Avoid These 5 Mistakes As A Short Term Rental Investor

Being a short term rental investor sounds great when people talk about how much money they made in a particular month. Unlike long-term rentals, every month’s revenue is unpredictable. 

There are so many factors that determine how much money you can earn in a particular month. You could be highly profitable one month and then lose thousands in another month.

A lot of novices have entered the short-term rental game because of the idea of making thousands of dollars a month off one property. 

I cringe when I see listings in apartments with the bare minimum furniture because it means the listing was probably put together as quickly as possible. I avoid those listings because I don’t expect it to be managed well.

Here are the biggest mistakes I see some hosts making:

Investing in the wrong location

Location has a strong impact on demand and nightly rate when it comes to short term rentals. Location can mean the difference between success and failure.

Think about it from the perspective of a guest looking for a place to stay for a weekend getaway. Guests are looking for convenience or accessibility to nearby attractions in a safe area. Marketing a rental WAY out of the way doesn’t attract as many guests as one near the local attractions if both rentals are of similar quality. 

Even worse is if the rental is located in an area that doesn’t look safe. Guests don’t want to stay somewhere that looks dangerous especially when they’re not familiar with the area. 

This rule doesn’t apply to all cases as there are rentals that do extremely well in the middle of nowhere but those offer a unique experience in a unique property. For example, a beautiful container home in the middle of the woods offers a unique experience where people will go just for the experience of staying in the home.

Not communicating properly with guests

Effective communication with guests is a key component of a successful Airbnb hosting experience. Prompt and detailed communication will improve your rating as a host and prevent confusion for guests as they have detailed information on how your property is set up. 

Being in the short term rental business is part real estate and part hospitality. Communication should be prompt, clear, and professional. You want to respond quickly in case there is ever an issue and you want to remain professional, even in uncomfortable situations. 

Communication with guests should be informative and concise – keep in mind that your guests are on vacation so give them their privacy. For example,I share easy-to-follow directions to my cabin in the mountain since there are winding roads and multiple paths once in the community. Guests can arrive in the night where there is limited visibility and I want to minimize my chances of getting messages from guests in the middle of the night. 

Using the scheduled messages tool is a great way to minimize the amount of work required. I create a scheduled message for when my guest books, a day before their check in, and a day before they check out. 

Having a poor aesthetic and layout design

While having a minimally furnished rental isn’t a deal breaker, the rental would likely do better with a well-designed set up. The effort put into a listing shows when guests see low quality furniture around the listing. It can greatly impact the guest’s overall experience and satisfaction.

When guests arrive at a clean, well-designed, and stylishly decorated space, they are more likely to feel relaxed and comfortable, and they may even feel more excited to explore the area. This positive experience can lead to better guest reviews and ratings, which in turn can increase your chances of attracting more guests and generating more income. Additionally, a visually appealing home can set your listing apart from others in the same area, making it more attractive and memorable to potential guests.

One way for hosts to improve in this area is to think from the perspective of a guest. Does the furniture make sense? For example, if your home is set up to host up to 8 people, does it make sense to only have a 3-seater couch in the living room? 

If it’s not financially feasible to decor the home the way you would ideally want, find alternatives like used furniture through Facebook Marketplace. It’s better to do it all upfront rather than building your way up since photos will become inaccurate and not what guests would expect. 

Accepting any guest looking to book your unit 

There may be times when your property isn’t getting as many bookings as you’d like. It can be tempting when a guest with either no previous reviews or even a slightly bad review requests to book. 

I’ll admit that I have accepted guests with a slightly bad review before (think 4 stars). For the majority of them, it ended up being fine. I don’t recall a specific instance when I totally regretted it. They may have been a bit messier than the typical guest, but that’s not an issue for me. Even with my screening methods that I go over in this post, I can’t be right all the time.

My most miserable experiences have been with guests without any reviews, especially accounts that have recently been made. AirBnB may have removed them from their “ blacklist” or it’s a totally new user. The issue with new users is that they may have high expectations for their first trip which is a disaster waiting to happen. 

​​

It’s a tough decision to make, but I rather keep my property safe from issues than to host a troubled guest. My advice is to read their previous reviews and to also check out the hosts who left those reviews. Is the host experienced or more of a single home investor? I prefer to rely on more experienced hosts than a host who may be renting their own home on the side. 

Not having the right insurance policy

Having the right insurance policy is important for Airbnb hosts because it provides protection in case of unexpected events, such as property damage, theft, or injuries to guests. 

Although Airbnb offers a Host Protection Insurance program that covers certain damages and injuries, it may not be enough to cover all potential risks. Therefore, it is recommended that hosts consider purchasing additional insurance coverage, such as a specialized vacation rental insurance policy. These policies can provide additional protection for the property and its contents, as well as liability coverage in case a guest is injured on the premises. Typical landlord insurance DOES NOT cover short-term rentals unless there’s an explicit clause added to the policy. 

Steadily Insurance offers all types of landlord insurance – even for short-term rentals. This is why I use Steadily Insurance for my short-term rentals. Once I submit my information for a quote, Steadily presents me with multiple policy quotes that match my needs, making it very easy to compare quotes. 

Without the right insurance coverage, hosts could face significant financial losses and legal liabilities in the event of an accident or incident. Filing a claim through normal landlord insurance will likely lead to a denial. You would be paying out-of-pocket for any damages and your insurer may cancel your policy due to the way your property is being used.

Consider avoiding these mistakes before purchasing your first rental for short term renting. Think like a long-term short-term rental investor because this is not a get-rich-quick scheme.