There are a variety of factors that contribute to a property being a successful short term rental. Determining which homes will do well as vacation rentals is a bit of an art. When you systematically analyze hundreds of homes each month you develop a pattern that guides you. These are four things I always make sure to pay attention to when looking at potential STR investments.
How many people can it sleep?
The first thing I do when I see a property that I think may make a great short term rental investment is browse through the photos. Quickly flipping through the images, I am taking an internal inventory of how many bedrooms the home has, if there are other rooms that could be converted to bedrooms, and if there are bonus rooms that could sleep additional guests. Unfortunately, I know from experience that listing details are not always accurate. Just because a home is advertised on Zillow as a four bedroom home does not mean it will be a four bedroom vacation home. It could have the potential to be a 6 bedroom with a craft room and office that aren’t accounted for in the bedroom count. When the property photographed is furnished it makes this process of evaluating the potential guest count much simpler. I’m looking at the furniture and duvet cover colors to make sure I don’t double count a room. A vacant home makes it more challenging to distinguish between one empty room and the next. In this scenario. Paying attention to small details such as window and door placement allows me to accurately count the number of rooms. I also look for clues in the written property description, and if I’m lucky I find a foorplan that makes it much simpler to assess the home. While accurately researching the total number of people the home can sleep is the main goal here, I’m also looking at the property as a whole. I want to ensure the home can not only sleep 12 people, but it can accommodate 12 people comfortably. Can the dining room fit a table for twelve? Are there enough bathrooms for twelve people? Make sure to look at the space as a whole while you are doing this exercise.
Backyard Qualities
One benefit of staying in a vacation home instead of a hotel is the ability to have your own outdoor space. When, I’m identifying potential STR properties, I’m making sure to assess the backyard space and it’s potential. First, I want to evaluate how private the space is, and the pros and cons of any adjacent properties. For example, I recently showed a property that backed to an elementary school. We could reasonably assume that this property would feel relatively private on the weekends, but during the week guests may hear school bells and children playing. It’s important to consider the neighboring properties and what potential implications they may have for your guest’s experience. You also want to look at the size of the yard and the type of landscaping present. A green lawn may appear beautiful, yet you need to consider the costs to maintain it, both in terms of regular mowing and water expenditures. Does it have an irrigation system? If not, how will you maintain it from afar? Lastly, I’m looking at the yard to see where improvements exist and where they can be made. Amenities such as outdoor games and firepits are low cost but offer high returns for STR revenue. Pools, while sometimes cost-prohibitive, dramatically affect revenue potential for vacation rentals in greater Austin. During an initial assessment, I’m going to take note of all of these items, determine what’s possible, and run the numbers later to see what improvements make the most sense.
Age of Big Ticket Items
Your biggest expenses for a home are your roof and HVAC. It’s important to verify the age and condition of these items early so you aren’t dealing with these substantial expenses later out of the blue. An older AC system isn’t necessarily something that turns me away from a potential STR investment, but it is something I want to budget for when submitting an offer or running my pro-forma. I’ll also do a quick run through of cosmetic updates that are needed to achieve maximum nightly revenue.
Nearby Attractions and Amenities
Finally, you want to look at what’s nearby a potential short term rental investment do determine if the property will be a good purchase. I usually just type the address into google maps and then click nearby. Then I can manually see all of the restaurants, bars, stores, and attractions near a given property. You can quickly see how far conveniences are from the home, and gather insights into the type of people that may want to stay at this property. If the home is near a popular waterpark, you can assume families may frequent the area. Conversely, if it’s near a bunch of wineries this property will likely cater to a slightly older clientele.
These are a few tips that will help you determine which properties will be a good short term rental investment. If you want expert guidance every step of the way, reach out to the ATX STRS team. We’re not just real estate agents, we are vacation rental investment experts.
