Things You Need to Know Before Starting a Vacation Rental Business

visitor with suitcase greeting airbnb host

Are you thinking about starting a vacation rental business? If so, there are a few things you need to know before getting started. In this blog post, I’m sharing the exact steps for setting up an amazing vacation rental property and the best ways to attract your ideal guests!

Table of Contents

How to Start Your Vacation Rental Business

First Things First – Create a Rental Business Plan

Every business needs a solid plan, and make no mistake, your vacation rental business is a  business. Before you start, take some time to map out your goals and define your target market. Who are you trying to attract with your property? Families? Couples? Business travelers? Knowing your ideal guest will help you get started on the right foot and make sure your rental business is successful.

Make the Most of Your Location

By choosing a location that is popular with tourists, you’re setting yourself up for success right from the start.

But what to do if you own a property that would make a great short-term rental but the place is off the beaten track? Not all is lost – remember that people travel for a lot of reasons. Brainstorm who those people might be and what might bring them to your destination. Are there temporary employees, conferences, retreats, family reunions, sporting events, or hobbyists who visit your city? If there are hotels in your city, there are visitors. Research what brings people to your destination and think about how you can make your vacation rental appealing to those visitors.

Before deciding where to buy a vacation rental, I recommend joining neighborhood groups on sites like Facebook and Nextdoor to gauge attitudes toward vacation rentals. Hostile neighbors can get rentals heavily regulated or even banned, and that’s certainly something you want to avoid.

Get Legal

Before starting your vacation rental business, you’ll need to take care of some paperwork. First, if you’re in an HOA, make sure short-term rentals are allowed. 

Next, check city ordinances, find out what licenses or permits you need, and apply for them as soon as possible. To find out what you need, search for short-term rental, vacation rental, Airbnb, or transient occupancy tax plus your city.

While waiting for your permits, call your insurance broker and ensure that short-term rentals are covered under your homeowner’s policy. If your broker says yes, ask him or her to tell you exactly where to find that information and read it for yourself to make sure there are no limits or conditions you need to be aware of. If you’re not covered, look into short-term rental insurance. Two of the biggest providers in North America are Proper and CBIZ, although more and more companies are offering this type of policy.

Side Note: If You’re Starting from Scratch

If you’re remodeling your vacation rental or building a new one, you’ll want to review your plans with the business in mind. Starting from scratch offers a rare opportunity to build something perfect as a rental with just a little tweaking. (Read here for more about what you should be thinking about.)

The Fun Part – Vacation Rental Interior Design

Your interior design will be determined by many things, including but not limited to your location, your ideal guest, your planned nightly rate, your taste, and your budget.

All of these factors can make it difficult to make design decisions, but the first thing to do is to start with inspiration photos. Set up boards on sites like Pinterest or Houzz and save photos that evoke the same vibe you would like to create. When you have a collection, start noticing similarities in the photos you chose. Is there a lot of color? White walls? Bright light? Natural materials? Try to be analytical about what appeals to you and take notes about what you see. This will all feed into your design plan. 

Start with an interior design plan.

Having a plan is the recipe for the project, and making choices for your vacation rental will be much easier if you have something to refer to when facing decision fatigue. Psst, if you don’t know how to create a design plan, we can talk it through together, or you can hire me to put one together for you.

Know your budget.

Furnishing your vacation rental can become overwhelming fast unless you know what to expect – and how much it will cost. That’s why I created a FREE Vacation Rental Budgeting Tool that we use here in the studio for every project. It works as a guide to what you need to buy, a budgeting tool, and a way to keep track of how much you’re spending.

Ready, get set, shop.

Use your design plan and budget to guide your selections for vacation rental furnishings. In general, look for furniture that’s commercially rated, meaning that it will stand up to a lot of use, and make sure your furniture is comfortable as well as stylish and durable.

Add the wow factor.

Styling takes vacation rentals – and vacation rental photos – from good to great, and it’s the thing most Airbnbs are lacking. Don’t be afraid to add personality to your rental with art, accessories, and soft accents like pillows, rugs, and throws. 

And the best thing – decorating doesn’t need to break the bank. Here are 12 ways to add style to your short-term rental – on the cheap!

Need some inspiration? Take a look at some of our recent vacation rental interior design projects!

Get great photos

Your vacation rental photography does most of the heavy lifting in your listings, but hiring a photographer can be a little daunting. Here are our tips for hiring a vacation rental photographer. Hiring a pro not in the budget? We’ve got tips for DIY listing photos, too.

Perfect your listings

Decide on a name.

Naming your Airbnb is the first step in creating a brand. Choose a name and use it in your listings. Even if you’re not ready to post on social media or build a website, use your short-term rental’s name to set up accounts before someone else does. You can even buy the URL for your website to use when you’re ready to start taking bookings directly.

Determine your nightly rate.

Most new hosts get anxious when it comes time to set their rates. I recommend you look at your competition on a couple of listing sites and jump in somewhere in the middle. Many are tempted to start out with low rates since getting bookings before you have reviews can take a little time. I advise against that. Experienced travelers will wonder what’s wrong with your property, and bargain shoppers will care more about the deal than your vacation rental. Remember that your rates aren’t set in stone. Bump them down if you aren’t getting enough inquiries, and raise them when your calendar starts getting full.

Decide on the rules.

Are you going to be pet-friendly? Or really just dog-friendly? Do you allow parties? Smoking? Make a list of rules for your vacation rental and include them in your listings.

You may also want to write a rental agreement with the rules spelled out and the basics, like check-in time, what guests need to do before checking out, etc. Some listing sites allow you to upload a rental agreement (Airbnb doesn’t), and you’ll definitely need one if you accept direct bookings. Have a lawyer review your agreement before your guests begin signing it.

Write your listing.

Don’t rush through this part! Your photos and amenities checklists will tell a lot of the story, but your description is your opportunity to paint a picture of how much your guests will enjoy their stay. Write compelling descriptions, but keep them to the point and punchy. If writing isn’t your strong suit, ask a trusted friend or family to weigh in, or even consider hiring a copywriter to help out.

Note: If you’re using a property manager, they will recommend a rate based on their experience and will most likely set up your listings for you.

Self-manage or hire a property manager?

Do you feel excited or overwhelmed when you think about answering inquiries quickly, keeping your listings up to date, hiring (and firing) help, solving problems, and taking care of your property? (The answer is probably both, and that’s okay.)

But if the thought of doing all of those things makes you feel dread, hiring a property manager is a good idea. A good property management company may not only take those tasks off your plate, they may also keep your property booked more than you would on your own. After all, there’s something to be said for expertise.

However, if you have the time and the interest, managing your vacation rental yourself can be incredibly rewarding financially and emotionally. Even if you live far away from your rental, it’s possible, as long as you have someone local who can act as your eyes and ears on the ground.

Some vacation rental owners choose to do the cleaning themselves. If you’re up for it, more power to you, but most find that it gets old fast. More importantly, it can be difficult not to take it personally when guests leave your place a mess. After all, you’ve spent a lot of time, energy, and money making your short-term rental the best it can be, and messy guests can seem disrespectful. Hiring professionals may cost more, but it might be worth it if it keeps you from resenting your guests.

What’s your marketing plan?

You may start by posting your listing on one site and waiting for the inquiries to roll in, but you’ll soon want to expand your marketing efforts. Ignore the idea that you have to do everything all at once and instead focus on the efforts that you like enough to maintain. That may be social media, e-mail campaigns (get opt-ins before you start emailing your guests), your own website and/or blog, online advertising, or something else entirely.

Seek out expert advice (sign up for the newsletter; it’s free and good), but keep in mind that a lot of the advice out there is for property managers or owners with multiple properties. Take what you need and put a pin in the rest to avoid the overwhelm that will keep you from doing anything. (I’m talking to you, fellow perfectionists.)

Bonus tip: Respond to every review and make plans for improvements

Last but not least, once your business is up and running, don’t forget to take the time to respond to all your reviews – both good and bad. Remember that replies aren’t for the guests that wrote the review, they’re for future guests, and they will be looking for how you respond to criticism as much (or more) than they are skimming for what’s great about your place. Use your responses to show that you like your guests, tell them about planned improvements, and even gently remind them of the rules.

Starting a vacation rental business can be a great way to earn some extra income – but there’s a lot you need to know before taking the plunge. From creating a business plan to furnishing and decorating your rental, use this guide to make sure you’re prepared for everything. Having a spectacular space will do a lot of the work for you. Consider a budget-friendly DIY interior design package, a strategy session, or full-service design to start with a bang.


Have any questions about starting your short-term rental business or creating an exceptional design? Leave a comment below or schedule a free phone call with me! 

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Hi, I’m Beth

I’m so glad you’re here! I want you to have the kind of vacation rental business you’ve dreamed of, whether that means you’re an investor or just want to rent your house out for a few weeks during the summer.

I like to talk about interior design, but there’s lots of other stuff here, from branding to maintenance tips. Grab a snack, hang out, and say hi in the comments; I’d love to hear from you.

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2 Comments

  1. This was such a great read, thank you. Manifesting my little cabin! And putting in whatever actions I can to make it happen.

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