In this article, we will share seven recommendations for starting a vacation rental company in Florida. Read on for these tips:
- Understand state and local regulations
- Keep properties in pristine condition
- Partner with local businesses
- Embrace revenue management
- Attract and communicate with owners
- Create engaging content through your website and OTAs
- Establish loyalty to drive repeat bookings and referrals
Florida is one of the hottest vacation rental markets in the U.S. It's no surprise, because the Sunshine State has always attracted tourists and vacationers. With the recent vacation rental industry boom, it's only natural that it has become a desirable piece of land for vacation rental developers and investors.
The coast lines and Central Florida have traditionally been big draws, and they continue to rank among the top spots in the nations for vacation rental investment. Panama City and Kissimmee are ranked among the 10 hottest vacation rental property markets, according to Evolve Vacation Rentals. Panama City is listed as number one, and is a favorite among other industry watchers based on median home price, average monthly rent, occupancy rates and other factors.
What's driving the growth in Florida real estate investment?
After four years in decline, sales of investment homes increased 4.5 percent year-over-year, according to National Association of Realtors (NAR). Lower mortgage rates and attractive sales prices were among reasons why investors chose to purchase homes for short-term rental. NAR’s 2018 report indicates that location in traditional vacation hubs and personal use are big reasons for investing in vacation rental property. Many homes purchase recently are near or on beaches and lakes. Median square feet is 1,500.
NAR Chief Economist Lawrence Yun said strong investment potential and rental demand are driving sales.
“Steadily increasing home prices and strong rental demand appear to be giving more individual investors assurance that purchasing real estate will diversify their portfolios and generate additional income if they decide to rent out the home,” he said.
Florida ranks along with California, Georgia, South Carolina and Texas among the most desirable places to buy a vacation rental home. But location doesn't necessarily mean that buyers will make a nice return on their investment.
Tips for starting a Florida vacation rental company
Here are seven helpful tips for starting a vacation rental business in Florida:
1. Understand state and local regulations
Investment in any locale comes with a unique set of challenges in addition to perks. Specifically in Florida, experts say to pay attention to the details, like local and state regulations. The State Department of Business Professional Regulation governs short-term rental properties and operators must be licensed. Violations of DBPR policies can result in hefty fines and experts say that state and local officials are tough with enforcement.
Make sure you are familiar with Florida HOA and Zoning laws, as well. While these differ by area, common regulations can relate to fencing, outdoor recreational equipment, parking, paint and roof colors, swimming pools, patios, pets and more.
2. Keep properties in pristine condition
Beyond the regulatory nuances, the key to success goes back to a staple of vacation rental management - creating a memorable guest experience while operating properties with ease and efficiency. This requires keeping properties sparkling clean and quickly identifying and responding to maintenance issues. Identify local housekeeping and maintenance professionals you can trust.
Once they're on board, Kigo Operations Manager helps ensure first-rate housekeeping standards are maintained and staff are held accountable with a streamlined inspections process. Worried about the risk of damage from unruly guests? Instead of requiring traditional security deposits, consider offering travel insurance policies to protect your properties.
3. Partner with local businesses
Establishing lasting bonds with other local business helps increase property exposure and offer guests an excellent standard of customer service. In turn, it helps grow business.
Offering restaurant discounts, creating a local map, approaching wedding planners, partnering with local vendors and printing business cards are good places to start. Consider leaving a guest welcome book at each property that lists activities and attractions in your area.
4. Embrace revenue management
One of the most overlooked technology breakthroughs, and the easiest way to increase profits, is dynamic rent pricing through revenue management software.
While sophisticated revenue management software is readily available to vacation rental property management companies, some are hesitant to use it to make pricing decisions because they fear higher prices will lose bookings. But revenue management has become the foundation of setting market rates in the vacation rental industry. The analytical pricing process has been proven to drive outperformance by 2-7 percent.
5. Attract and communicate with owners
Much like aligning with local businesses, property managers should develop relationships with owners. They often hire property managers based on personal relationships and referrals, so it’s a good idea to get acquainted- then communicate in a consistent way.
According to Quora’s “What are the Best Tactics to Market to and Attract Owners to Property Management Companies?” bringing new owners to properties and offering potential management clients helpful information about properties they may want to acquire helps build relationships.
6. Create engaging content through your website and OTAs
A solid vacation rental marketing involves generating repeat bookings through your website, while taking advantage of the broad reach of OTA channels.
A customer's impression of your business is almost entirely based on the image projected by, and interactions that take place on, your website. Prospective guests need to feel impressed, comfortable and confident enough to bet their vacation on you. It's critical that your website is accessible and functional on mobile devices, and that you provide a smooth and easy booking process. Remember, you want them to re-book with you often - and tell their friends about you.
At the same time, it's important to develop a strong channel management strategy. This should involve a unique approach for each individual channel, from Airbnb to HomeAway to Booking.com and more. By creating a customized strategy for each channel, you can reach a diverse base of travelers around the world.
For both your website and OTA listings, use professional, high quality photos and showcase what's unique about your properties.
7. Establish loyalty to drive repeat bookings and referrals
Extending memorable hospitality to guests is defining how vacation rental managers stay competitive. Analysts forecast the industry to grow 7 percent annually from 2017-21.
The industry is already challenged by effectively communicating between property and consumer, property conditions that meet expectations, safety and security and managing operations.
Maintaining constant touch points while condensing the guest life cycle into just a few days or weeks is a particularly big hurdle. Hospitality and solid communication are essential to creating a bond with guests so that they repeat, give referrals or write positive online reviews. You may also consider surveying guests to determine where they traveled from, along with what made them select the destination and your property. This is valuable data that can influence your marketing approach moving forward.
Success story: RealJoy Vacations
Panama City’s long strip of powder-white beaches is home to RealJoy Vacations, which has been serving vacation renters since 2009. Micah Berg says the success of the company, which offers more than 400 homes, revolves around putting smiles on the faces of owners and guests.
"A vacation rental property is supposed to be all about happiness, for both guests and owners" he says. "We have a very middle-class customer base and these vacations are a huge deal to them - we want to make sure they get the most out of every dollar they spend. But we also want our owners to enjoy their investments without headaches."
In addition, investing in an effective vacation rental software platform can be a game changer. Berg attributes $70 million in bookings to Kigo Marketplace plus money saved by reducing staff headcount.
“Considering the cost of a full-time employee with benefits, that’s a huge return on investment,” said.
The vacation rental guest experience
In a recent interview with Brad Larsen on “Property Management Mastermind” Kigo Vice President Matt Hoffman pointed to Clearwater Beach, Florida as an emerging market along with Nashville, Denver and Dallas.
"The expectations that you have as a vacation rental guest cannot be standardized because every experience is slightly different. That's what's changing with technology."
Kigo provides a platform that enables consistent communication, from pre-booking to check out. To learn more, get a free demo of Kigo Marketplace.