Understanding The Short Term Rental Algorithms

I started investing in Sedona several years ago, and my business partner and I figured we would find a property manager to manage all of our properties so it would be very hands off. What we learned was that every property manager in Sedona seemed to want an extreme amount of the profit, but could not really explain how they would get us more business if we went through them compared to just doing it ourselves. So we did it ourselves…and we did not do so great. We booked about $49k with our first property in 12 months.

Through the first 12 months I became fascinated with how the short term rental websites operated, and actually built a desire to understand all of the facets of running short term rentals. I am a big fan of lifelong learning, and because of this desire to want to learn more, I stumbled across the book “AirBNB for Dummies”. I had read many of the “…For Dummies” books before, and always appreciated the approach they took to teach the reader all of the basics to getting started in their topic. After reading this book I actually looked up the authors, and noticed they had online training courses, and in my commitment to learn everything I possibly could, I actually signed up, and let me tell you, what I learned from this course turned around our profits overnight. We took that $49k property and turned it into 109k by simply taking advantage of the algorithms used on these websites, and a few other additions which were recommended to me by James Svetec, the author of “AirBNB for Dummies”.

This is the secret sauce. Knowing what to do daily to take advantage of the short term rental websites so that your property shows up as one of the first few listings, rather than on page 12 which no prospective booker will ever get to. These algorithms are frequently changing, and the great news for my clients is that I continue to keep watch on exactly what these algorithms demand, and by doing so my properties are consistently on the top of the search on websites like AirBNB and VRBO, and often they are the first properties shown period.

Answering the fears of short term rentals!

I can’t tell you how many prospective clients and investors that I run into daily that all seem to have the same 3-4 concerns or fears about investing in an AirBNB. Rightfully so, of course. Short term rentals are returning rates that are unheard of in the real estate world, and this can make people weary of the stability of the market. These are the most common fears I hear:

Fear #1:  “Short Term Rental Homes have a lot of repairs” – We have found that this could not be further from the truth. We have managed both long term and short term properties for over 8 years now, and what we have found, and what many studies show, is that because you have a crew of people like your cleaning crew coming in weekly or even multiple times a week, repairs are dealt with much quicker and therefore cause less damage in the life of the home.

Fear #2:  “Short Term Rentals are a lot of work for the homeowner” – We take care of everything you want us to, so we can literally do everything for you, or we can just help you get more bookings. You can do as little or as much work as you want. If you just want to collect a check every month, we can set you up that way.

Fear #3: “My neighbors will be annoyed if I turn my home into a short term rental” – It is true many residents in Sedona do not like short term rental units as neighbors, but a lot of the reasons are unfounded. What we have learned, as long as the neighbors have the information to contact someone, and the guests are given clear instructions as to how to respect the neighbors, neighbors and short term rentals can live in harmony.

Fear #4: “AirBNBust is upon us, there is no more money in short term rentals” – This is perhaps the craziest thing people say, many homes in Sedona are making well over $100k a year in rental income far surpassing what they would make as a long term rental.