One of the ways that we are able to “Earn While We Roam” is by utilizing our home as part of the short-term rental industry. While we don’t fit the mold as typical short-term rental property owners, implementing our short-term rental business plan provides us with more opportunities for travel.
We have included our business plan below to share how we do it. It also can serve as a blueprint for others that might be interested. Using personal homes as short-term rentals can be a great first step in earning while you are traveling.
Our Mission Statement
We will provide an upscale home for guests to enjoy, where they can relax and reduce their stress.
Leah and I are empty nesters and we are close to flying the coop, but we aren’t quite there yet. She is retired. I am not.
Our three children are in three different major US metropolitan areas. We have our house, a travel trailer, and two small dogs. Our next step will enable us to move several steps closer to full retirement.
We also have some great flexibility with our time and location. Leah works her post-retirement gigs from home and she can do that from anywhere, so long as wi-fi is available.
In this stage of my working life, I have about 6 full weeks of personal time off each year. We previously owned long-term residential and commercial rental properties.
Executive Summary of our Short-Term Rental Business Plan
As property owners, we can easily host short-term guests while we are traveling, and it makes economic sense to do so.
One hundred percent of our home’s maintenance, upkeep, and other expenses are funded through the household budget. We use the home less than 84% of the time. This leads to a profitable business even without a property manager.
The Property
Let me briefly describe the property. Our realtor, when we bought the house, jokingly called it ‘The Riviera’. However, for marketing purposes, we will call it ‘Relaxation Station’.
It is a 4 bedroom, four bath, 3200 square foot space with wood burning fireplace. There are 3 living spaces, two dining areas, a full wet bar, and a coffee bar.
The property has a heated outdoor pool, outdoor kitchen, well-maintained gardens, designated office space, and other desirable amenities. It is also in a safe, clean, quiet neighborhood.
With beds, a divan, sofas, and cots, fifteen guests can sleep comfortably. Few other STRs in the area have comparable unique selling points.
It is located in a secluded rural town- restaurants, groceries, and other such conveniences are fifteen minutes away. Yet in under the space of half an hour, you can easily be at Sikes Center Shopping Mall or Midwestern State University. Additionally, Sheppard Air Force Base’s Missile Gate and the Regional Airport are nearby.
The house is minutes off Highway 287, exactly halfway between the east side of DFW Metroplex and Amarillo, or Galveston and Colorado Springs.
Audience for our Short-Term Rental Business
In the first two months, the bookings ranged by source, purpose, and duration. It is perfect for extended family to meet and celebrate holidays. Families of airmen about to be deployed overseas have booked for a week to bond and say goodbye.
Travelers stay as a stopover in a multi-stop itinerary. Couples have booked a week for their honeymoon. And a hostess used it to throw a baby shower.
Value of our Short-Term Rental Business
All of this is in November and December of our first year- the slow season. We anticipate increased business beginning in February. The hope is to have an 80% occupancy rate for the second year of operation.
We haven’t yet marketed the heated pool in the listing because we are working on learning and developing our processes more than occupancy at this point. We will market it as a year-round destination.
Market analysis hasn’t yet pinpointed optimal pricing. We want it to be fairly priced. We also want a healthy profit.
Comparable properties I’m our market are few, and all of those are inside Wichita Falls proper. We offer superior space and amenities over any other offerings in the greater market area.
We anticipate the property to command a premium over any competitive spaces because of the guest capacity, the heated pool, and its overall attractiveness.
Beta testing will help us move in the right direction and complete the pricing analysis which will enable us to optimize returns. Guests will pay actual cleaning and maintenance fees when they book the stay.
Management Structure
The business will be structured under an LLC named L&J Ventures. It will be a sole proprietorship, operated by a husband and wife as a joint enterprise.
Operations Plan
I will have marketing and booking responsibilities. Leah will have inventory, staging, and vendor responsibilities. We will share the property management responsibilities. Cleaning and maintenance will be outsourced.
Marketing Plan for our Short-Term Rental Business
Our marketing strategy is to reach potential guests by using social media. We will also use Airbnb’s search feature, and build repeat business from our welcome book. Additionally, we hope to have a competitive edge by going the extra mile with current guests.
Financial Plan
The costs and upkeep of the house average $101 per day, or $3,030 per month as our residence. Presently, we budget that amount from household funds and minimize potential risks.
After the property is completely situated for STR use with ample linens and other necessities, all cash flow will be positive, so cost and maintenance aren’t expected to be additional expenses.
We don’t have a second home. But we do have the option to stay in our RV. We can also travel any time our house is occupied by guests.
The rental price is artificially low until we have five 5-Star guest reviews.
We will use dynamic pricing to optimize profitability. At 80% occupancy and an average of $330 per day booked, we expect to generate $7,920 in monthly income beginning in June of 2022.
One hundred percent of the first $50,000 in revenue generated will satisfy investment repayment. Then, the following $100,000 will fund capital growth.
Target Guests for our Short-Term Rental Business
Short-term rentals of different style properties and in different locations attract specific customer types. We identified three types of potential guests. Further customer analysis will inform and streamline the tour business model.
(*The names have been changed below to protect the privacy of our guests*)
Sharon* is a teacher, realtor, or banking professional living in the Wichita Falls area. She is between 28 and 48 years old and will secure the space for hosting events such as showers and ladies’ retreats.
Lisa* is a professional from the Houston Texas area. She has a large amount of disposable income. The privacy, size, location, and appearance of the space appeal to her as a family stopover and she will book single days midweek as they travel.
Victor* is a veteran whose son is an Airman stationed at Sheppard. His son is up for an overseas PCS and Victor* books the property for 6 days so he and his family can spend time with his son prior to deployment.
The target market for this property may still be in an undiscovered niche. Beta testing will uncover the best target audience will inform what type of guests we should identify.
Industry Analysis
The overall occupancy rate for STR in Wichita Falls is 75%. Of 128 Airbnb offerings in the market, only ten of those are direct competitors, asking over $200 per night.
None of the competitors have an ADR over $300. The most expensive is a 6/5 built in the 1920s. That property has over 50 reviews and a 4.98 rating.
All others have 11 or fewer reviews and most seem to have limited availability. Competitor research may not be completely comparable to our situation due to Relaxation Station’s location on the edge of Wichita County while all competitors are inside Wichita Falls.
Questions for the Future
The following questions may need to be addressed in the future:
- Do we need to adjust our rental business plan template or is the current one an adequately comprehensive business plan?
- Will we need to explore the use of someone in the property management business or a property management company?
- As business owners, what more do we need to learn as rental owners?
- Do we need to add another rental home (or rental homes)? Would adding more rental property be feasible in our situation as part of a larger real estate investment strategy?
- Is our current rental rate appropriate in providing the maximum income?
- Do we need to expand our Airbnb business plan to include other platforms such as Vrbo?
- Once Jim retires, would long-term rentals be a good idea? Would those require lease agreements?
- Competitor analysis is challenging, but as new businesses come to the area, will there be more local competition?
- The current short-term rental market is strong. Will it remain so in the future?
- Do we need to focus on targeting specific business travelers or continue as a more vacation rental business?
- Will we need to create our own website for our property?
Conclusion
We spent a long time trying to do thorough research before choosing to use our current house in the short-term rental business. There are definitely specific challenges that using your primary residence brings that are not there in typical situations.
That said, our new business has been doing well as seems to be a good strategy so far. As always, our main focus is on how we can travel more. Joining the scores of other short-term rental businesses has already allowed us to do so.
What do you think?
Would you consider joining the vacation rental business world with short-term rental of your residence? Let us know in the comments!
Want to know more about us? Click HERE.
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