The Entrepreneurial Side of Vacation Rentals
I like to compare my vacation rental property to the capital projects I worked in the oil field. It might not be an analogy everyone connects with but I’m from Houston. In the oil field I would often build new processing facilities above ground to handle oil from newly drilled wells. But many of our facilities in West Texas were old and needed to be revamped from time to time because the wells were initally drilled in the 1930s. When we would revamp an existing facility, the accountants would capitalize the maintenance costs to take advantage of depreciation rules and we would dub it a maintenance capital project.
When you purchase a vacation rental it takes an initial capital purchase to get the business up and going. Think of the home itself as well as the furniture and furnishings. As time goes on, what I like to refer to as maintenance capital is needed to keep the initial investment producing. I look at my vacation rental the same as any other business that routinely needs capital reinvested. Unfortunately, the old adage it takes money to make money rings true in vacation rentals. There is sometimes an attitude that, “Once my house rents, then I will improve it.” Unfortunately, in the competitive market we are in, the adage if you build it they will come seems more in line with my current experience. You need to make the investment in the property prior to guests arriving so they afterwards rave about their experience in the review in order to attract the next guest, and so on.
As I began to see market conditions start to change last year as well as the delay of the HOA amenities in Escondido and Paseos, I decided to revisit my first vacation rental and take a constructive look at its offerings. We furnished this house in April 2020 when all the stores were closed. Most of the furnishings were bought at Kohls online and I selected items solely based on budget out of fear of what COVID would do to the economy. I also reused a lot of old décor from an earlier house I had lived in and made things work. My total investment in that three bedroom home was around $15,000. I know prices have increased significantly since then and are not comparable, but I want to give you real numbers.
Looking at current market trends, we have a significantly higher supply with equal or less demand, thus driving price and occupancy rate down. Both Ivory Homes and Cole West have announced new neighborhoods with a combined supply of at least another 200 houses that are between the Hurricane exit and Washington Parkway (exit 13). As we continuously see nightly rental zoned supply increase, it becomes more important to ensure your house is competitive.
When I look at the houses in my management portfolio and across the market that are often booked, they all have one thing in common. They are tastefully decorated with up-to-date décor trends and the guest reviews mention having everything they could want or need while there. I recently received a 4 star review with a glowing comments at house I would consider in my ‘best’ category. I messaged the guest to find out what my team could do more, better, or different to earn that extra star and their feedback was ‘more spices than salt and pepper and a pool’. While I personally feel that review and comment are out of touch with reality, I appreciate their honest feedback so we know what the guests expect.
When looking for vacation rental décor and style, I try to stay away from flashy trends that will come and go. I like to keep things pretty neutral rather than bold. My goal is to be aesthetically pleasing to many people. I don’t want 10% of the market to love the home and 90% of the market to be turned off by décor. My goal is to capture as many guests’ attention as possible when they are looking at multiple properties in the area.
After analyzing the offerings at my first house I realized that the house was lacking in décor and style. Several furniture pieces I had there came from my old house and the décor was a mishmash of old stuff and cheap stuff.
I decided to purchase new bedding, bedside lamps, a seating chair and side table for each king suite, large wall décor, and décor for the bathroom counter. As I made the new selections and updates, I kept my current décor in mind. Much of the old décor remained in the house but I found a new home for it.
In the downstairs king suite, I added an upholstered chair (~$150 HomeGoods) and side table (~$50 HomeGoods). I repurposed one of the smaller lamps that was on the nightstand on this side table. I also added a new duvet cover with coordinating decorative pillows and a throw to drape over the end of the bed. I have found decorative pillows and a throw photograph well and make the bed look inviting. Additionally I added changed out the décor in this room because I felt that it no longer matched the aesthetic I was going for. I purchase a new large canvas for over the bed ($99 HomeGoods) and a long mirror ($75 Ikea). A floor length mirror is décor that adds functionality for the guests. I moved the artwork that was originally in this bedroom to the hallway adding color and life to a space that was previously empty.
In the attached bathroom I added a decorative box that hides the tissues ($15 Target), a basket behind the toilet for toilet paper ($8 HomeGoods), and a magnified make-up mirror ($15 HomeGoods). I often use a make-up mirror when in a hotel and traveling with hand luggage so I figured this would be a nice amenity to add.
The upstairs king suite lacked a tv so I purchased a 50” TV on Black Friday ($250 Walmart) and had that mounted ($25 mount on Amazon & $70 handyman fee). In this bedroom, I completely changed the look in feel from the original décor. I selected several pieces of geometric artwork that’s popular right now as my starting point ($125 HomeGoods). Since my artwork is trending and bold, I selected a simpler duvet that can work with many different styles of artwork (Duvet $50 HomeGoods). I then matched the throw pillows ($75 Homegoods), the throw ($25 Homegoods), and bedside lamps ($60 each Target) to accent chair I added ($125 HomeGoods). I moved the large canvas that was in this room to sit in the nook in the staircase. It adds a lot of life as you go up and down the stairs without a lot of pieces to dust.
In the attached bathroom, I wanted to pull the contemporary geometric style through to this room as well. I accomplished that by updating the shower curtain ($20 HomeGoods) and moving the current curtain to the third bathroom. I then added a decorative box that hides the tissues ($15 Target), a basket behind the toilet for toilet paper ($8 HomeGoods), a small plant ($15 Ikea), and a magnified make-up mirror ($15 HomeGoods).
My final room to update was my bunkroom. To cut budget at this time, I elected to only update the bedding on the queen bed in this room and leave the bunk beds for another time. My bunks currently have grey bedspreads and coordinating throw pillows. While the bedding is not ideal in function or style, I get more bang for my buck in updates by putting money elsewhere. My queen bedspread was beginning to show wear from being washed too often. The poly fill was beginning to get lumpy. I added new bedside lamp ($60 each Target), a new duvet cover ($50 Ikea), throw pillows ($80 HomeGoods), and a throw ($25 HomeGoods). The wall décor in this room was pretty neutral so I left it.
In addition to the décor in this room I added several games and toys to the closet for kids. I purchased several card and board games on Black Friday ($25 Walmart). I also bought a set of the magnet tiles for all ages to build with. We don’t have bad weather and rain often in Southern Utah but parents appreciate indoor activities in the likely event they are stuck in doors longer than anticipated.
In the attached bathroom, I moved the other bathroom’s shower curtain to this room. I removed the décor items that no longer coordinated. I also brought a piece of art from my house up north that I loved. I then added a decorative box that hides the tissues ($15 Target), a basket behind the toilet for toilet paper ($8 HomeGoods), a small plant ($15 Ikea), and a magnified make-up mirror ($15 HomeGoods).
The last area I updated was the open concept living space. I moved the décor that was over the table to over the desk and added a large canvas I found on clearance ($99 HomeGoods) above the kitchen table. I then added a lamp in the living room but it needed an extension cord to reach the plug since it sits in the middle of the room ($100 Target). I considered updating my rug but decided to leave it until I find one at Costco I like for less than $150. When I update my rug, I will update the decorative pillows on the couch to coordinate. I also reused a bedside lamp from the king suite on my entryway table.
By enhancing the furnishings you offer, updating décor, and/or bringing the style of your home up to current trends, you are increasing the value in the eyes of your customers (the guests). This in turn can often help lead to increased bookings, thereby bringing you a return on your investment.