How to increase the profitability of an apartment for rent?
Did you know that by using the right sales techniques and properly preparing your property, you can increase the profitability of your apartment for rent? In this post, we suggest what steps to take to make a short-term rental bring us maximum profits.
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Estimating the profitability of your investment begins at the stage of selecting a property. Starting with the city, the potential of the location (proximity to the center, the prestige of the neighborhood, distance from universities, schools, bus stops, stores, etc.), and ending with the condition of the building and the apartment. It’s obvious that a modern apartment building with underground parking, in the very center of the city, has a better chance of getting visitors than an apartment in a block of large slabs. However, it is worth remembering that it is possible to increase profits in any case, even when we have no influence on the location or condition of the building. But before we get into specific tips, let’s take a moment to explain what profitability actually means.
Return on investment, rental profitability – what are they?
Return on investment is one of the key aspects that should be measured when offering apartments for short-term rentals. In simple terms, rental profitability is the ratio of profits to expenditures. At the same time, the outlays themselves include many aspects, such as maintenance of the apartment (fees, bills), taxes, loan installments, settlement with the intermediary company (if we use its services), cleaning, renovations, etc. So overall, the idea is to keep the balance sheet positive and leave as much money in the owner’s pocket as possible.
How to increase the profitability of short-term rentals?
The good news is that profitability can be worked on. And it’s not at all about investing in luxury furnishings or expensive equipment. The key to success is to determine our target group, understand its needs and present the offer in such a way that the recipient has no doubt that he wants to rent this apartment and not another. How to do it? Here is our set of tips.
Short-term rentals – create a model customer and prepare an apartment just for him or her
A short-term rental apartment is a product that can be sold using techniques commonly used in the e-commerce industry. One of them is to create a so-called persona, or ideal customer. If you have the right property, you can decide for yourself whether to target tourists, business clients, young or old people, families with children or perhaps foreign guests. In many cases, however, the apartment itself – the number of rooms, location, amenities such as an elevator or parking – will set us on the trail of who will choose our offer.
And so, for example – a studio apartment in the city center will appeal to a business traveler, while two rooms near a park, with a crib for the kids included – will appeal to a family. So let’s look at the potential of our apartment precisely from this angle, and see if highlighting values important to the target group in the ad will increase interest.
Write an effective ad for an apartment for rent and bet on the Virtual Tour
A well-constructed ad has tremendous sales power. However, it is not enough to list all the technical details and features. The recipient reading our offer should learn about the benefits of choosing this particular place.
That’s why it’s a good idea to make a list of assets and present them accordingly. If we offer a parking space, let it be “permanently available” or “private”, the balcony “with a view of the city” or “greenery”, the kitchen “fully equipped” and the bed “comfortable”. Using the right terms builds concrete ideas in the potential customer right from the start – that he won’t have to waste time looking for parking, will sleep on a comfortable mattress, and will drink coffee in the morning while admiring the city skyline.
You should also invest in good photos, videos and, before anything else, a Virtual Tour. Users of platforms like Booking or Airbnb primarily “buy with their eyes.” Using a professional interior photographer is therefore a must to complete the look of your ad.
Invest in home staging
To ensure that the photos have the right persuasive power, it is a good idea to carry out so-called home staging. We can do it ourselves or outsource it to a company that prepares properties for sale or rent. What is home staging based on? In short, on such selection of interior design elements, equipment and accessories, so that the apartment looks as favorable as possible. Cleanliness, the impression of spaciousness, consistency, fresh flowers, graphics on the walls, different light sources, fabrics – all this makes the apartment more attractive and is more likely to be chosen by guests.
Use automation; take advantage of new technologies – for example, noise monitoring
Automating processes will allow you to save time and even dispense with hiring an additional person or company to manage the property. Integration of booking calendars from all sales channels, systems for self-check-in of guests – all of this facilitates operations and offsets some costs – for example, travel to hand over keys.
Noise monitoring also deserves separate attention. It’s a discreet device that, via a mobile app, allows us to control whether our guests, contrary to the rules and regulations, have not held a party or social gathering in the apartment. How does this system translate into profitability? First of all, it reduces the risk of damage to the apartment, and thus costly renovations. Thanks to notifications, we can react in time and prevent possible damage.
Discover the power of recommendations
Good guest ratings under our ad are a magnet for attracting more customers. The recommendation technique is widely used in marketing – because it’s a proven fact that we trust more a place that has been visited many times and has a lot of stars. Therefore, encourage guests to leave positive reviews online. But before that – it is worth ensuring that they have no reason to complain. Cultured and efficient service, the highest standards of cleanliness, compliance of the ad with reality – these are key aspects that minimize the risk of negative comments.
Manage prices on a regular basis
A fixed price regardless of the season? That can discourage potential customers. If we want to increase the attractiveness of our offer, we should modify it and adjust it to what is happening in the market. After all, thanks to discounts, we are able to increase occupancy in dead periods. Special offers, such as those for May Day, the long weekend or holidays, also work well. The recipient then gains the feeling that he is enjoying a limited-time promotion that may not be repeated. This may perhaps make him decide to use our services sooner.
Profitability of an apartment for rent – what else is worth paying attention to?
Of course, our review is not exhaustive of all the ways to increase the profitability of an apartment for short-term rental. Other aspects worth looking at include, for example, tax issues, establishing a partnership with an apartment management company for rent, remodeling the property and separating another room. Each apartment requires an individual approach and analysis of which solutions will be most beneficial.