Starting a Vacation Rental Business: 5 Must-Know Tips for the Best Success
The Vacation rental industry has increased by about 10% each year and stands to grow to about $20 billion by 2025. Vacation rentals by owners are becoming wildly popular across the globe, and it’s easy to sign up and start making money. Starting a vacation rental business can be a great way to make some extra cash, but there are some important things to know before you dive in. Poor planning and running a business without a registered company can waste all your profits and put your personal assets at risk. If you’re exploring ways to make money with a short-term rental, read our guide to avoid pitfalls and protect yourself in the event of a lawsuit.
This guide covers the top 5 tips and resources to launch a successful Vrbo business. Since 2001, we have formed tens of thousands of companies for entrepreneurs just like you. There are a lot of options when it comes to forming a company. But if you want 5-star service and hassle-free solutions, MyCompanyWorks offers comprehensive startup packages to help you start your company fast. Find out why thousands of startups choose MyCompanyWorks and find everything you need to start your business, all in one place.
The Vrbo: Vacation Rental By Owner
People everywhere are converting bedrooms, garages, even treehouses, and giant seashell unicorns into short-term rentals. The price range – from just under $100 to over $10k a night varies just as much as the style of each unique vacation spot. Earnings will vary by location, occupancy, and property size, but the average Vrbo host makes around $33k each year. You can estimate your earnings using Vrbo’s estimator tool.
Premiere hosts increase profits by offering unique amenities and providing stellar hospitality. Many vacationers look for listings that include a stocked full kitchen, air conditioning, and room for their pets. Lodgify offers a free PDF download list of the most popular vacation rental amenities. Check out some of the top Vrbo spots in the US to get an idea of what makes a great vacation rental.
Why Vrbo Owners Form LLCs
Starting a vacation rental business is possible without a registered company. But according to the IRS, you’re in business as a Sole Proprietor the minute you collect payment for a booking. Running a Vrbo without a Limited Liability Company (LLC) or Corporation can put all your personal assets at risk if a guest sues you.
Top Reasons to Start an LLC for your Vacation Rental(s)
- Limited liability companies are separate entities from their owners
- LLCs are easier to manage than other business types
- Pass-through taxation reduces paperwork and tax liability
You can get an instant quote and form a Vrbo LLC online with just a few clicks and details about your business.
5 Tips for Starting a Vacation Rental Business
1. Research Your Market
Searching the Vrbo website and reading online reviews will give you a good idea of what other hosts do to make money. You’ll want to study booking rates for each season, amenities, and hospitality offerings. Forums on Reddit, Facebook, and other social platforms are also helpful short-term rental owner resources. Researching your market will paint the picture of what’s needed to create a profitable rental space.
TIP: Your landlord or Homeowners Association may have restrictions on vacation rentals. Make sure to check with them to make sure you can rent
2. Plan Your Rental Strategy
Based on market research and your availability, decide on the best rental and blackout dates. You’ll have to enter the available dates in your Vrbo listing. Ask yourself questions like, are there times during the year when you’re away from home? Will you rent all year, or just during peak seasons? Will your Vrbo be available for weekends only, or for extended stays? Again, you can check out other listings in your area to see how other vacation rental owners set up availability.
Veteran hosts say that listing your space on a variety of platforms increases exposure and revenue. Compare rates, fees, etc. with Airbnb, Booking.com, and other vacation rental listing sites to find your best options.
3. Form an LLC for Your Vacation Rental Business
When you list your property with Vrbo, you can get paid as a business to separate and protect your personal assets. If you’re ever sued by guests, they can only go after business assets to satisfy a judgment. So for instance, you personally own your vacation property, but all your rental sales are paid to your LLC. Because the LLC doesn’t own your property, the property is excluded from any legal payouts related to your business.
4. Set up Business Accounts, Licenses, and Insurance
In order to separate business and personal finances, you’ll need to open a bank account for your Vrbo business. Your local bank may offer business solutions, or you can work with one of our recommended banking providers to get started.
TIP: When you form your company with MyCompanyWorks, you’ll get immediate access to affordable banking solutions in your free account dashboard (My Account Dashboard).
US businesses are required to be licensed in their state. You may also have to register at the local and/or county levels. Contact local and state business authorities to find out which licenses and permits are required to run a short-term rental in your state. You can save research time and money when you order a business license package.
Insurance requirements also vary by state. Most businesses carry policies for general liability, property, or a combined liability and property policy, called a Business Owners’ policy. One of the biggest mistakes many vacation rental owners make is settling for cheap policies that don’t offer enough coverage. Insurance and other business expenses are tax-deductible, so you’re better off spending the money on a good policy that offers as much coverage as you can afford. You can take advantage of free quotes and special pricing with one of our business insurance partners.
5. List and Market Your Short-term Rental
List your property on Vrbo
The simple 3-step process tells how much you can earn and gets your listing published to Vrbo and the Expedia Group of travel sites. It’s free to list, and commissions and processing fees are deducted after your guest has paid. Each booking is subject to about 8% in commissions and fees.
TIP: Make sure to register with Vrbo using your company’s tax ID number and other details. If you have already registered with your personal information, you can add your company details by editing your host profile.
Market your property with a custom domain name, website, and email address
These days, a website is like a phone book ad. Around 70% of all consumers search for websites before deciding where to spend their money. Travelers want to see photos, reviews, amenities, things to do in the area, etc. Your Vrbo listing should include all of these items, but you can get the word out about your rental pad with social media accounts and an active website. If you want to save some time and money, we offer custom web packages that are easy to launch. Check out options and get more information here.
Vacation Rental Business Resources
Protect Vacation Rentals with Multiple Entities | Simple Accounting Software | Get Help with Rental Taxes
Help for Vrbo Hosts
There are loads of free forums and resources to help you build the best possible Vrbo business. Find tips and guidance for everything from writing your rental agreement to managing a problem gues. Here are just a few recommended resources:
- Short Term Rental University on Facebook
- Find technology to manage your vacation rentals with Tech4Rentals
- Learn how to market your Vrbo with Marketing Vacation Rentals – Mastermind for Success
A quick Google search for vacation rental forums or vacation rental podcasts will help you find other valuable resources.
Start a Vrbo Business with MyCompanyWorks
If you’re ready to become a Vrbo host, you can make some considerable cash with your extra space. You can sign with Vrbo in just 3 steps. But without a registered company, all your personal assets can be wiped out in a legal dispute. The best way to protect your assets is to form a Limited Liability Company, or LLC for short.
We can help you register your business online and you can find everything needed to manage your business on our blog and FAQ page. Our latest comparison is also a helpful tool to show you what’s included and why so many startups choose MyCompanyWorks. Most orders are processed within one business day, and you can track progress in your free account dashboard. Contact our friendly support team for more information.
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