By The Hospitable Team
“If you want to grow a professional hospitality business, whether it’s 100 units or five units, you have to get clear on the vision and dial in systems that are repeatable. That’s how you start working on your business versus in it.”
So says Eric D. Moeller, co-founder and CEO of leading short-term rental educational company Overnight Success, on what short-term rental operators must do when looking to invest.
And Eric should know.
As well as Overnight Success, he is also the co-founder and CEO of the online host course Short-Term Rental Profit Academy, the creator of the STR Legends X Accelerator, which helps hosts turn their side-hustle into a successful brand; and co-founder, with Jasper Ribbers, of the STR Legends community, the industry’s only high-end, virtual mastermind designed for established 7-figure STR operators looking to double their profit.
When you’re just starting, investing in property can be a daunting prospect. That’s why we asked Eric for his top tips and gems of advice on how to invest successfully, and grow your rental business sustainably.
Before you spend a cent, check out Eric’s 6 essential things you must consider before investing in short-term rental properties—whether you’re just getting started, or looking to build on your existing portfolio with maximum success.
6 essential considerations for investing in short-term rentals
Tip 1: Stick to areas where short-term rentals are legal
The first, fundamental element to remember is that you must invest in a state, city or country where STRs are legal, and you can run a functioning, above-board business.
It might sound obvious, but it’s surprising how many cities and towns have stringent regulations and Airbnb restrictions (or outright bans) on short-term rentals, or how many days per year they can operate.
For example, London has a 90-day limit; Paris requires you to declare your property to the city if you’re renting it out for more than four months a year, and register it with the local town hall; while San Francisco also requires city registration, alongside a host of other restrictions.
And while some companies may suggest they can “get around” these limits, and ensure a successful STR return anywhere, Eric is unequivocal about this.
He says: “Stay away from just buying anywhere. Don’t invest in any property unless you can run it legally.”
Tip 2: Ensure your rental is ‘not the destination…but around the destination’
Ok, so you’ve checked that your business will be legal, but now, let’s make sure people actually want to go there!
Choosing to invest in properties that are already in the best cities for Airbnb investment—or are truly up-and-coming—can help you to attract more good-quality guests, market your STRs more easily, and take advantage of the existing attractions, events, and infrastructure too.
Eric calls this “making sure you’re around the destination, not the destination”.
“If you’re an investor buying these properties, you want to be in markets that support it,” he says. “Our industry is vulnerable.”
Tip 3: Don’t rely solely on STR income
For some properties, it can actually make savvy business sense to allow your property to be used in different ways, depending on demand and market conditions.
This might mean you enable mid-term or long-term bookings, or use your property for Airbnb Experiences or classes, such as cookery demos or art workshops.
You could even offer it up to local people for even more creative reasons, such as a photography studio or a yoga space (always check your insurance terms to be clear you’re covered for such events).
“One of the main things to remember about investing is making sure that it’s something that you sustain, and that you have that backup plan in case short-term rentals are removed from you,” explains Eric.
Tip 4: Get your financials right
Your STR business is just that: A business. That means that the returns and cash flow are paramount.
The exact figures will depend on a million variables from location, type of property, size of your portfolio, and local demand—but Eric suggests that a good rule of thumb is to price your rental for at least twice what you would get renting long-term, and to ensure it’s consistent and competitive with what else is available in your area.
You want to make sure you have good cash flow, but also “making decisions on the equity that we’re adding to the property”, says Eric.
“The best way of thinking about it is that it comes down to what the business model is,” he says. “Are we focused on cash flow? Are we focused on long-term equity or both?”
Tip 5: Stay true to your vision
Yes, you’re running a business and your financials are key, but staying true to your vision is also crucial when scaling.
Get back to basics here, and ensure your portfolio aligns with why you started your business in the first place. Ask yourself, what kind of business do you want to run? What’s important to you? Do the properties you’re investing in allow you to do that?
If you cannot make a success of one rental, it’s unlikely that adding more properties to your portfolio will help—in fact, it will likely hurt your business.
Focus on your vision and purpose in 1-2 properties first, and only expand once you’re totally solid on what that means and what works for you and your guests.
“Always start with your vision,” says Eric. “Get clear on the type of asset you’re buying. What is it that you’re truly trying to build? Who do you want to serve? It does not make sense to go out and buy another property if your current property is a mess.
“We want to provide world-class experiences for our guests, right? So only when you can maintain those across multiple properties, can you go out and buy another one. Vision is super-important for that question of scaling.
“You can have a hospitality brand with one or two units or 100, but it really comes down to your identity, who you’re serving, why you’re serving them, and how you’re serving them.”
Tip 6: Automate, automate, automate
Eric is clear that it’s fundamental to have excellent systems in place before scaling.
“It’s about what your team and your systems can maintain,” he says. “You’ve got to have your exact process dialed in. The worst thing we can do is put energy into buying another property and not have the systems in place to maintain the experience that we want to provide.”
And the more properties you have, the more processes you will need, and the more automation you’ll require, because doing everything manually just isn’t scalable.
“You’ve gotta build systems,” Eric says. “A system is repeatable. It’s a very specific process that you ‘put down on paper’, that you can fall back on and rely on, rather than a host keeping everything in their head. Lack of systems can cause you to micromanage.”
Even hosts of just 1-2 properties can easily get burned out and resentful without proper automation in place that helps them take care of the admin, even while they sleep.
Platforms such as Hospitable.com enable you to automate and scale without burnout because it helps you set up repeatable, reliable systems that work without you, so you can be an excellent host across multiple properties, even when you’re not available.
Have conversations with your guests even when you sleep.
For example, Hospitable.com can send automatic guest messaging replies that use AI to sound like a real human (so you can answer queries super-fast, even when you’re asleep!), and avoid accidental reservation clashes with its automatic Channel manager and double booking protection.
Features such as the task manager, a centralized inbox, and integrations with guest screening and smart lock tools also mean you can maintain control of your business and coordinate it remotely, whether you’re managing 2 properties or 200.
As Eric puts it: “We believe systems equal freedom.”
The bottom line: Scaling means systems
It’s clear; once you know where and how to start investing, establishing solid, repeatable systems is a major part of scaling with ease.
Putting processes in place using platforms such as Hospitable.com can make this a breeze, no matter how many properties you have, so the admin happens in the background without you, enhancing efficiency and reducing manual tasks, stress, and burnout.
Getting the admin and processes right in one property and scaling them to multiple investments means you can scale successfully without adding hours of work to your to-do list.
Ultimately, investing is about enjoying the industry, and constantly approaching your business with agility and curiosity, so you can work “on it” rather than “in it”, Eric says.
“Systems are a living organism, always growing,” he says. “Keep building and fine-tuning, and build your business in a way that doesn’t rely on you. Rely on your systems and your team. That’s how you can go out and scale, in the best way.”
All your STR business in one convenient window
Start now with a 14-day free trial.
Scale Your STR Business: 3 Growth Strategies from the Million Dollar Host
You’re determined to grow your vacation rental management business, but you’re faced with a common problem. Caught up in the day-to-day tasks, you don’t have time to plan for the future or focus on acquiring new properties. We sat down for a chat with Julie George, the “Million Dollar Host,” about the best ways to grow a property business.
Vacation Rental Investment: Is It Worth It?
Thinking about real estate investment to make money outside your 9-to-5 job? Buying a vacation rental home might be the best way to enter the real estate business and become a property investor.
9 Simple Ways to Scale-up your Airbnb Operations, from Check-in to Review
The more bookings you get, the less free time you have.
You’re stuck in the old ‘time-for-money’ paradigm…
…and it sucks.
Luckily, however, there are ways (many in fact) that you can run a successful Airbnb business and even scale it up to multiple listings in a way that doesn’t impact your free time.