As the owner of a rental property, you’re always on the lookout for new ways to boost revenue and maximize your investment. Not only does this help ensure you’re maximizing your profits but it also opens you up to more opportunities through additional income. The best way to increase your revenue is through a comprehensive strategy that matches up with your goals and your market. Increasing the value of your vacation property through home improvement, combined with proper financial management, and dynamic pricing strategies can help you to improve your profit margin and increase revenue.
Home Improvements That Increase Rental Revenue
Home improvement projects can be a great way to increase the revenue from your vacation rental property. Primarily, increasing the value of your property means that you can charge higher rental prices. However, home improvements also lead to better reviews, another major factor in a lucrative vacation rental. Home improvements also give you an opportunity to upload new photos of your property, which are better for advertising and can be the difference between someone booking your property or not.
Here are a few upgrades to consider:
- A fresh coat of paint: a bright new coat of paint can give the sense that your space is modern and updated. A few carefully selected pieces of art and decorations can further amplify this sense.
- Amenities: anything that will give your guests an “added touch” that won’t go unnoticed. Good WiFi, fun games to play, a good book or DVD collection, etc. You can also include location-specific amenities, such as beach chairs if you’re near the ocean, or a bike if you’re in the city.
- Good kitchen utensils: your guests will appreciate a kitchen that is ready for use. This means having a good coffee machine, pots, pans, knives, and a pantry fully stocked with all of the staples. You don’t need to provide your guests with the staples to make a gourmet meal, but the basics will go a long way.
- An updated bathroom: replacing the fixtures in your bathroom to give a “new” feeling will give an added sense of luxury to your property. Options include updating the shower-head, faucet, backsplash, light fixtures, and even something as simple as new, soft towels.
Implementing a Dynamic Pricing Strategy
Maximizing the revenue from your vacation rental property is all about finding the right balance between occupancy and your pricing model. Lower prices may lead to more occupancy, but higher prices will lead to a greater profit margin. In order to determine a good value for your vacation rental, you need to do market research to get an idea of what other properties in your area are going for. You want to be competitive with these other rentals so that your vacation property looks like a bargain, but you don’t want to be so cheap that you’re leaving money on the table.
One of the best ways to stay competitive is with a flexible pricing model—that way you can make adjustments to your price at any time based on factors such as occupancy and season. Perfect Price basically does all of the work for you. As a dynamic pricing solution built for vacation rentals, our software uses artificial intelligence to analyze the market and recommend a price for you. It also makes it simple for you to manage your calendar, make price adjustments on the fly, and monitor your competitors. By staying on top of your pricing model and rental strategy, you’ll have a much better opportunity to increase revenue from your rental property.
Tracking Revenue With Good Financial Management
In order to increase the revenue from your rental property, you actually need to do a good job of tracking it. How else will you be able to compare profit margins and revenue from past months? One way that you can monitor your revenue is by creating a spreadsheet that details dates of stay, booking price, profit margin, etc. You may also consider implementing a Property Management System (PMS), many have accounting features built-in, which even as a single property owner can save a huge amount of time and anguish.
Another simple way to track finances is to create a separate checking account solely for your rental income. By keeping this money separate from your other accounts, you can easily monitor how much you have made over a given period of time and review past transactions. If you choose to open up a separate account, consider an account without maintenance fees. This way you aren’t losing any money as you accumulate it.
One thing to keep in mind as you're tracking revenue and profit margins is the cost of upkeep to your rental property. If you decide to make home improvements that will help raise the value of your property, it’s important that you budget for them. The only way that you’ll notice a difference in your revenue is if you’re comparing your profits with your expenditures. For this reason, it is important to choose projects that will recuperate their money over time.
Bonus: Consider choosing a professional property manager to rent your property, or augment your own work with a virtual assistant. Saving time and incorporating a professional into your business is often worth the cost and can lead to higher returns.
With the right strategy and smart financial management, increasing revenue from your rental property is simple and attainable.