Here are the five tips to buying vacation rentals in St. George Utah and the surrounding areas.
Research your property
There's a couple of things, in particular, I want you to research. The first is the legality. Vacation Rentals in St. George, Utah are going to have different laws then vacation rentals in Ivins Utah even though they are minutes apart. This is somewhat new in a way, the idea that someone can put their house up for short term rentals, and a lot of these houses are in little residential neighborhoods and they're zoned as single-family homes. They don't even have laws in place for this kind of stuff. And then what they do is they change the law if there is none, or they put one in place that says you can't rent it for less than 30 days. So, you need to do your research on the legality, because that could be a big deal killer. You get this going, you have all these bookings set up, some as far as a year in advance and then boom, the government says you can't do it. So, make sure you do your research on that before buying any properties in Southern Utah that are not already in a designated vacation rental community.
You need to figure out if you're going to make money with the vacation rental you're looking to purchase. You need to look into what other properties are renting for in the same area as your property. Using HomeAway.com, or Airbnb. Look at some "competitors", see what they're running their nightly rates for, and then look at the calendar and see how booked up it is. I can also get you this information if the vacation rental is in a designated vacation rental community.
The main number you want to get to more than anything else is the gross. What is the gross revenue? I'm not talking about when they collect an extra 12.5% for taxes or a cleaning fee. I'm talking about the actual rental money that could go to you as the owner. What is the gross amount? And then you can start to look at, okay, if the gross amount is, let's say it's $45,000. Well then how much are my utilities going to be? Because that's extra. Typically your renters renting your units would not have to pay for utilities. You will need gas possibly, you got your electrical, you got your water, you might have your sewer and your trash. Then you're also potentially going to have cable and internet.
So, you've got utilities that you've got to factor in there. You may have things like lawn care, that's another one. If you have a pool, you of course have pool care. So you're going to need to look at, what is the revenue you're going to generate? I'm not including taxes or insurance, because you'd have that no matter what, but what kind of revenue you're going to generate, and is it significantly more than if you did a normal rental?
So this is something that you want to do. You want to do your research. Legality, and is it actually gonna make any money?
The Sweet Spot Property
That's the property that's going to give you the most beds at the least amount of cost, but also has all the amenities, right? So, if you're in Ivins Utah then you are going to want a view, and water park for the kids. If you're buying a vacation rental in St. George you might want to be closer to downtown.
So, trying to figure out what those amenities are, and that's simple, by going back to study what your competition is. What are they putting in their ads? Really study what they're offering to figure out and pick up on ideas on what those amenities need to be. And then sleep number is another one. So, maybe you've only got three bedrooms, but it's got an bonus room that you can put some bunk beds in. So the number of people it sleeps is a huge determining factor on how much more money you can get. So the sweet spot property has the amenities and has the beds, and then it has to have the ability to have, I'm going to call it a WOW factor.
So, the wow factor is the idea, and you can fabricate some of this by how you furnish the property and renovate it. But that way when people go there, they just love it!
Renovate and Furnish the Vacation Rental
Now, you may not have to renovate very much, but usually there are certain things you may need to accomplish to make it far more traveler-friendly. But this is where you really can win big. If you make this place just wonderful. So, you've got leather couches and you've got great things on the wall. You make it feel homey, you do all the little things. You've got all the pots and the pans, and everything you need so that, as a traveler, you feel like you're at home. You can make up for some lack of amenities that a property doesn't have. Maybe it isn't all that close to the red mountains in Ivins, or next to Sand Hollow Reservoir, as much as it should be. But if you can make it wonderful when people walked in, they're just like, "Wow, this place is great, you got plenty of towels." All those little things, they're not that expensive, but they make a huge difference.
Now, this is by far the biggest separator from going to a normal traditional investing arrangement versus short term rentals or vacation rentals. You're going to have to pay to get it furnished, and this can be $10,000, $15,000 $20,000. So, this is more difficult for those that are cash-challenged, because you can't usually borrow money on furnishing unless you get a credit card, and those interest rates are too high. You have to have the cash to do it. But you have to look at the math that we started with on step one. If it's going to make enough money, then the furnishings are negligible.
So, make it wonderful, make it a home and it will have huge impact on your star ratings, which makes a big deal over time, but also it makes a huge impact on the ability to get these people to come back, because ideally, you start building a brand if you will, where people want to stay in your properties because they're just wonderful, because they have all of the little things that most people don't have.
And this is where so many of the people that have been in the short term rental business for a little bit of time, a couple of years now, this is where they always skip. They always get cheap on the furnishings. Don't do that. This is where you can win and win big.
Get a Booking Agent
So, with a short term rental, especially on platforms like HomeAway, Airbnb, VRBO, TripAdvisor, they require you to respond in 24 hours or less. Well that's not freedom, right? At least with a traditional rental, you just have to pick up your rent each month and maybe pick up a phone call or two, or you hire a property manager to do it. Well, a booking agent is kind of like a property manager, only they're more suited for this particular industry. So they're the ones that are handling those inquiries that are coming in usually on a daily basis.
Now, perhaps the biggest one out there is EvolveVacationRental.com. Now, what's so wonderful about a group like this is not just that they're going to pick up the phones. They're also going to manage your listings. If you don't know how to set up an Airbnb or a VRBO or HomeAway listing account very well, then you're going to be in trouble, because that's where all the bookings come from. So you've got to make that look good. These people have already figured that out and they'll manage it for you.
And this is the other big thing that they're going to do. This one's huge. Dynamic pricing. There are tools out there now that the hotel industry has been using for eons, where they will dynamically price the unit based on time of year, based on if it's a peak week or not because of some event coming to town. Also based on what the hotels are charging, what the other competition is like out there. It's amazing. Now they have already built into what they're doing.
There is software called UseWheelhouse.com. And let me tell you, pricing, this is going to make or break you in this game. So often, you're going to price it too low, and once that little slot of time is booked, you don't get it back. So if you have shortchanged yourself, you're losing money, you're leaving money on the table. So UseWheelhouse has been a game changer for for vacation rental owners, because it dynamically prices.
I can recommend to you, if you're first getting started, this might be a lot easier way to do it then manually setting prices on your St. George Utah vacation rentals.
Proper Book Keeping
Bookkeeping, this is above and beyond the normal bookkeeping of a property management system. You now have to deal with what's called occupancy taxes. This is what hotels and motels have been dealing with for as long as it's been in place. 12.5% to 13% is normal. Now, this gets paid above and beyond what you get paid. You can charge this to the guest, so it's not like it's going to be an expense to you, but you do have to pay the government what you collect.
There's a service called My Lodge Tax that will do this bookkeeping for you. I already have a bookkeeper in place doing all this, but one of the most frustrating things about setting up occupancy taxes is setting up the licenses and getting all these things in place, these different government organizations to actually get this done. This can take a while. We're talking 10 hours to get it set up, just so you can pay the government. So MyLodgeTax.com will do this for you.
All right, so those are your five tips to starting a vacation rental business. Research, make sure you're picking up properties that actually can make the money we're looking at, as well as being legal. Number two, the sweet spot properties being with the most beds you can get and also have those amenities that those travelers are looking for. Number three, renovate and also furnish. The better you furnished, the better off you're going to be. Number four, hire a booking agent. Now, I also failed to mention, not only do they help with the listings and they can do the dynamic pricing, but they also can help coordinate with the cleaning and the maintenance. And then number five, bookkeeping. It's important you pay your taxes as well.
All right. Now this, obviously, is a little bit more complicated than the normal traditional rental, but it can make more money and there are a couple of other benefits I want to share with you real quick before we wrap up. Number one is that you don't have to evict anyone because they are travelers. They're coming in, they're coming out. It's fantastic. Evictions are non-existent. In the world of normal traditional rentals, evictions are very common, and it's frustrating because the laws are set up mostly to protect tenants, so landlords typically gets screwed.
The next thing is you get your money upfront. You're not chasing tenants for rent, they're paying you sometimes upwards of a year in advance. You're always getting your rental money. So I love this form of investing, but you do have to pick the right properties that are in a sweet spot, and you have to have done your research right, and all these things have to be in place. But when you do that, this can be a magical formula. You can make a lot more money for the same property you currently have that you might be doing a traditional rental on.
Now that you have read my tips here are vacations rentals for sale here in Southern Utah. My personal favorite vacation rentals are in Paradise Village At Zion located in Santa Clara Utah, which is located minutes from St. George Utah.