Set Your Price
You’ve got your home ready to rent, your business mindset is in place. How do you set your pricing? Two considerations: What will the market bear with respect to costs, and how will you compete in that market? Let’s start with some quick and easy research, because we are all about making this easy.
By looking at very similar properties in your area, you can get an idea of what others are charging and the vacancy rates for the upcoming weeks. Look out to a year and see how often the homes are being rented and if there is a seasonal swing in vacancies and pricing. You may see this reflected in the pricing and duration of the rentals. For example, in Florida, the high season and off season vary according to region. Coastal Florida rents well in summer, in winter, and as you would expect, central and northern Florida rent during the football season in the fall. California and Colorado have similar swings in price. Leaf Season in the fall! Festivals and special functions like conventions radically affect pricing so check out the chamber of commerce websites in addition to the other property calendars and get an ideas about pricing and availability.
PRICING: Supply and Demand
If there is a lot of open space on the calendar in the upcoming weeks, the price people are asking could be set too high for the number of available travelers. This is supply and demand at work, supply being the number of homes available and demand being the number of travelers needing lodging. You can always rent your home out to a 100% if you drop the price low enough. The question is does it cover your costs? If the price doesn’t even cover wear and tear on the home, why would you want to lose money? Some income is better than none so you’ll need to make that call. IF your price is set to high your home won’t rent – also zero income. So find the sweet spot for price. As mentioned the demand for travel will vary throughout the year. The price for a beach weekend on the Fourth of July weekend may be much different than middle of March. Obviously festivals and other special events will change the pricing dramatically. The most important thing is to know the costs per day to own and operate your home compared to your rental income and how those numbers work in the context or your overall objective. See Picking the Right Vacation Home and Run the Numbers! for more info on those topics.
Cost and Differentiators
Is your home comparable and what differentiates it from other similar properties? If you are in a complex with many similar properties then your differentiator may be a view, or a location next to the pool. These are things that you need to take advantage of in your listing. It may be that your differentiators are better furniture, art or bedding (thread count!) to compete in your market. You never know what might be important to your clients so figure out where to spend your money to get the most benefit for you and your clients. Remember your BRAND.
So how do you compete in sea (or mountain) of similar properties or even a condo market? It’s time to make some decisions on cost and benefit. Perhaps you have an outstanding outdoor area with a view that you can feature. Make it a focal point to generate sales. It is probably worth your time to upgrade the outdoor furniture, put in some nice potted plants, perhaps an umbrella or a retractable shade to extend the usability. So put yourself in your clients shoes and figure out what is important. It may be access to dining and restaurants so perhaps a street view of a thriving entertainment area. I had a mountain home that had beautiful views from a deck in the east and the west so you can bet I took advantage of that in my home profile page and headline. “View the sunrises and the sunsets from the Coffee Deck and the Wine Deck!” Nor Cal has great weather but it can be a bit chilly so I helped my clients visualize enjoying themselves in my home by creating the mindset of sitting in the sun and enjoying these features.
Selling Points Vary by Location AND by SEASON!
For a mountain chalet, ski in, ski out is a primary functionality and it can add significantly to your market pricing. In the summer, being close to restaurants, night life, or bike trails and hiking might be more important. These are sometimes premarket decisions but the point is take full advantage of the features you have available.
I’ve talked before about creating your brand and meshing that with the personality of your home. I’m an outdoor guy so I place great value on creating a “launching point” for adventures. Realize that for some, that adventure may be a great book on the beach or by the fireplace. The point is to visualize your client’s desires, figure out your target audience and then play to your home’s strengths when competing in a market. It’s likely that the same features that attracted you to the home will attract clients so trust your judgement and roll with it.