How to Generate More ROI From Your Luxury Home Rental Properties
It’s highly likely that you’ve seen the average figures for a return on a luxury vacation rental property and turned away from the idea. You may have even heard of horror stories from colleagues or friends from bad experiences or money and time they lost on managing them.
The truth is that luxury vacation rentals can be some of the most profitable kinds of real estate investment for minimal costs, but they have to be appropriately managed.
To truly earn that 6-figure income, you need to re-frame your view and understand each part of the system and what you need to prioritize.
How Luxury Vacation Rental Properties Can Actually Make You Money and out
| KEEP MORE OF WHAT YOU EARN
First off, you need to understand that vacation rental properties are some of the best investments for tax liabilities. They have many valuable tax deductions available, which can improve your profit margin.
Most ordinary operations of simply running your vacation home can be written off as tax deductions. These include everything from cleaning costs to lawn and pool maintenance and even the depreciation of furniture and appliances.
Depending on the home (and location), there may be opportunities to take advantage of “green” tax credits if the property gets power from solar energy or has other environmentally friendly features.
Make sure to talk to an accountant to see if you’re paying more on taxes than you could be.
| QUALITY OVER QUANTITY
Diversification of your portfolio will always be good, but when it comes to luxury vacation rental properties, starting with just one home that’s ideally located and built with quality can serve you perfectly well. It's possible to get the same profits (or more) as five average vacation rentals as just one luxury vacation rental.
Because it’s a luxury property, you’re able to charge more to balance out ongoing costs, and your overall costs will be much less significant.
| THE INCOME IS MORE STABLE THAN YOU MAY THINK
You may think global events (like a pandemic) would cause the vacation rental market to suffer, and you’d be right since most people will not be travelling as much.
However, the luxury vacation rental market isn’t the same. Wealthy travellers still move about throughout the year, generally regardless of global or local crises. In fact, in some cases, the market can be even better during specific times of crisis.
Other factors like annual regional or local events can also positively influence profits during more traditional low periods.
Even more so than the Okanagan, Kelowna often has a stable market because there are so many things to do around the year. Spring and summer offer wine tastings, boat rides, swimming, and other water-sports, fall offers local farms to visit and camping locations to go, and winter has Big White - a premier ski resort that offers a wide selection of winter activities.
| Why You’re Not Getting Results From Your Marketing
After spending money on luxurious furniture, it's understandable that you want to protect it as much as possible and keep your property exactly as you left it. However, when it comes to luxury rental properties, this kind of homeowners-first mindset is what’s holding you back.
Since there is often little competition for luxury vacation rentals, having a guest-centric approach is not only a good idea; it can be what keeps guests coming back.
In terms of your marketing as a whole, it’s important not to think of it as a one-off piece of your management system. Your marketing needs to be holistic and integrated with all the moving parts of your management. This includes both your distribution and management strategy.
Speaking of marketing, luxury vacation rental properties shouldn’t be marketed as you would a regular Airbnb. If you truly want to improve the ROI on your luxury investment, language and designs need to elevate your property and draw in people of higher stature who can afford to rent and are interested in staying.
If this sounds like a lot of work to get everything working smoothly, that’s because it is. Getting a luxury property to produce consistent profits on your own can be a full-time job in and of itself, but it doesn’t have to be.
Teams of professionals (like us) can handle all aspects of managing your property to get the best return on your investment. In fact, we handle everything from ensuring guests have clean towels to marketing and managing your bookings and everything in between.
Overall, luxury vacation rental properties can be immensely profitable, but you need to have the right strategies, marketing, and management systems in place.
Need help managing your luxury vacation rental?
Contact us today to get in touch with our experienced team!
