What process do you use to price your vacation rental? Do you feel overwhelmed when deciding on a price? Or maybe you don’t worry too much about the specifics. Correctly pricing your vacation rental is an important step in successfully renting your property and attracting high-quality, paying guests.
There are two pricing models for vacation rentals:
- by the night
- by the month
Whether you can rent your home by the night or by the month is often dictated by the city that the vacation rental is located within and the HOA (if applicable) by which it is governed. For vacation rentals that are rented by the night, check out my blog about pricing. For vacation rentals that have a 30-night minimum stay, this blog describes my process for pricing a vacation rental property that rents for 30 nights or more.
First Step
I conduct a Comparative Market Analysis (CMA) via MLS to identify rental properties with similar criteria to the vacation rental in question. This is where being a licensed real estate agent comes in handy!
The criteria typically include:
- Bedroom count
- Bathroom count
- Square footage
- Location (distance to beach, walkability to restaurants and shops)
- Special features, if applicable (like a rooftop deck or ocean view)
As the Property Manager, I was trying to determine a monthly rate for a vacation rental, “Surf and Sea Beach House”, that had a 30-night minimum. The home has 4-bedrooms, 2.5 baths, 2,000 square feet, and is in walking distance to the beach and restaurants. Utilizing this criterion, I conducted a CMA via MLS to understand the current market rate for similar properties. In the map below, the Surf and Sea Beach House home is indicated in purple, the homes that have been rented are indicated in red, and the green dots indicate properties available for rent.
The MLS CMA revealed that the average monthly rate was $7,150/month for properties already leased and $7,000/month for properties available for lease. The leases for these rental properties are typically for 6- or 12-months—they are not vacation rentals. However, this data provides a starting place for pricing your vacation rental. It can also help you determine if it is more profitable to lease your property as a long-term rental to one party for a longer period of time or as a vacation rental to many parties who will be typically checking in and out every 1-2 months.
Second Step
Check out the competition! I searched for rentals on Airbnb and VRBO with similar criteria as the Surf and Sea Beach House and found one match on Airbnb and one match on VRBO. The Airbnb property rented by the night and the total rental fee for the month was $11,990. However, the hosts offered a 50% discount for a month-long stay, so the actual total (before taxes, fees, etc.) was $6,600/month. The VRBO rental cost $5,790/month and the hosts advertised the vacation rental as being “discounted”.
Given my comparison on MLS, Airbnb, and VRBO of similar rentals, I felt confident this vacation rental could garner a monthly rate of $7,500. I also knew that it would take a little bit of time for it to get noticed on Airbnb and VRBO where I listed it for rent, but that given the location of the property, it would become quite profitable once we entered into the high season of summer.
Want to know how much this home ended up making in per month?
- December 2021: $6,750
- January 2022: No guests
- February 2022: No guests
- March 2022: $10,070
- April 2022: $10,150
- May 2022: $10,150
- June 2022: $9,800
- July 2022: $10,500
As a property manager, it is my job to create customized strategic pricing for your home so you receive maximum rental proceeds. How?
I conduct ongoing comparative market analysis of rental pricing in the area, understand the high seasons for rentals, and keep up with pricing trends and increases in demand. Using this information, I adjust pricing accordingly, which will ultimately get your vacation rental booked for top dollar.
Tips:
- Do not offer a discount for 30-night stay if your minimum stay is 30-nights. You will be prompted to do so when you list your vacation rental on Airbnb and VRBO. Just say no!
- Do not list your property as being “discounted” nor list it below market rate! Correctly priced vacation rentals will attract high-quality, paying guests.
