In October 2022, Arrived added vacation rentals as an asset class on the platform. We have since launched numerous properties in the category, including The Oasis and The Hammock. Investors often ask how we select property management partners, prioritize vacation rental markets, source properties, and prepare them for booking. In this article, we will go through the process step by step.
Selecting a Market
When we select a market, we rely heavily on data. Thanks to the incredible growth of platforms like Airbnb and VRBO, available data on vacation rental markets is vaster than ever before. One of our favorite tools for identifying potential markets is Airdna, the leading platform for short-term rental intelligence.
Airdna tracks over 10 million properties on Airbnb and VRBO in more than 120,000 markets worldwide while also collecting data from over 1 million of its partner properties. Airdna assigns a Market Grade to each market based on rental demand, revenue growth, seasonality, regulation, and investability.
On our property pages, you will see that we include the Airdna market grades, such as the A+ rating of the Nashville market when we launched The Oasis:
After creating a list of top markets, our team then digs deeper. Here are a couple of crucial steps in our process:
- Obtain available revenue figures to see what markets are yielding the highest returns
- Layer in some specs on a market’s long-term potential and sustainability, including driveability and vacation growth.
- Deep-dive on regulations, Non-Owner Occupied permits, and gauge the viability for short-term rentals in the market.
- Ask – Do we have or can we find a good property manager in the market that we could work with long-term?
Finding Our Partner
If all the boxes based on data are checked, the last step in officially deciding to enter a vacation rental market is finding a local property manager to partner with. The primary criterion we use to select a partner includes:
- Compliance with All Requirements: We ensure adherence to all insurance, legal, and accounting standards established by our team.
- Extensive Market Experience: The partner must demonstrate a wealth of experience, a long-standing presence in the chosen market, and a deep understanding of what it takes for a property to excel.
- Outstanding Guest Service: The PM maintains a stellar reputation for customer responsiveness and consistently stellar reviews.
- Superhost/Premiere Partner Status: We prioritize property managers with titles such as Airbnb Superhost, VRBO Premier Partner, and Marriot Bonvoy distinctions.
- Competitive Pricing: PM must be willing to offer competitive rates, especially with the potential for scale.
Finding the right partner may take time, but it’s a crucial part of the process we must get right to enter and grow our presence in a highly competitive vacation rental market.
Selecting a Property
Once we have our market and partner selected, the last step to officially enter the market is finding our first property. We rely heavily on our partner’s expertise and in-market agents to send us leads on properties with the look, feel, and potential to perform as vacation rentals. Our team also uses various sources, most notably the MLS and pre-market lists, to vet properties based on aesthetic, condition, and revenue potential, which we then confirm with our PM before moving forward.
Once we have our shortlist of properties, our team creates and reviews revenue projections and other crucial factors to ensure the property meets our requirements.
If every box gets checked, we submit an offer for the property.
Preparing the Property
We take all necessary steps to complete the transaction if our offer is accepted. After this, two things happen:
- Our team, PM, and design partners get together to select a theme that will perform best in the selected market. While we rely heavily on our PM and design partners, our in-house team provides significant input on the extent to which we can ‘level-up’ the property to ensure it outperforms the comps.
- We list the property on our platform for our investors – you can browse available properties and sign up to receive emails when vacation rentals go live.
When designs are approved, we give the green light to our PM partner to coordinate the renovation. Having boots on the ground is crucial, and we ensure that our partner does everything in accordance with our best practices for the best interest of all parties.
Listing the Property
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The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. The views reflected in the commentary are subject to change at any time without notice. View Arrived’s disclaimers .