This is Why Small Cities Are Best for a Short-Term Rental Business

This is Why Small Cities Are Best for a Short-Term Rental Business

small cities short term rental business

It’s common knowledge that you need to be in a large city to run a successful short-term rental business, right?

Wrong.

It’s the smaller cities that have the most opportunities for Airbnb hosts. This is especially true for places with decent property prices (if you’re purchasing property) and large tourist pools.

In the beginning, it made sense for hosts to start off in large metropolitan areas. There weren’t a lot of players in the field, and no one knew how successful a short-term rental business could be. 

As more and more people realized the potential of short-term rentals, larger cities became overly saturated. Now, many hosts face stiff competition and strict regulations. This means more stress and work for lower prices.

To avoid this, hosts can consider managing units remotely or entering smaller cities. If you want to scale your vacation rental business and you want to look for your next property, consider a small city!

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Benefits of Small Cities

Because very few hosts operate in small cities, there’s often an unmet need in the market. Guests may default to hotels simply because there aren’t many alternatives. This allows you to charge higher rates since there’s more demand than supply.

Other benefits include less competition and regulations. This makes it easier for you to run your short-term rental business.

Challenges of Small Cities

It goes without saying that most places have some degree of an on and off-season. This is most pronounced in smaller towns, where the off-season (i.e. winter) can be a complete ghost town. You might have 6 months of solid rentals and 6 months of little to no rentals.

short-term rental business

To address this challenge, you might have to switch up your business model. A common strategy is offering 6-month leases during the off-season. This doesn’t apply to any downtown units. Business travelers will still come down, regardless of season. But, if you have units outside the city, this can be a viable strategy. While you won’t be making as much money, you’ll be ensuring your property isn’t completely vacant during the off-season.

Of course, if no one is booking for a 5-6 month period, then you can offer monthly rates. You probably still won’t be able to fill 100% of your units, but it’s better than filling none of them.

The people who sign these 6-month leases tend to be students, divorcees, and real estate agents. You can find these long-term guests through Airbnb, Craigslist, and Realty.com.

You can also advertise on local Facebook groups. Most cities have a Facebook group of people looking for long-term rentals in that city.

While you don’t need to be on every single booking platform, you should be on the ones that are popular in your market. These vary by market and location.

For instance, in Traverse City, MI, the two big platforms are Airbnb and HomeAway. If you’re already on those platforms and decide to try Booking.com, it’s not going to hurt you. But, it's also not going to significantly help you. If you’re only on Airbnb, you can still do well, but you’re going to be missing out on a huge market if you don’t use HomeAway.

Advice to Short-Term Rental Business Operators in Small Cities

While it might sound counterintuitive to focus on small cities, Christian Gissing has found it to be the reason behind his success. Here are some of his top tips for those of you looking to get into this space.

Find an Amazing Photographer

The listing photos are the most important aspect of your listing. Sure, it’s great to have amazing interior design, but it’s useless if you can’t showcase that in your photos. After all, people won’t even enter your home until after they’ve viewed your listing photos and decided to book.

small cities short-term rental business

If you ever have trouble coming up with inspiration, you can look at other 5-star listings that stand out.

Be Charismatic in Your Writing

Your listing description should be able to convince people to stay at your property. This means more than just listing out all the features you offer. You should persuade your guests on a logical and emotional level.

Nine times out of ten, you’re going to be the best writer. You’re the most passionate about it because it’s your own property. But if you have your doubts, go out and find someone to write your listing description.

Use Dynamic Pricing

A lot of hosts set a single price and stick with it year-round. This is a terrible pricing policy because you’re going to be leaving a lot of money on the table. The goal here is to charge lower when there’s less demand and higher when there’s more demand. That way, you maximize your profits at any given time.

During the weekdays, when there's less demand, it’s better to charge a lower price to secure a booking than to have a higher price and no booking. But on weekends, when there’s a lot more demand, you can charge a higher price, since there’s more people competing over the same supply of properties.

To get started with dynamic pricing, you can use tools like Beyond Pricing or Wheelhouse (read my comparison of Airbnb pricing tools). Of course, you still have to change it a bit yourself, but it’s a great place to start.

Add Personal Touches to Make Guests Feel Special

It’s easy to put in a little bit of effort to personalize your guest’s experience, especially if you’re only managing a few properties.

When it comes to small towns, there are often certain aspects that are unique to that area. For instance, Traverse City, MI is known for its tart cherries and wine. You can leave a bottle of local bubbly out for your guests. You can also gift them fresh cherries or cherry-related products.

This makes guests feel special because you’re giving them a local product, instead of a generic bottle of wine. 

Leverage Local Partnerships

There’s often a lot of local-run businesses in small cities. You can reach out to these businesses and build relationships with them. For instance, you can team up with local wineries to give your guests free wine tastings. This is especially powerful in towns such as Traverse City, MI, where lots of people come specifically for the wine.

small cities short-term rental business

You can also partner up with local gyms. By paying a minimal cost (either a monthly fee or a per guest fee), you can allow your guests to use the gyms for free. This is a great way to differentiate your business because there are quite a few people who only stay at hotels for the free gym.

If the thought of reaching out to these local businesses is nerve-wracking, just remember: it doesn’t hurt to ask. If you don’t ask, you won’t get anything. The result of asking and getting a “no” is the same as not asking. You’d be surprised at how open these local businesses can be.

Conclusion

When operating in a small town, you want to stand out by focusing on the local experience. If your town is known for its wines and you offer guests free wine tastings, put that in your listing description so people know about it.

As long as you know what to look for, small towns can be an amazing opportunity for short-term rental operators.

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