How to Write a Short Term Home Rental Business Plan or Template
The short-term home rental industry has enjoyed significant growth over the last several years, which has driven demand for short-term home rental business plans and short-term home rental business plan templates. A driving reason for the substantial growth in the short-term rental industry is thanks to digital marketplaces such as Airbnb, Vrbo, and Hometogo.
These marketplaces allow short-term rental business owners to place their properties or rooms for rent in the marketplace where tourists and other visitors are able to review them to see if it meets their needs. As the popularity of short-term rental sites and usage grows, the need for a short-term rental business plan, regardless if it’s for funding or operations, will become more and more needed. Because of increased demand for short-term rental business plans, our business plan writer has outlined some tips and tricks that may be utilized when writing a short-term home rental business plan or template.
Executive Summary for a Short Term Home Rental Business Plan.
The executive summary section for a short-term home rental business plan or template, more commonly known as an Airbnb business plan, should include important details about the home or room for rent. Specifically, make sure to discuss whether the home or room is available for rental on a daily, weekly, and/or monthly basis. Further, our short-term home rental business plan writer recommends briefly describing amenities in the area or at the home in the executive summary section as well. For example, if your short-term home rental is near the beach, then make sure to mention that it’s within walking or driving distance of the beach. Further, if there’s any community access possible, like pool access, this type of information is critical to include as well (6/22).
The company information section for a short-term home rental business plan should start by discussing the location of the home, terms for rental opportunities, and various amenities aligned with the rental of the house. Further, an excellent practice to embrace when writing the company description section of this type of plan is to describe your business model in the segment. For example, some short-term home rental business owners will hire third-party companies to do the cleaning, booking, and accounting activities. If this is the case, then the business owner is often able to justify a higher variable cost in their financials, which sets the foundation early for projections justification. This is just one trick to utilize when writing up your company description (6/22).
Also, in the company information section, set the parameters and scope for the business plan. What a business plan writer means is that if you are going to write a business plan for one property but have other properties, especially in the area, make sure to state explicitly which property the business plan is focused upon. Also, make sure to include in the company information section a brief discussion about the other properties under your management or ownership and your experiences in managing this type of operation. By setting this foundation, not only do you add credibility but you also help the reader gain perspective in relation to the scope of the business plan.
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Service Description and Competitive Advantages
In the service description and competitive advantages for a short-term home rental business plan or template, short-term rental property owners often take an internal/external approach to the section. What I mean by this is that property owners, especially for the competitive advantage section of a short-term property rental business plan, will describe the amenities of the property. Common amenities may include the number of bedrooms and baths, whether it has a full kitchen, a pool, or even a gated yard for pets. As for the external aspects, this is often where business plan writers will then highlight the nearby amenities for the location like close to beaches, theme parks, area shopping, and more. By following the internal/external approach, business owners are able to capture the full scope of the competitive advantages as compared to other short-term rentals.
One of the most important sections of the company segment of the business plan for a short-term rental business plan would be the target market. When a short-term rental business owner knows their target market, they can structure their competitive advantage section, advertising section, and even their financial protection section to best align with expectations. For the most part, the target market section of a business plan for short-term rentals would either be tourists or corporate clients. In the event of a tourist-target market, make sure to align your competitive advantage section by describing how you can best help this market. Examples would include discussing shopping locations near the property, proximity to major thoroughfares, etc. As for corporate client target markets, here is where you may choose to disclose how far the property is from major employers in the area.
Industry research for a Short Term Home Rental Business Plan or Template
For the industry research section of the short-term home rental business, business owners may choose to explore their research on the bed-and-breakfast industry or the hotel/motel industry. This industry is a blend of the two so both or either industry segment would suffice. For example, if I were to write a business plan for a short-term home rental business, I would focus more on the bed-and-breakfast industry. In this industry, revenues for the last year exceeded $1.7 billion. In the next five years, industry experts anticipate a 5% annual growth rate for revenues. This is well above most mature industries. As for profits, organizations such as these have exceeded profits of $94 million. There are over 7,900 businesses competing in this industry. These are just some of the industry statistics that may be included for the basis of your industry research.
The owner and management section for a short-term rental business plan should start with disclosing the owners of the organization or property. After this, make sure to discuss professional achievements or previous jobs that have allowed the owner to hone their management/advertising skills. Common previous work histories may include management positions, advertising positions, or even construction-related job holdings. Once the foundation for experience has been set, adding in educational achievements is an excellent supporting activity. Try to identify degrees related to business, marketing, or terrorism. Also, any type of volunteer work related to tourism or management would be helpful as well.
Funding Request for a Short Term Home Rental Business Plan
The funding request section for a short-term home rental business plan should start with stating precisely how much funding is needed to start the company. Next, make sure to describe how the funding will be spent. Popular needs for a short-term home rental would include purchasing the property, making renovations, an advertising budget, and substantial working capital. Finally, the segment rounded off by describing how the loan or investor funding will be compensated. For the most part, business owners will pay back loans through excess cash flow. However, future funding may also be an excellent exit strategy.
The final section of the business plan should discuss the financial projections of the short-term rental property business. In starting the section, I always like to introduce highlights related to the company. Financial highlights may include expected first-year revenues, anticipated first-year costs, profit margin expectations, and subsequent year profits. Once this is outlined, I then describe the assumptions used in the financial projections. Assumptions may include the number of properties at the start of the company, advertising budget monthly, average property rental rate per night, and the number of employees. Next, I then filled in the financial model that will be usable for the business plan as well as in operations.
Hopefully, these insightful tips and tricks for writing a business plan were helpful. As always, if you need help with a business plan or financial projections, just send us an email or give us a call.
Author: Paul Borosky, Doctoral Candidate, MBA., Author