Busting Your Fears of Wear & Tear to Earn More
Shattering Myths About Wear and Tear in Short-Term Rentals
Mark is the owner of a gorgeous luxury vacation rental in Breckenridge, Colorado. Worried about the degradation of his property due to wear and tear, he decides to set his rental at a high price floor and rents out for only half the year to preserve the state of the home for as long as possible.
However, at the end of the year, it becomes obvious that his investment is not making him wealthy–even factoring in his savings in replacement and repair costs, keeping occupancy at a lower rate did not prevent wear and tear from incurring entirely and in fact, made him lose out on potential revenue in the end.
It’s normal for people like Mark to worry about whether guests are influencing the deterioration of their property, especially with rising repair and upgrade costs, but many property owners make the grave mistake of setting a higher price floor on their vacation rentals and keeping occupancy too low, primarily motivated by the fear of wear and tear overhead.
Rather than relying on a hunch or intuition to determine how much wear and tear will affect revenue, Local VR uses a more logical approach backed by data and mathematics, and the math doesn’t lie: wear and tear costs typically don’t affect revenue the way that many owners like Mark think they will.
What is Wear and Tear?
Wear and tear is the normal and expected deterioration of a property’s condition due to its regular use, not including damages caused by abuse or neglect. The biggest factor in predicting wear and tear is the rate of occupancy–the more often a home is occupied, the higher the predicted rate of wear and tear will be. Durability of appliances and home construction also matter, as the more durable a home and the furnishings in it are, the less damage it will incur over the course of regular use.
Despite Mark’s worries and the worries of many short-term rental owners, fear of wear and tear can actually be more of an obstacle than the wear and tear itself. These normal damages are just one cost factor of many, and rather than looking at the cold facts and figures, owners often rely more on how much they intuitively feel wear and tear will cost than on actual calculations, just like Mark did. At the end of the day, however, the math doesn’t lie: fear of wear and tear can lose you money in the end.
Busting Misconceptions
One of the most common misconceptions about owning a short term rental is that
low occupancy is the best way to increase revenue while preventing wear & tear.
When all factors and overhead are considered, that’s simply not true. Even when accounting for differences in daily rates due to increased occupancy, the additional income potential of renting out for a larger portion of the year will more than surpass the costs of your damages.
After a chat with LocalVR, Mark realized that his intuition about wear and tear costs was flat-out wrong.
Increased occupancy may affect overhead due to the faster amount of deterioration, but revenue potential can still prove higher than the costs incurred.
The next year, Mark decides to lower his price floor and rents at 90% occupancy. Even with the wear and tear cost increases, Mark is able to boost his gross revenue by an astonishing 40% over the year before, more than making up for the money lost to repairs and upgrades.
How LocalVR Combats Wear and Tear
Per-Person Pricing Model
Thorough Guest-Vetting Process
Multi-faceted approach to maintenance & repairs
Short-term rentals are always going to incur some type of damage, whether they’re used 50% of the year or 100% of the year. But LocalVR does things differently than other management companies. In order to prevent as many damages from occurring as possible, we implemented our proprietary strategy for Mark’s property, one that encompasses all aspects of guest vetting, routine repair, cleaning, and maintenance to ensure that wear and tear costs are minimized.
Some of the key prongs of this strategy include employing a per-person pricing model, security deposits, and a sophisticated guest verification system before booking. High-quality guests who treat a property well will incur less damages than low-quality guests at the same rate of occupancy, all things considered, and in Mark’s case this made all of the difference to the upkeep of his property.
LocalVR also combats wear and tear with a multi-faceted approach to maintenance and repairs. With our local ground operations team, professional cleanings of the property after every booking, and post-check out inspections, Mark’s home remained pristine while keeping his wear and tear costs from skyrocketing, allowing him to reach the income potential he always knew that the property was capable of without any of his worries coming to fruition.
Wear and Tear Should be the Least of your Worries
Of all the worries on a short-term rental owners mind, wear and tear costs should be the least of them. If you, like Mark, have allowed your own hunches about property deterioration to weigh you down, then follow his lead and contact LocalVR. Rather than being motivated by the fear of wear and tear, find motivation in the potential to increase your wealth by putting your fears aside and giving your vacation rental over to the hands of local experts.