If you’re tired of reading the same old advice about extra income streams for real estate agents, you’re in for a surprise: managing a short-term rental (STR) business is a surefire way to generate passive income and skyrocket your earnings minus all the heavy lifting.
Right now, you’re at the mercy of the housing market, commission-based rates, and irregular paychecks. You don’t have the ready cash for real estate investing nor the time to launch another real estate podcast that nobody asked for.
But STR management is super profitable and nowhere near as time-consuming as it used to be. And you can do it all simply by leveraging the relationships you already have as a real estate agent.
Ready to find out how? In this guide, we’ll cover:
- Why real estate agents should consider short-term rentals
- How one realtor skipped the side hustle for easy cash flow
- How to start your vacation rental management company
Why real estate agents should consider short-term rentals
You’re looking for passive income ideas to increase your earnings. A quick Google search gives you tens of articles with the same five options: write a blog, launch a YouTube channel, start a crowdfund, share referrals, or sell digital products.
All this sounds like too much work, leading you back to square one—how to increase your income passively?
How real estate agents can earn passive income
Here’s an option most of these articles don’t tell you: real estate agents can earn passive income effortlessly through vacation rental management.
The vacation rental industry is growing at an astounding rate, with the potential to cross $105 billion by 2026. Realtors can tap into this booming market, leverage the partnerships they already have, and take that extra money home through a vacation rental management business. Here’s how STRs will change your life.
Benefits of vacation rental management for realtors
- Extra money: Managing vacation rentals can significantly multiply your income and bring extra revenue to your asset owners.
- Leverage existing partnerships: You don’t need to be a property owner to enter the STR market. Take advantage of your existing relationships to get leads and hit the ground running quickly.
- No upfront cost: There’s no need to make a huge investment when you enter the vacation rental market, you just need to choose your partners wisely.
- Stable monthly income: Short-term rentals promise steady revenue all year round and higher profits during peak season.
- Greater brand recognition. You can do all this under your own brand, building awareness among your real estate clients and STR guests as you build your portfolio.
- Scalable business: Unlike the real estate market, the STR industry offers greater scalability because you can use technology to support the business and manage bookings as you grow.
Wouldn’t it be less work to start a real estate blog or podcast?
Starting a blog or launching a podcast are two of the most common suggestions for passive income streams for real estate agents.
But both these options demand hours of work to produce meaningful content that resonates with your audience. Plus, despite your best effort, there’s still no guarantee of solid monetary returns.
On the other hand, starting a vacation rental management business promises a regular source of income minus all the struggle of creating, publishing, and distributing content. It can be time-consuming and stressful for some, but if you’re backed by technology, it’s a lot easier.
For example, you can automatically sync your listing across multiple booking platforms and set up automated cleaning and maintenance scheduling. And if you partner up with a service like Jetstream, we can get you connected to the industry’s best software so you don’t even have to be tech savvy yourself.
Earn more from your real estate business with no initial investment.
Jetstream will take care of distributing your properties on all the major booking channels, but we don’t get paid until you do.
How to start a white label vacation rental management company
There are just nine steps you need to take to start making passive income from your
vacation rental management company.
Step 1: Find your management partner
Your vacation rental income will be far from passive if you do all the work yourself. So, the first and most important piece of this puzzle is deciding on your property management partner.
Here’s what Jetstream can help you with:
- Building a direct booking website to get organic traffic and bookings
- Managing guest communications round-the-clock with empathy and care
- Handling channel distribution on various booking platforms to increase visibility
- Automating various processes, like check-in and check-out, to offer a frictionless guest experience
- Updating your calendar with automatic syncing across platforms to avoid double bookings
- Screening guests through a robust and data-driven process to prevent lousy guest behavior
- Simplifying coordination with your cleaning teams to keep your property clean all the time
Put simply, Jetstream’s innovative technology complements your connections as a real estate agent to create a foolproof STR business. You’ll be supported with full-time care of the more tedious parts of vacation rental management to free up your time for more critical tasks on your plate.
Jetstream works as your trusted property management partner to help you build meaningful guest relationships and get a better ROI.
Step 2: Reach out to buyers
Once you’ve figured out who will take care of your operations, shift your focus to lead generation. This is where you can take advantage of your existing network and reach potential clients.
Let’s look at three ways to reach out to your ideal buyers:
- Collect and connect with leads. Start by analyzing the kind of properties you’re interested in managing—like boutique hotels, serviced apartments, or something else. Once clear on this, create a list of potential leads that meet your criteria. Approach these property owners to see if they’re interested in your business model.
- Participate in local events. You can also reach potential clients by showing up at local events. Think of this as an opportunity to interact with your community and create a strong network. Focus on sharing your industry insights to make some valuable connections and get business through positive word-of-mouth instead of being pushy.
- Take advantage of referrals. If you’ve already made a name for yourself in the real estate market, the easiest way to kick-start your STR journey is by taking referrals. Let your network know about your new rental management venture and incentivize referrals through a bonus or a structured referral program.
Lead generation can be the trickiest part for realtors entering the STR market. With these three actionable tips, you can meet your audience where they are and win some solid leads.
Step 3: Take care of the paperwork
Like any business, you need to take care of the legal bits. Sort out all the required paperwork before launching your business to prevent any unavoidable mishaps in the future.
You’ll need these two essential documents to start:
- Contracts. A rental management company can have two types of client contracts: guaranteed and commission. The guaranteed contract means you pay the property owners a fixed amount every month, irrespective of the actual turnover. The commission contract means you pay the owner a monthly share, factoring in fees like maintenance and cleaning and some percentage of the overall profits. Mutually discuss this with your clients and chalk out a contract with them.
- Licenses. You need a license or certificate to run a property management business in some regions. Check with your local authorities to see if you need such a license before launching your company. See if you can also find out about occupancy taxes in your area. This will help you develop a better pricing structure per your tax obligation.
Completing the legal paperwork is a crucial step to protecting your interests in the long run. Seek legal counsel if you’re unsure of the laws and tick off all the legalities before you start the business.
Step 4: Hire a professional photographer
You might think your iPhone is enough to take photos that nudge people to book their stay with you. But the truth is, you need high-definition photos taken from just the right angles to excite prospective guests into making a reservation. That’s something only a professional photographer can help you with.
If you haven’t worked with a professional photographer before, here’s a list of parameters to consider in the hiring process:
- Service package. Always look through their proposal to check the type of services and add-ons included within their package. You might want to opt for additional services like a 360-degree tour or a drone photo shoot.
- Experience and specialization. You’ll find photographers from various niches with diverse expertise. Make sure you do your due diligence about their past work to understand if they’re a good fit for vacation rental photography. Ask for details about similar projects, equipment, and photography techniques.
- Pricing terms. Photographers price their services based on their level of expertise and industry knowledge. So, check their pricing structure first to ensure you’re not over the budget. Make your pick based on the ROI you can expect from their work.
- Licensing terms. Some photographers offer a limited period license for photos, while others retain complete ownership. So, before you hire a photographer, get clarity about their licensing terms and how they’ll give you the rights to the photos.
High-quality photos can directly impact your booking rate and boost your bottom line. So, make that initial investment in a professional photographer and get double the ROI in return.
Step 5: Approve your own branded direct booking website
Platforms like Airbnb are a popular way to increase your discoverability in the early stages. But once you’ve built a good reputation with raving reviews, you can skip the platform fees and direct all the buzz to your website to get more revenue from each booking.
So, let’s look at how you can create a website for your vacation rental property:
- Self-hosted. A standard option is to build a WordPress website with your chosen domain name. You have to pick a theme and do some development work yourself to start with this.
- Website builder. You can set up a user-friendly website using a website builder tool. This should come with a channel manager and a booking engine to let guests book a stay per their preferences.
If neither of these options fit the bill for you, Jetstream can design and manage a website on your behalf. You can look into the branding and voice of the website while Jetstream handles your bookings and site maintenance.
Step 6: Outsource cleaning and maintenance
Achieving a professional property clean is tricky for most vacation rental owners/managers. Add to this same-day bookings during the peak demand season, and you’re living a nightmare.
But there’s an easy solution to your housekeeping worries: a professional cleaning team. Just like you need experienced counsel to complete the paperwork and professional photographers to make your property look good, you need to outsource your vacation rental cleaning to keep your property spick and span at all times.
Finding a team doesn’t have to be challenging either. Here are four easy ways to do it:
- Run a Google search for licensed cleaning companies near you
- Jump on marketplaces like Homeadvisor to find professional cleaners
- Ask for recommendations among local homeowners or realtors running vacation rentals
- Take expert advice from the team at Jetstream and find professional companies in your area
Jetstream integrates with Operto Teams to automate cleaning schedules and assign tasks according to certain triggers.
Step 7: Set up keyless entry
An inconvenient check-in process can create friction in your guest experience, starting their stay on a poor note. But smart locks are a complete gamechanger.
Smart locks offer keyless entry where guests can simply type in a code to access the property. You don’t have to welcome guests at the door yourself, and they won’t struggle to find the keys. Plus, your cleaning team will have their own access codes, giving you even more security.
Many vacation rental managers don’t install smart locks because of the fear of nonfunctional locks or technical failures. But with a service like Jetstream by your side, you just supervise the installation and let Jetstream manage the software on your behalf.
Step 8: Create your pricing strategy
The last step in the process is finalizing your pricing strategy. Vacation rentals work differently from long-term rentals—and so does their pricing. You have to decide your pricing in line with the demand and local competition.
Here’s how to build your pricing strategy:
- Decide your base pricing. Look at other similar properties in your area and review their location, amenities, and size. Contrast your amenities with theirs and analyze the pricing to determine the ideal baseline for your property.
- Price according to your niche. Some properties are luxury, and some are budget-friendly. Decide on your market niche and set the price accordingly.
- Choose dynamic pricing. Demand changes with the season, and so should your pricing. Pick a dynamic pricing tool like Wheelhouse to update your nightly pricing in real-time based on the market factors. Jetstream integrates with Wheelhouse to analyze over 10 billion data points when setting your prices.
Remember to set ground rules for pricing your property instead of going with the flow. Decide the prices you want to develop for the long run and gradually progress toward this strategy.
Get ready to enter the vacation rental market confidently
From a distance, vacation rental management can seem like too much work; but it doesn’t have to be. Consider this article your handy guide to unlocking a passive income stream and growing your earnings every month.
The next steps? Decide the market where you wish to manage vacation rentals and do some competitor research to understand the real estate agents already operating in the area. Then shortlist a few properties and make a list of leads. Set up your basic workflows with Jetstream before approaching the property owners with the deal.
Once you’ve finalized your partnerships, let Jetstream take charge of your day-to-day operations, so you can focus on building your brand and growing your portfolio.
Frequently asked questions about income streams for real estate agents
How can real estate agents make extra money?
Real estate agents have many passive income streams, including starting a vacation rental management business. Such a business promises a stable monthly income without needing to manage the work proactively.
What is the average salary of a real estate agent?
Here’s the average salary of a real estate agent in different parts of the world (according to Glassdoor):
- USA: $67,962/year
- Canada: $124,357/year
- Germany: $60,240/year
- Australia: $55,000/year
- India: $3857/year
What should a real estate agent do to become more successful?
A real estate agent can become more successful in their role with these best practices:
- A knack for problem-solving
- Attention to detail and empathy
- A purposeful network of realtors
- Strong time management skills
