Using the Power of Data to Grow Your Property Inventory

Larry Hoffer
6/18/2024

Running your property inventory with the right properties is likely the most important factor for your short-term rental business. Whether you want to grow rapidly, implement a strategy for steady organic growth, or optimize your property mix to allow you to operate more effectively, it all starts with the power of data.

With 21 years of experience helping vacation rental companies across the United States grow and operate more effectively, the following learnings and tips come from conducting hundreds of owner-acquisition marketing campaigns. But it always starts with a well-thought-out strategy based on data. When you use the power of data, you can craft highly targeted marketing messages, eliminate waste by not including suboptimal properties in your efforts, and, in return, increase your focus on the properties that will make the biggest impact on your business.

What’s the ‘Right’ Property Worth to You?

Let’s take a quick look at the numbers. Adding a property to your inventory using your existing infrastructure is absolutely the most effective way to increase your profits and the value of your business. If a property generates $75,000 per year in gross rentals, and you earn a 20% commission on rentals, you’ll earn $15,000 per year in commission income (plus any housekeeping and management revenue). If you have 10% turnover per year, on average, a homeowner will stay with you for 10 years, generating $150,000 in future commission income over the life of a relationship. Take a moment and calculate what one more property is worth to your business using your commission rate, your turnover, and the average gross rental per property.

Determine the Right Property Mix for Your Business

The first step in your property growth strategy is identifying the ideal mix of properties that work best for your business. If you’ve been in business for a while, you know what type of property and what owner profile works best for your business model. Some companies elect to target properties with optimal geographic proximity. Others focus on a certain property type (large luxury homes or condos). Other companies like to have a mix of inventory to meet broader guest needs.

If you are using revenue management systems or a demand data platform, you likely have the ability to use “comp sets” of your higher-performing properties and use those data sources to help identify the best profile of properties.

Continue to make data-driven decisions by reviewing the properties in your inventory that perform well, and then targeting “lookalike” properties. For instance, if you find that four-plus bedroom homes with swimming pools built in the past 20 years are your sweet spot, generate target lists that meet those criteria. Conversely, if you discover that condos with only one bathroom underperform, confidently omit them from your target lists. Your data is your guide, leading you to more profitable properties.

Enriched Data Sources Turbo-Charge Your Marketing Efforts

There are several sources of real estate data, and some sources provide the ability to enrich the data, including neighborhoods, property values, length of ownership, distance from the owners’ residence to the property, listing status on Vrbo, and presence of swimming pools or hot tubs. Some data sources also include mortgage balances and property appreciation. This enriched data allows you to further refine your target lists.

For example, there might be two properties in the same neighborhood:

• Property 1: Four bedrooms, three baths, 2,400 square feet, swimming pool, 80% loan-to-value mortgage, owner lives 800 miles away from destination
• Property 2: Four bedrooms, three baths, 2,500 square feet, no mortgage, no swimming pool, owner lives in drive-to destination

By having access to the enriched data, one can determine whether to put a more focused approach for Property 1 versus Property 2 and customize your messaging.

Putting Things into Motion

Once you determine your desirable property mix, create a list of all property records that meet your criteria and omit those that don’t. Then grade each of those properties by desirability (A, B, C). If you are in a rapid growth mode, make your list a bit more inclusive. If you are more strategic, make the list more restrictive.

Making a highly refined target list forces you to really think about the properties you want to add. By making a smaller target list, you can devote more resources to targeting the most desirable properties. Once you do this heavy lifting of identifying your target list, it’s time to craft your outreach strategy. It’s easy to obtain the mailing addresses, email addresses, phone numbers, and Facebook profiles of the owners of the target homes. Most vacation rental managers target only absentee owners, and many data sources allow you to filter by occupancy type.

Your marketing efforts should involve a mix of direct mail (yes, it works), email marketing, phone outreach, social media promotion, custom landing pages, and, of course, the use of a CRM. Your marketing agency can craft your custom messaging that sets you apart, and based on the data associated with each target property, you should customize the messaging.

With access to the data like never before, and digital marketing, which includes digital printing with highly customizable output, it’s never been easier to deliver highly targeted marketing than today.

How Many Properties Will I Add, and How Much Will This Cost?

First of all, the caveat is that your results will vary. If you are competitive in your market and have a positive and established local brand, you’ll do better than those who are new, have a sullied reputation, and charge higher commission rates.

In general, with an ongoing targeted effort against the most desirable properties, you can expect a fully onboarded conversion rate of 0.25% to 0.75% over the course of a year of your target list. You should expect that your marketing costs, including the cost of data, marketing materials, and media should cost you between $1,500 and $3,500 per property added. But if you’re not competitive in the market and you are targeting a very small subset of the most lucrative properties, this cost might be more than this range.

Bottom line: Even if you don’t want to grow your business and just want to maintain your inventory with desirable properties, you need to have an organized outreach based on data. Please note that ongoing local outreach and requests for referrals are all part of your marketing strategy, and joining the local real estate community is table stakes for being a good local provider of service to the property owners.

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