Deli: Our Business Plan

This article was written by our expert who is surveying the industry and constantly updating the business plan for a short-term rental.

Who wrote this content?

The Dojo Business Team

A team of financial experts, consultants, and writers

We're a team of finance experts, consultants, market analysts, and specialized writers dedicated to helping new entrepreneurs launch their businesses. We help you avoid costly mistakes by providing detailed business plans, accurate market studies, and reliable financial forecasts to maximize your chances of success from day one—especially in the short-term rental market.

What will I pay to purchase or long-term lease the property (including closing and legal)?

Expect to budget the acquisition or lease deposits plus all closing and legal fees before launch.

For purchases, typical prices range from $100,000 to $600,000, with 5%–7% in closing costs and $1,000–$10,000 for legal work. For leases, plan first month + security deposit (often equal to one month) and possible setup or brokerage fees.

Include inspection, appraisal, and due diligence ($2,000–$50,000 depending on complexity) and set aside a buffer for title or compliance updates. If leasing, confirm subletting/STR permission in writing and add any landlord-required addenda to the budget.

Always confirm local STR rules for the address before committing; rule changes can materially impact returns.

Run the numbers with conservative ADR and occupancy to ensure the short-term rental can service debt or lease costs.

What renovation or remodeling is required and how long will it take?

Scope drives both the budget and timeline for getting your short-term rental guest-ready.

Cosmetic refreshes (paint, lighting, fixtures) run $5,000–$15,000 over 2–6 weeks; targeted kitchen/bath updates often cost $6,000–$15,000 in 3–10 weeks. Full remodels or structural work can exceed $50,000 and take 8–16 weeks.

Prioritize repairs impacting safety, sleep quality, and water systems; these cut guest issues and bad reviews early. Lock in contractor availability and materials before closing to compress downtime.

Build a 10%–15% contingency for surprises behind walls or utility upgrades.

Schedule final clean + punch list 3–5 days before photography to avoid re-shoots.

How much should I allocate for furnishing and décor to fully equip the property?

Plan a complete, durable fit-out so guests lack nothing on day one.

Expect $10,000–$30,000 for beds, sofas, dining, storage, appliances, electronics, linens, kitchenware, and décor for a typical one- to three-bedroom short-term rental. Quality mattresses, blackout curtains, and washer/dryer reduce refunds and churn.

Standardize items for faster replacement and use commercial-grade linens rated for frequent washing. Keep a labeled owner’s closet with backup linens, bulbs, and batteries.

Buy duplicates of high-use items (pillows, towels, wine glasses) to protect turnaround speed.

Document every SKU and warranty in a shared sheet for easy re-orders.

What does utilities setup cost (internet, water, electricity, waste)?

Budget both one-time setup and monthly service to keep the short-term rental online and comfortable.

Initial setup averages $1,000–$2,500 including deposits/installation; ongoing monthly costs typically run $150–$420 (internet $30–$70; power/water $100–$300; waste $20–$50).

Choose a business-grade router and set up a guest SSID with auto-reset smart plug to cut support time. Photograph meter readings on day one.

Enroll in e-billing/autopay and add property manager as an authorized contact to avoid service disruptions.

Track utility usage per stay to detect leaks or HVAC issues early.

Which licenses, registrations, and permits must I pay for?

Most jurisdictions require a short-term rental license plus a business registration.

Upfront fees typically range from $50 to $1,144 with renewals from $80 to $885 depending on the city/county; some require inspections and neighbor notifications.

Check zoning, minimum-stay limits, and caps on the number of STRs; non-compliance can trigger fines or removal from platforms. Keep copies of approvals in your host binder.

Calendar your renewal dates and tax filings to avoid penalties.

If in a condo/HOA, secure written authorization for STR operation and post any required signage.

What should I budget for safety and compliance (detectors, insurance, security)?

Safety gear and insurance protect guests, property, and your cash flow.

Expect $500–$2,000 for smoke/CO detectors in every sleeping area, fire extinguishers, first-aid kits, and lock security; STR insurance typically runs $500–$2,000 per year.

Add noise monitoring (~$150) and exterior cameras where legal; disclose devices in listings. Hard-label breakers, water shutoff, and Wi-Fi info for rapid field fixes.

Test alarms quarterly and log it in your operations checklist.

Post emergency contacts and evacuation map at exits for audits and guest clarity.

How much for professional photography, staging, and listing setup?

Great visuals drive search ranking and booking conversion on STR platforms.

Budget $400–$2,000 for photography/staging depending on size and market; allow $100–$350 per platform for optimized listing creation, copy, and amenity mapping.

Capture blue-hour exteriors, bedroom vignettes, and workspace shots; add captions that sell benefits (sleep quality, parking, walkability). Prepare a 3D floor plan if layout is a strength.

Refresh the photo lineup seasonally and after upgrades to maintain click-through rate.

You’ll find detailed market insights in our short-term rental business plan, updated every quarter.

What should I spend on early marketing and advertising (ads, website, channel manager)?

Front-loaded marketing accelerates your booking ramp in competitive short-term rental markets.

Plan $500–$3,000 for initial ads (Meta/Google/OTA boosts) and a simple booking site; channel manager tools typically cost $25–$100/month.

Use a launch promo (e.g., 10% off first 10 bookings) and targeted geo-ads near feeder cities to seed reviews. Build UTM-tagged links to see which campaigns actually convert.

This is one of the strategies explained in our short-term rental business plan.

Switch off underperforming campaigns within 14 days to protect CAC.

Which initial operating costs should I plan for (cleaning, supplies, maintenance)?

Have cash ready for the first 6–10 turnovers and restocks before revenue stabilizes.

Typical cleaning is $50–$200 per turnover (size and location dependent) with $500–$2,500 for initial consumables and minor fixes; keep a $1,000–$3,000 buffer for unplanned items.

Stock owner’s closet with labeled bins: toiletries, coffee/tea, laundry pods, paper goods, bulbs, batteries, and spare linens. Track cost per stay to refine pricing and fees.

Set standard turnaround checklists to reduce missed items and complaints.

We cover this exact topic in the short-term rental business plan.

How large should my reserve fund be for low occupancy or delays?

Hold a contingency fund equal to 3–6 months of expenses.

For most short-term rentals, this equates to $10,000–$20,000 depending on fixed costs, debt service, utilities, and cleaning cadence. Keep it liquid and separate from operations.

Use this only for revenue shocks (seasonality, regulation changes, unexpected repairs) and replenish rapidly after drawdowns.

Stress-test your P&L at 10–15 percentage points lower occupancy than your base case.

It’s a key part of what we outline in the short-term rental business plan.

What will property management cost if I outsource guest ops?

External management can trade margin for time and scale in a short-term rental.

Expect 10%–25% of gross booking revenue or $250–$1,000/month flat depending on service level and market. Clarify scope: guest messaging, dynamic pricing, check-in, vendor management, reviews.

Ask for a 90-day trial and performance clause (e.g., revenue or review targets). Require monthly P&L and maintenance logs.

Compare the fee to your effective hourly rate if you manage yourself; sometimes hybrid (you do guest comms, manager does turnovers) proves optimal.

Get expert guidance and actionable steps inside our short-term rental business plan.

What is the total launch budget and how does it compare to first-year revenue?

Most first-time short-term rental launches fall between $150,000 and $800,000 when purchasing, or far lower when leasing.

First-year revenue commonly ranges from $25,000 to $80,000+ depending on ADR and occupancy; strong markets at 70%–80% occupancy can cover a meaningful share of upfront costs.

Use the table to stack all line items in one place and benchmark your own target. Adjust for your city, size, and renovation scope.

Revisit this budget after your contractor bids and insurance quote to finalize cash needs.

Can you summarize the renovation budget and timeline by scope?

Use this table to pick a scope that matches your market and cash position.

What exactly goes into the furnishing budget?

Break your furnishing plan into durable “sleep, sit, dine, cook, clean” packages.

How do licensing and permit fees vary and what should I expect?

Fees differ widely; use this table to structure your checklist and cash needed.

What are the essential safety items I must buy on day one?

• Interlinked smoke and CO detectors for each bedroom and hallway (test button accessible).
• Multi-purpose fire extinguishers on each level and in the kitchen, with mounted holders.
• Smart deadbolt plus lockbox backup and unique codes per stay (auto-expire).
• First-aid kit, non-slip bath mats, and clearly posted emergency contacts and exit map.
• Noise monitor and exterior cameras (where legal) with clear listing disclosure.

What are the first listings and pricing tactics to budget for launch?

• Start on two platforms (e.g., Airbnb + Booking.com) and budget for both listing setups.
• Use dynamic pricing from day one; set a 10%–15% launch discount to collect 10+ reviews fast.
• Stage and photograph workspaces, family amenities, and parking—filters guests use most.
• Bundle a mid-stay clean in weekly+ bookings to defend reviews and reduce wear.
• Collect guest emails lawfully (QR to signup) for direct booking offers in shoulder seasons.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.

Sources

1. Horizon Homes — Understanding Closing Costs
2. Horizon Homes — Closing Costs in Thailand
3. Houst — Home Renovations Guide
4. STR Cribs — Airbnb Renovation
5. San Bernardino County — STR Permit Fees
6. Dojo Business — Short-Term Rental Recovery Time
7. Dojo Business — Short-Term Rental Startup Costs
8. Lake — Renovating a Short-Term Rental
9. AirDNA — Guide to STR Expenses
10. Hostfully — STR Licensing