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VACATION RENTAL INFORMATION
| Having been a property manager for several years locally before I started selling property with Coldwell Banker Sky Ridge Realty, I know that many people wonder how the vacation property rental programs work and if owning a rental property is viable option for them. The most common question is, "How much could I rent the house for?" This is specific to the view, the style, the size, the location and the amenities the property provides. The best way to get an approximate idea is to go to the websites of the local rental companies and compare the property you own (or are interested in purchasing) with the homes already on the rental programs. To visit some of their websites, click here. Most people also want to know how often they can expect their property to be rented. This again varies based upon the size and amenities of each individual home. However, I think it is safe to say that the average home could be expected to rent: 1) Every major holiday period (4th of July, Labor Day, Thanksgiving, Christmas and New Year's). These are premium rental periods and have a minimum night required stay ranging from 3-7 nights, depending on holiday and company policy. (A total of 20-25 nights annually). This presents a problem for many owners who would like to use the home themselves during these times. Just remember that these dates will account for the most income over the course of the year. 2) Half of the minor holidays (President's Day, Martin Luther King Day, Easter, etc.). These are usually three night stays, but some companies will allow 2 nights. (maybe 10 nights total, annually). 3) One other rental per month. This is the "wild-card." This additional rental could be for one weekend or three months and will vary from year to year. Vacation rentals are very seasonal. Most people come for the holidays and during school breaks. The summer months can be very busy. In fact, lakefront owners usually require a minimum of a week's stay during these times. Winter can be quite busy as people want to enjoy the snow and the wonderland that the mountains can be in the colder months. Spring is usually quite slow - very slow in fact. Fall is generally slow, too, as the kids are back in school. Many people I talk with regarding the purchase of a home to use as a vacation rental want to know if the rental proceeds will put them in a positive cash flow situation. Generally, if you have a substantial mortgage on the property, you will probably not cover all your expenses. I tell people that they can expect to pay their property taxes, utilities and some upkeep and repairs from their rental proceeds. Anything above and beyond that is gravy. There are, however, properties that have a good potential for positive cash flow. In my opinion, these fall into two groups: 1) small, but incredible cute and charming homes for romantic getaways and 2) large, incredibly functional properties for church groups and retreats. The small homes can be one or two bedrooms and should be done-up to the hilt with "cute." It would preferably be in a location that is somewhat secluded, but this isn't necessary. These should have everything geared toward a couple looking to get away for the weekend and enjoy time together. I would suggest a spa on the deck, a jet tub for two in the bathroom, and a good-sized TV with DVD player with a nice collection of romantic comedies (so they snuggle in front of the fire and watch a movie) and a CD/stereo with some good music. The kitchen should be well-appointed for those wanting to cook a romantic meal in, maybe even some trays to facilitate breakfast in bed. There should be nice dishes, stemware and an ice bucket (for champagne). Anything you can think up to "set the mood" is fair game. Price your rental reasonably (romantic couples don't always have a huge budget) and you will see couples book year after year as they come to enjoy anniversaries, Valentine's Days, honeymoons, etc. The large homes should have as many bedrooms as possible. Be sure that there is plenty of LEGAL parking for the property. Find a home that has a large family room and/or living room for everyone to congregate for meetings, etc. Furnishings should be completely utilitarian. Of course, you want it to be functional and comfortable, but be aware that with increased numbers of people the chance for damage and the reality of lots of wear and tear are inevitable. Be sure to have tons of pots, pans, silverware, plates, glasses, etc. Not just enough for one meal, but a few meals. Same goes for pillows and blankets. Bunk beds are great space savers here. These types of properties are great for father/son retreats, mother/daughter retreats, church groups, college groups (be warned against frats and sororities!), quilting clubs, etc. Again, groups that find your property suit their needs well and are well-appointed, will book your property time and time again. "What things do you have to provide for the renters," is another question most want answered. I would say the majority of the rental homes provide everything a family would need to have a comfortable stay. Keep in mind how many people your home can accomodate to have enough plates, glasses and silverware. Think about what you would personally want in a rental home if you were staying in the mountains to have an enjoyable, memorable time. The beds need to have pillows, blankets and comforters, though most do NOT provide sheets and pillow cases. Most companies offer linens to be delivered to the home at an additional charge or the renters bring their own. This applies to bath towels, paper products and firewood as well. You will want to include some games or videos/DVDs, cable (or satellite) and TV with DVD or VHS player, and anything else you think would make someone's stay enjoyable. You can be as creative as you would like in this area! Remember, if the renters enjoy your home because it is well-appointed, nicely decorated and comfortable, they will come back time and time again. They will also refer it to their friends and coworkers. Repeat business is like free money! "Do renters frequently damage the property?" It is my experience that most tenants treat the homes very well. Of course, the larger the home and the more people it can accomodate, the chances increase for accidents to occur. I found that most times that people broke something, they brought it to our attention and offered to replace the item. Things very seldom were stolen or damaged and "hidden" only to be found after they left. There were the odd occassions when things were broken or stolen, but they were certainly the exception and not the norm. For times when there is damage, rental companies collect a security deposit, usually between $200 and $500 as well as a credit card number that is kept on file. There are also damage and cancellation clauses in the contracts that each renter is required to sign prior to taking occupancy of the property. When interviewing rental companies, ask to see a copy of one of their contracts to review their policies. Rental companies advertise the homes, take reservations, execute contracts, collect monies, arrange cleaning, do the accounting, facilitate repairs, arrange outside vendor services, give out and collect keys, disburse checks and return security deposits, and many other things. They do ALOT of work and, deservingly, keep a percentage of each rental as commission. This is generally 30% of the gross rental price. This, of course, dips heavily into the bottom line, but is well worth the investment, in my opinion. Their service is tax deductible as a business expense as well! For other questions about vacation rental properties, please contact me. I'm always williing to share suggestions and recommendations with you based on my experience in the field. |