Whether you are new to owning a vacation home or you’ve had one in your family for generations, you’re sitting on a potential gold mine. Renting out your vacation home is a great way to boost your income, pay those ever spiraling insurance costs, save for your next vacation or help pad your retirement account.
There are several ways to wring some income out of your vacation home, depending on your personal and financial situation. One way that dominated for many years was to contract with a rental agent or property management company. A growing trend in the vacation home rental sector is to do it yourself.
There are benefits to having an agent or property manager handle the renting of your vacation home for you, especially if you live far from your second home. Local rental agents generally have in-depth knowledge of the local market and laws, which can help you avoid any missteps. There may also be a time savings since you are dealing with just the property manager rather than every single renter. But there are drawbacks to going this route.
The main drawback with relying on an agent to book and manage your vacation property is that you will be sharing the revenue with them. Agents typically take a commission on each rental, pass on cleaning fees, credit card fees and other incidentals to you, and they choose who rents your property. So they rent your property for $1000/week, for example, you are likely to receive anywhere from $500-$700 of that.
Although handling the rentals yourself will require a greater investment of your time, you will hold onto more of the income than when you delegate the task to an agent. Christine Karpinski, an author and authority on renting your vacation home by owner, on her Web site explains how to achieve positive cash flow from your vacation home. Her example is outlined below:
To keep the numbers simple, let’s say your mortgage is $1000/month. If you can rent your property for $1000/week during the peak season for your area (often Memorial Day to Labor Day in beach areas and December to March or April in ski areas), then you’ve covered your annual mortgage by renting just 12 weeks. Plan to rent another 5 weeks to cover utilities, homeowner association or condo fees, and regular maintenance. So with just 17 weeks rented (a 33% occupancy rate), you’re breaking even. Everything you rent beyond that is profit.
What about all those fees the property manager passed on to you? You pass those on to the renter either by building them into your rates or itemizing them. And how will you get those renters? You will need to advertise.
The quickest way to start renting your property is to do a little marketing, either online, in your local newspaper or the local chamber of commerce. There are a number of Web sites that specialize in vacation rentals by owner, these include such sites as HomeAway.com, CyberRentals.com, VRBO.com, and GreatRentals.com. Advertising online is effective; these sites get millions of visitors a year.
Advertising online is inexpensive; for $299 a year, you can purchase a listing on Homeaway.com, CyberRentals.com, GreatRentals.com and A1Vacations. The typical newspaper ad can be as much or more than $299 a month. Advertising online is smart, you get four or more photos (worth a thousand words each!), virtually unlimited text and an availability calendar. The inquiries you get from Web sites are much more qualified than typical print advertisements where you are limited to just a few lines of text.
If you aren’t sure you want to try this on your own, you can also partner with a vacation rental manager and boost your booking potential by placing your own ad on these sites and augmenting the bookings that the property manager will get for you. The vacation rental manager will handle the cleaning, maintenance and calls from tenants.
All of this may seem daunting, and there is a lot to learn. Ultimately you may find it is worth the effort to learn the ins and outs of renting your vacation home. After all, it means more cash in your pocket. In addition to reading books and learning by trial and error, a new and evolving resource for do-it-yourselfers can be found at ownercommunity.homeaway.com. This site has tips and articles to help and educate with many aspects of vacation home ownership and renting your vacation home.
Find more articles, tips and advice on the HomeAway Community for Vacation Rental Owners. |
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