A few years ago when the kids were young, we decided to invest in a summer home. As big boaters, we wanted something close to a body of water but affordable enough to maintain year round. Our first venture was a trailer, but due to the cleanliness of the lake it was on, cramped quarters, and only 5 Gallons of hot water, we quickly traded our trailer in for a home along a cleaner body of water
We ventured into Michigan and found a small quaint town. We couldn’t afford lake side housing so opted for a little cottage a mile from the beach. It was close enough to home but far away from reality. As the kids grew, our ability to make it out to our summer home lessened so we decided to dive into the world of renting. After interviewing several rental companies in the area, we opted to manage rentals ourselves to avoid the hefty 20 – 25% fee.
If you are in the process of converting a vacation home into a vacation rental some changes need to be made. Walk through your home and remove any valuable items you don’t want broken or removed from the property. Swap out family photos with artwork. Consider the linens – the quantity and even the color. Whites may be easier to bleach but may stain easier. Make sure you have back up towels and two sets of sheets for each bed for quick turnovers or when you don’t have time to have laundry done.
PURCHASING A VACATION RENTAL
If you are purchasing a new property, make sure the economics work. Research the area and figure standard rental rates and the length of the season. In our case, our rental season is only 12-weeks long so we needed to make sure that renting made more sense than selling, we figured-in the cost of furnishing and updating as well as taxes and utilities.
We chose to list our property on both AIRBNB and VRBO. It takes a bit of coordination to make sure the websites are updated continually so if you rent on one, you need to make sure you block off the dates on the other
You need to create a powerful listing that captivates online viewers so treat the listing as an advertising tool. Take great pictures and write an honest and detailed description of the property. Include your distance from key destinations and any added value your property offers. Research pricing of similar properties and price accordingly, taking into consideration fluctuations for holidays and peak travel times.
Put a team in place. Interview cleaning people, get to know your neighbors and find a local handyman. If your vacation property is far from your main residence, your team is your most valuable resource. During the summer, our cleaning lady becomes the go-to gal. She lets us know if there is damage and turns over the property for the next guest in as little as 3-hours. Our neighbors have also helped when tenants had issues like a new battery in a smoke detector or figuring out cable. They even notified us of a burst pipe in the winter.
Make sure you pay taxes on your rental income, state dependent. If you are a vacation homeowner and only want to rent less than 2-weeks per year, you can do so tax-free but anything more is taxable.
It does get a bit chaotic at times managing a vacation rental with schedules, tenants and but for us it’s been fun.
By: Edan Gelt, MBA, CMD