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Vacation Home Owners Squeeze More Income Out of Resort Properties - 2009-04-12 |
In recent years, many Atlantans decided to invest in condos or houses at resort locations. I wish I knew how many condos on Saint Simons or in the Destin area were purchased by residents of metro Atlanta.
And while the idea of renting that home to other vacationing families in exchange for rental income may have seemed unnecessary then, today it just seems to make sense.
Rental agents in traditional vacation destinations tell me that when the economy is down, vacation rentals usually go up. And this year is no exception. Here’s why:
* Renting a house or condo at the beach is much less expensive overall than staying at a swanky hotel or resort;
* Since the dollar is hurting against other currencies, you can likely get a better value by paying in United States dollars;
* If you’ve got kids along, it’s a lot cheaper to cook for them in your rental kitchen than to eat out every meal; and
* Larger units can accommodate friends or even the whole extended family in one location. (This may or may not be desirable, but it’s a fact.)
And even though more vacationers are staying close to home rather than jetting off to Saint-Tropez, there are more units being offered for rent than in past years as owners seek more rental income from their vacation property.
Here are some frequently asked questions about vacation rentals:
Q: If I rent my beautiful home to uncaring strangers, won’t they destroy my property and cause thousands of dollars of damage?
A: The vast majority of people who want to rent your vacation home for a week-long vacation will take care of it as if it were their own. This is particularly true if you talk with the renters ahead of time and let them know that they are renting your home and not just some hotel room rental.
I have rented vacation property on Saint Simons for years, and we have never had any serious damage. On occasion, we will find a broken picture frame or a stain on a carpet, but nothing that can’t be fixed.
Q: How do I get renters for my property? Should I use a local real estate company that handles rentals? Can they keep my home full all summer?
A: Using a local agency is the easy way to handle your marketing and management, but you pay a relatively high price for that service. Some companies charge as much as 35 percent of your rental income as their fee. In addition, they often add a mark-up to any expenses or repairs they handle.
My advice is to explore the idea of offering your home on websites like VRBO.com and HomeAway.com. Also, don’t forget free sites like Craigslist. The best of all worlds would be to find a local agency that will offer your home as their listing, but will also allow you to market the home yourself.
Q: Who cleans the unit between rentals and gets it ready for the next guest?
A: If you call local hotels and ask for the housekeeping manager, you can get reliable referrals. These folks often want to make a little extra money.
Q: Who makes the repairs if a water heater breaks or the roof starts to leak?
A: If you are Internet savvy, you can easily find local plumbers and tradespeople. If you need specific referrals, call local real estate agents or call a local tool rental store. As I said before, you can have your rental agent take care of everything, but the cost may end up higher.
Q: How would I handle the money transaction?
A: I recommend Paypal, because they make it so easy for you to accept major credit cards. It’s a good idea to ask for half the rental at the time of booking, with the remainder being due sixty days prior to arrival. That way, if a guest backs out or needs to make a change, you still have time to try to re-rent the property to another guest.
Q: How often do guests back out or change their minds?
A: Based on my experience, less than one in a hundred.
Q: How do you handle getting them the keys?
A: We use a push-button entry set that allows multiple entry codes for different individuals. The Schlage FE575 is extremely easy to use, and costs about $175 installed. Guests like it because their kids can’t lose the key.
Q: How do you communicate with guests?
A: Internet communications sites such as RingCentral.com provide you with a toll-free phone number that can ring any landline or cell phone you choose at any time you choose. Pricing starts at ten bucks per month, and this gives guests confidence that they can reach you in an emergency.
Q: Do I have to report the rental income for tax purposes?
A: If you rent for 14 nights or less during any calendar year, all the income you receive is totally tax-free. However, once you rent for the 15th night, all the income becomes taxable.
The good news is that many of your expenses may now be deductible. Because the rules regarding personal usage are somewhat complex, you will likely need an accountant to help with your tax preparation.
Q: Where can I learn more about possibly renting my vacation home?
A: Check out a book called “How To Rent Vacation Properties By Owner” by Christine Karpinski. About $20 on Amazon.
Questions or comments?
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