How to rent out your vacation home for extra cash
Post date: Oct 29, 2010 6:35:40 PM
By Adrian Sainz, AP Real Estate Writer
MIAMI BEACH — Whether it's the snowy slopes of Colorado, the blue waters of Miami Beach, or the picturesque golf courses of Hilton Head Island, finding a quality vacation rental is becoming easier every day.
That's especially true now as the economy sinks into recession. Vacation home owners who once refused to open their prized retreats to renters are now reconsidering, seeking more cash for their pockets.
Homeowners interested in becoming temporary landlords can benefit from some advice to help them along in a process that can be both time consuming and mined with expensive pitfalls.
About 25% of vacation home buyers last year said they planned to rent out the property, up from 18% in 2006, according to the National Association of Realtors. And real estate agents in vacation hot spots say that trend is continuing because more owners are watching their retirement savings slump with the stock markets.
"People who have second homes have found the price of operating and maintaining their home have gone up," Justin Halloran, vice president of HomeAway.com, which operates a series of websites that lists vacation homes for rent. "Other expenses in their lives have also gone up, so they have less money to spend on their second home."
Vacation rentals are homes or condos that can be rented for several days, weeks or even months at a time. They have a more homey feel than a hotel room, and often extra features like flat-screen TVs, swimming pools, and fully equipped kitchens.
And while they can be pricey compared to a budget hotel, they're often more affordable for groups who can share one home instead of renting several small hotel rooms.
"It's just a different feeling," said Tom Ridgway, owner of Hilton Head Rentals & Golf in Hilton Head, S.C., which provides listing, property management and rental services for homeowners and travelers. "In a hotel, you can't go down to the lobby in your pajamas with a cup of coffee and talk to your sister who you haven't seen in two years."
While mansions in the Hamptons, N.Y., and Palm Beach, Fla., attract the most affluent buyers, an eager investor doesn't need to spend millions. Consider affordable areas like Gatlinburg, Tenn., central Florida, Colorado skiing destinations like Winter Park and Keystone, and even exotic locales like Costa Rica and the Bahamas.
Dennis Johnson, a real estate agent with Paffrath & Thomas in Breckenridge, Colo., said it varies by resort, but buyers can snare a one-bedroom condo with "ski-in, ski-out access" for about $300,000. Properties with two or more bedrooms start at $650,000 and top $1 million. Vacation rental rates range from about $125 to $1,000 a night.
"There's always going to be that demand for people to come to ski areas because our society is so stressful and we want to get away," Johnson said.
In Miami Beach, Jayson Wingfield rents out his $600,000 studio-style condominium with a water view. Located in the upscale Setai condo-hotel, his condo produces an average of about $3,000 per month on vacation rentals. Bookings and maintenance are handled by the condo-hotel, though cheaper third-party managers are available, Wingfield said. His condo is rented about 65% of the year.
"It's perfect for the absentee owner that doesn't want any responsibilities, who wants to use it part-time and maximize the investment," said Wingfield, 31.
Industry professionals cite several steps for homeowners to follow in the vacation rental process.
First, owners should investigate the rental laws, and what, if any, licenses are required for owners of rental properties. They should build a rental agreement that includes policies on pets, smoking, security deposits and minimum stays. Determine check-in and check-out procedures. Some vacation rental companies mail keys to travelers ahead of time to streamline check-ins.
Deciding on a daily or weekly rental rate is key to make the most profit while not overpricing the property. Homeowners should consider accepting credit cards or PayPal charges to make payment easy for both sides.
Next, homeowners should prepare the house based on the type of renter they're targeting. Properties with video game systems, for example, and kiddie pools can attract families.
To protect your property from damage and theft, always list the inventory of property in the home.
If a homeowner has the time and energy, and lives close enough to their rental property, there are rent by owner services and websites available. It can be more affordable for a homeowner to handle everything without a property manager, but unless the homeowner is ultra handy, at the least they will likely have to hire a professional cleaning service or someone to handle difficult repairs like plumbing or air conditioning.
The other options is to choose a reliable vacation property manager, who can handle maintenance, cleaning and repair services and help keep the property presentable for renters and owners.
Individual companies also offer these services. Many vacation managers also book renters and keep the house ready for when the homeowner wants to visit, charging a percentage of the rent that can range up to 30% or above if booking fees are included.
Homeowners want an attentive property manager who is not too busy to care for their investment and respond to emergencies. Check references and talk at length with mangers to determine their reliability. Experts stress a close study of the contract to avoid hidden charges added to booking fees, which can be 20% or more.
After finding a vacation manager, seek out a way to list the home, whether it's through a real estate agent or the Internet, an essential research option. In addition to HomeAway's sites, others that offer listing services include Vamoose.com, Beachhouse.com, and myriad sites that highlight a specific region.
A well-marketed vacation home is more likely to find renters. By using listing websites, owners can give details of the property and show photos to prospective renters.
"Take a whole lot of them," says HomeAway's Halloran. "Make sure you have pictures of both the interior and exterior, nice pictures of the kitchen ... Take pictures of the view."
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