BP Podcast 057: An Introduction to Investing in Vacation Rental Properties with Matt Landau

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The sand between your toes, the soft roar of the waves crashing on the beach, the beautiful people sunbathing on the shore. If this is your vision of a vacation rental… it’s about to change!

In today’s episode of the BiggerPockets Podcast, we chat with vacation rental expert Matt Landau about getting started as a vacation rental investor and building a scalable (and profitable) business around leasing rental properties to nightly guests in great vacation areas. Matt shares a ton of great tips, tricks, and skills to help you learn more about this fascinating – and largely misunderstood – niche of the real estate space.

Additionally, Matt shares some really great tips for any landlord  to decrease vacancy rates and increase profits in your real estate business, so no matter what kind of investing you currently engage in, this episode is bound to help your business improve!

So grab a beach chair, make yourself a piña colada, and  sit back and relax… it’s time to take a vacation!

Listen to The Show on iTunes

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Listen to the Podcast Here

In This Show, We Cover:

BiggerPockets Podcast _ Real Estate Investing and Wealth Building 9.42.11 AM

  • What is a vacation rental – and why should you consider one?
  • The legalities of vacation rentals
  • Screening for the tenants who won’t destroy your property
  • Marketing for great tenants
  • The first steps in buying a vacation rental property
  • Expenses when dealing with a vacation property
  • Using Adwords to fill vacancies
  • The secret to getting national press for your properties
  • And a lot more!

Books Mentioned in the Show

Links from the Show

Tweetable Topics

  • We’re at the beginning of a very massive trend: vacation rentals. (Tweet This!)

  • Be generous in having faith in people. (Tweet This!)

  • Create a bulletproof reputation of being the industry expert. (Tweet This!)

Connect with Matt

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About Author

Brandon Turner (G+) is the BiggerPockets.com Senior Editor and Community Director. He is also an Active Real Estate Investor (Flips, Apartments, and Buy-and-Hold), Entrepreneur, World Traveler, Third-Person Speaker, and Husband. Come hang out with him on Twitter!

21 Comments

  1. Matt,

    Thanks for the recommendations and the info. I appreciate it.

    In your experience with overseas vacation rentals what type/size properties seem to have the largest demand….Condo,,SFR,, Large Villa? 2 Bed , 3 Bed 4 Bed…?

    Also, what price per week seems to be most profitable/ in demand for you. $3000+Large luxury Villas , Middle of the road properties,, or the less than $750 a week type.

    Lastly, any developing countries you would recommend getting into now :)

    Thanks,
    Todd

    • Todd, it’s nearly impossible to say — across the board — one particular type of rental is better than another. It depends mostly on who travels to that destination and what they’re looking for from a property on vacation there. In other words, a 5-bedroom home might be most successful on the beach in Long Beach Island, while a small studio/condo might be most popular in Austin, Texas.

      The same goes for pricing. It varies in every scenario.

      In terms of an up-and-coming country, check out Colombia. It’s people, professionalism, and future all show tremendous potential.

  2. Matt,
    Thank you for a very interesting show. My husband and I lived overseas a few years ago and we seriously considered investing in a vacation rental. We’re still interested in doing this, and when I listened to the podcast I was expecting more discussion about how you got started.
    How did you find your first vacation rental? How did you fund it? Did you use loans from local banks in Panama? How difficult is it for Americans in a foreign country to get bank loans? Did you need to fix up your first property before you rented it and how was that funded?
    I found the discussion about marketing your property very helpful. You brought up many points that we never even considered.
    Thanks again for a great show. Katherine

  3. Hello Matt,

    Thank you for all the information. I am in the vacation rental business in Montreal. However, the hotel industry is fighting hard and the future for vacation rental is uncertain.

    1. I wonder about the legality of vacation rental in Panama? Is it completely legal or is it a grey zone of the law.
    2. What is the average price of a 2 bedroom condo in Panama City in the tourist area? and what would be a reasonable monthly revenue for this unit.

    Thank you again.

  4. Hello Matt, me again.

    Do you have suggestion of which countries, Other that the U.S. and Canada, are good to do vacation rental business. No legal ambiguities like in the U.S. and Canada, and which counties would represent the biggest return for my money?

  5. Nice interview. Josh mentioned the economics getting glossed over a bit and it didn’t seem like you guys made it back to that point (don’t mean that in a harsh way! :)).

    Would you be able to share a short case study on the economics of a vacation rental for someone who’s hands off? I’ve always thought it would be cool if you could own a vacation property with fairly few day-to-day headaches, visit a couple times a year (business purposes, naturally!), and have it mostly covered (say out of pocket $5-10k/yr max). If appreciation happens then that’s gravy that *might* pay back all of those trips you took.

    Realistic? I’d love to know some numbers for actual places if you have some you could share.

  6. Michael Dorovich on

    ‘Is that your candy cane voice, now that you’re striped?’

    This was worth the price of admission alone. Who says you guys are not comedians? :)

  7. Bryan Whitfield on

    Very Interesting podcast but not for the reason you might think!

    Please consider having Matt back on the show to just talk about marketing. Much of how Matt markets using new and old media can be applied to those who market properties, ideas or lifestyles to buyers, sellers or private financiers.

    Matt knows how to market!

    Nice job as always guys! Please keep the podcasts coming.

  8. I have two Vacation Rentals and participate in some groups of VR owners, and I would like to give another side of this.

    Managing vacation rentals is a lot of work (more work than a regular rental) and does not usually bring in the returns discussed here. Many, many VR owners do not make a profit, they just bring in some money to offset the costs of owning a second home. Those that own VR’s just for profit, as discussed here, the majority of them have seen their profits go down because the competition has gotten fierce. Marketing costs have gone up. The amount of places where you can advertise has dwindled as many VR sites have consolidated, and those VR rental sites now have so much power that it has become more difficult to optimize your income. In addition they are forcing the process to be more impersonal, which is disillusioning renters. Instead of the old days when vacationers were renting directly from an owner, they’re often now renting from large property managers, so that personal touch is gone.

    It is not easy to find good and dependable cleaning people. Many VR owners say that as more people are renting VR’s, the quality of the renters has gone down. Some cities and states are making it more difficult to have VR’s. A single bad review can kill your bookings. Some VR owners have also bad experiences with renters trashing their homes, etc.

    As a result of these types of things, I know several long-time VR owners that decided to throw in the towel. This is not to say that you can’t make money, but don’t kid yourself into thinking it’s easy. I have owned several single family home rentals and several commercial property rentals, and in my opinion VR’s are the most work for the least return. If you’re going to do it, be prepared to do a LOT of marketing like Matt is describing.

    • Cindi, I have two apartments that I rent out through Airbnb (http://www.airbnb.ca/c/amontreal) and with the exception of January and February (50% & 60% occupancy) I always have over 75% occupancy. The marketing cost is only 3%. The competition is getting heated but I have over 200 favorable reviews and the occasional bad review enhances my credibility.

      I do agree with you, finding dependable cleaning people is difficult, even if I pay above average rate for help. That is why I only have 2 properties and I don’t see any way to scale. Some people in my city have over 10 properties and I have no idea of how they do it.

      As far as tenants is concerned. All my biases have been totally destroyed. I have rented to some people fearing that they will destroy my place and I have been pleasantly surprised when I find the place in perfect order. In spite of that, I still have a bias against people in their earlier 20s and I try to have a conversation with them before renting. In two years, I only had one incident that didn’t cost me more than $50.

      With my two properties I work about 8 to 10 hours per week. I can handle that.

  9. Thanks so much for doing this interview! This is definitely an investment that I have been just started thinking about, so the timing is great!

  10. I know I’m kind of late responding to this, but this was an awesome feature. I’ve always been interested in Vacation rental property.
    A Partner of mine in St Lucia has a couple for sale, I posted it in the BP Marketplace but I think it might be expired as I cant find it anymore. He also has Lots available.
    I will be visiting Matt’s site for sure.
    Thanks guys- very informative show as always!

  11. steven gaviria on

    Hi @MattLandau,
    Let me start saying “Great SHOW”! It was great hearing somebody making a living doing this and being successful doing it.
    I have a beautiful Ranch in Colombia. I always thought it was a great investment, being from there, we saw it being a place my family could enjoy but we don’t nearly get to enjoy it as much. I really have really been wanting to rent this out as a vacation rental.
    Now I live in New Jersey, so I wouldn’t be present. What are the first few steps you can recommend me really doing first in my due diligence?

    I need a property management company, any recommendations on how to get a good company?

    How can I go about getting some paper work for the vacation rental?

    You also shared some really websites to list the property, do they take payment before or after the stay? Or do you need somebody there to take payment there?

    I hope you hear from you Matt,

    Thank You,
    Steven

      • steven gaviria on

        Hi Alain,
        Thank for the info. airbnb has alot, looks great. Let me ask you since you aren’t in Montreal do you have a property management company checking the room before and after it rented out and are they also the ones handling the cleaning company ?

        • I am in Montreal.

          I hare people to clean but having good quality service is very difficult to find. I am always ready to step in in case that one of the cleaners don’t show up.

          For your business to work, you have to find some one reliable in Colombia to do the cleaning for you. You have to look locally.

          Good luck.

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