Real Estate Investing Basics

6 Vacation Rental Beginners: Look Where They Are Today!

13 Articles Written
Vacation Rental

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Unlike many developed industries that require years of grunt work only to be on a level playing field with your nearest competitors, vacation rentals offer a different, more hands-on and rewarding ecosystem in which newcomers can thrive.

Below you’ll find six inspiring stories of investors who arrived to the vacation rental playing field with little to no experience. Their stories act as living proof that inexperience does not count you out of the vacation rental game: in fact, it often acts as the catalyst for rapid (and sometimes unexpected) success.

New Challenge, New Progress

Greg Ross bought his first home shortly after moving to San Diego in 2002. When the family started growing and they needed a bigger house for the kids, he decided to rent the home as a vacation rental.

To run the vacation rental property efficiently, Greg figured “with my 15 years of technology background that this would be easy. Everything is done online now anyway! Right? Wrong!”

While he entertained 70% occupancy rates simply by signing up for VRBO, HomeAway (click here to list your place for free on HomeAway—only pay when you get a booking), and FlipKey, Greg and his team quickly realized they had no problem marketing the property. It was the customer service part that they so vitally needed to stand out from competition.

So what did the former technology executive do? He became obsessed with quality and customer service.

“We do a lot of things very differently than other companies now,” he says. “We give our customers an experience. It is not optional. We find out what they like to do and why they will be in town. We often pick our guests up from the airports in limos and will do things like stock their home with specialty food and drinks. We even have curated relationships with some of the very exclusive places so that our customers will feel like VIPs whenever they are in town.”

Greg says that this treatment – this Four Seasons-style concierge he has built – lets him charge higher rates and builds a customer loyalty and referral business that is second to none. He now manages a number of rentals as well under the name Pacific Coast Vacation Rentals.

Thinking Of Renovations As Investments

When Leslie Eiser, a self-proclaimed “Grannie living in Montreal” invests in properties like Caribbean-bound Theater On The Beach and Vermont-based Theater In The Woods  to operate as vacation rentals, she says they are almost never as “turnkey” as advertised.

“I’ve never bought a property that I’d vacation in, as is,” she says. “There is always something majorly wrong. Sometimes it’s simple – like tiny TV’s and no internet. More often it’s a case of really bad decor. Dark walls, old wall paper, bathrooms that haven’t seen a paintbrush in forever, tiny porches, broken furniture, stuff that the previous owner could easily have fixed – and didn’t.”

But in a less-than-luxurious predicament that many investors might just consider “passing off” to some unsuspecting long-term tenant, Leslie says owners should not be afraid to do renovations.

“Often just taking the time to consider the bones of a place, deciding what it needs for you to want to stay there, is enough to set the place on a much better path.”

She looks as each of the upgrades as investments – a theme that has resonated throughout many of these stories – because a better guest experience means more bookings. “I buy my babies (her vacation rentals) gifts: a new Kayak, a 3D TV, a nice quilt,” she says, because once she’s proud of a property, then Leslie can shine and go about telling the world!

Managing Your Rental: A Labor Of Love

Debi Hertert is a big believer that there are some things you can only learn by doing.

She started renting her family beach home in Oregon – The Gullhouse – to people (other than family friends) back in 2007. Formerly a travel agent herself, Debi and her family "got ready" for business by rebuilding the deck, putting in a hot tub, replacing the carpet, and upgrading all the linens. Her family did all this work themselves (with friends helping out) calling it "work with a view" and they had a blast.

Hearing that 100 nights per year was the regional average for vacation rentals, Debi set her sights. And at the end of her first year, when tallying the numbers (her husband taking her out for dinner at every 50-night milestone to add some incentive) they were ecstatic to find they had netted 144 nights.

Debi then decided to get serious.

“I started reading everything I could find… about giveaways, kinds and amounts of soaps to supply, thread count on the linens, types of vacuum cleaners, and when is the best time to deep clean.”

It soon became very clear to Debi and her husband that they were adding a good bit of income to their reduced retirement coffers. “Stocks and bonds, are fine, but they don’t DO anything!” she exclaims. So they picked up house number two and three, Shearwaterhouse and Romance of the Sea respectively.

Now Debi spends her time trying to streamlinw her work. She signed up with WebChalet, a service that is ideal for owners who are too intimidated to build and manager their own vacation rental website. “Now we are learning about social marketing, statistical tracking and other acronyms that are still puzzling to me,” Debi chuckles. Meanwhile, her husband just finished a Microsoft Access class, so they now have means to organizing statistics and understanding why they are relevant.

The Gullhouse averages 200 rental nights a year. Her Romance of the Sea and Shearwaterhouse also each rented almost 200 nights each of the last two years.

“We are ahead of where we were last year,” Debi says “and one thing I’ve realized is that it has to be fun. I don’t want to get caught up in the numbers and forget the people aspect. It’s a work in progress and a labor of love.”

Related: Overseas Real Estate Investing… For Real?

Thinking Like A Traveler

Violet bought her Florida vacation home (20 minutes from Disneyland) just after the collapse in the market, so she paid a reasonable (not cheap) price.

As a self-described “owner virgin” she wanted to offset some of her costs by offering the home out to rent part-time. Fortunately she had done research and chose a great position in a small, gated community overlooking a natural 14-acre lake. The home came with very outdated furniture and no forward bookings in place.

But in making renovations to the property, Violet was very thoughtful in her decisions, considering how each upgrade might appeal to a traveler.

“Most of our contemporaries had paid thousands of dollars to convert the double garage into a games room, but we chose to think outside the box and convert the formal entry room by taking away the tired dining table, adding a pool table and upgrading the settees to leather. We get many praises that this is so much better than a stuffy converted garage.”

Violet again thought outside the box and created a private gym in the garage, adding exercise equipment and flat screen TV with instructional DVDs, “a great unique selling point over our neighbors,” she says.

“It is time consuming,” Violet admits, but the work seems to be really paying off. “The first year we achieved 22 weeks booked, second year 31 weeks and this year 38 weeks with 7 weeks already booked into next year. We have raised our prices year on year and offer few discounts. Our philosophy is we would rather have two weeks booked per month at our rates than 4 weeks at cheap rates. And for us, that is working.”

Related: The Vacation Rental Hypothesis

Results Aren’t Magic

Tom McCauley is definitely new to the vacation rental game: he bought two Florida vacation rental properties in 2010 and 2012 respectively, which he now refers to as the Sandy Ridge Villas, a business he operates part-time.

With bookings at a standstill back in February, 2012 and his marketing portfolio pretty much limited to word of mouth, Tom was gravely facing the marketing challenge of how to fill his units and earn sufficient return on his investment.

So he decided to take an analytical – albeit simple – approach.

“We created a referral program where we reward people who refer guests, we connected with 18 owners in the same development for the purpose of referring guests when one cannot meet their requirements, we created Facebook, LinkedIn, and Twitter accounts, we began to participate in online forums, and we tracking bookings and guests nights on a monthly basis (with financial reports created every quarter).”

The results? They’re not magic.

“The first quarter [alone]of 2013 saw us book 75% of our 2012 booking and visits.” Tom says. “Our [realistic]goal is to double our business this year.” Pretty clear proof that doing something is pretty darn influential when compared to doing nothing.

Related: Buying a Vacation Home as an Investment: Fun, Sun, and Income?

Don’t Listen To The Naysayers

Juliana Raposo’s story begins in the midst of the 2009 recession: forced to relocate for work, she started weighing the options with her San Diego town house in Pacific Beach: “We quickly realized that monthly rentals would not cover the mortgage and the only way to be in the black was to try vacation rentals.”

But there was a catch: the local rental agency was asking for 20% commission of every booking (and not to mention, they weren’t terribly interested in Juliana’s home anyways) so if they were to go the route of vacation rentals, Juliana would have to manage it herself, remotely.

“Back then all I knew about was a rentals site called VRBO (to learn more about how to rent your place and list for free on VRBO, click here). A sculptor and mom of three kids under 6 years old, I had no business experience.” So when she halfheartedly put up a listing for her less-than-optimal vacation property she was amazed when her inbox started filling up with inquiries.

“I learned that there is a market for offbeat rentals! I realized a lot of travelers saw more value in a home away from home with a friendly local host than the same old beach rental with no personality. A lot of people prefer not to be directly on the beach, where it can be rowdy and lacking privacy. Two blocks inland while two blocks away from Main Street was a magical combination for us.”

Juliana also claims vacation rental management is “the best work-from-home job ever!”

She believes “organized owners can give guests a warm welcome and provide better service remotely than agencies with an office and staff. Creating great written materials (namely insider guides, interactive maps, a concise house manual) and making yourself present by returning phone calls in a second and answering email at lightening speed will make you, the owner, available while unobtrusive.”

And in contrast to many investors who believe that vacation rentals are far more time-intensive than long-term rentals, Juliana says when she started out, she was discouraged by well-meaning folks who told her vacation rentals only attract party people and end up in property damage: she says there is control in accessing your property once a week (compared to being at a tenant’s mercy in a long lease) and she says there is no concern about collecting rents on time: “weekly renters pay well in advance and if they break something, it is easy to get reimbursement.”

Photo: Markles55

    Replied almost 7 years ago
    Hi Matt Landau! Great job and great explanation in depth!! I read this post and enjoyed it! Thanks a lot
    Replied almost 7 years ago
    As part of my business plan exploration and research, I find I’m drawn towards many aspects of vacation rentals, and the first story in particular resonated with me, especially: “… this treatment – this Four Seasons-style concierge he has built – lets him charge higher rates and builds a customer loyalty and referral business that is second to none.” Timely, as always. I’m considering a few properties that might work well as vacation rentals, and really appreciate you sharing these stories.
    Matt Landau
    Replied almost 7 years ago
    Awesome Page! Join the club!
    Matt Landau
    Replied almost 7 years ago
    Awesome Page! Join the club!
    Replied almost 7 years ago
    As part of my business plan exploration and research, I find I’m drawn towards many aspects of vacation rentals, and the first story in particular resonated with me, especially: “… this treatment – this Four Seasons-style concierge he has built – lets him charge higher rates and builds a customer loyalty and referral business that is second to none.” Timely, as always. I’m considering a few properties that might work well as vacation rentals, and really appreciate you sharing these stories. Reply Report comment
    Replied almost 7 years ago
    It seems wise for rental owners in the same development to take a collaborative approach to referrals rather than taking a competitive stance. If you have other examples than McCauley’s Sandy Ridge Villas, please share! I’m sure there is lots to be learned.
    Replied almost 7 years ago
    This gives me some new ideas! It is very helpful to read how other people are getting creative, and learn some new ways to offer my property to guests and show them a good time.
    Replied almost 7 years ago
    It’s one thing to rent a vacation home that you also live in part of the year. I have a very popular, high end VR in Hawaii that brings in a lot of income. HOWEVER, if you allocate all the costs including the maintenance costs there is no way it is worth it compared to other investments. It only makes sense for me because I live here part of the year and would have to pay most of those costs anyway. The drawback of living in the VR though is that is that almost every day we are staying at the VR ourselves we are working on something. If you paid people to do all the routine maintenance that comes up (especially in a tropical climate, but really in any house with a lot of guests), your return would really be impacted. My concern is that “investors” will think this is a good idea and buy VR’s they never live in. Investors never take care of the places like those of us who live in ours, and that gives VR’s a bad name. And if they flood the market, they drive down prices, so we all lose money. I think people may also underestimate the amount of work it takes to manage a VR. This house actually isn’t bad because people rent for 1-4 weeks at a time, and they’re paying a lot so they tend to be sophisticated renters and very nice people. I also bought a small condo in a ski area and I can’t wait to sell that. Why? Although that makes a better % return, the total return in $ is pretty low. Plus the people are harder to deal with. Many people only stay a few days, no matter how cheap it is they want it cheaper, and they complain more than people spending 20 times more.
    Derek Dewitt
    Replied over 2 years ago
    Thanks for the inspiring article about vacation rental owners. I like how Violet took the time to think about how each renovation would appeal to vacationers. Adding things like a pool table would definitely increase the value of the home in my opinion. If my wife and I take a vacation soon, we might think about getting a rental for it.