VACATION RENTAL OWNERS - Please help!

5 Replies

Do you own vacation rentals? Will you please answer the following questions, I know it will help me, and many others on BP. Thank you! 

  • Is there a site you look at to determine vacancy rates?
  • What number of weeks do you rent your VR out? 
  • On the off months, what do you do with your property?
  • Do you manage your units yourself or pay manager?
  • What has your overall experience been in renting VR?
  • What do you think of your location as it relates to VR?
  • Would you buy another VR? 

We are building a house and 2 condos in San Clemente, CA and have been asked about the potential for a Vacation Rental. Off the top of my head, it "seems" like a perfect fit, close tot he beach, new outlet mall, restaurants, and it's in Orange County (Disneyland, sports teams, shopping, surfing and more) perfect weather, etc. However; I'd like to pick the brains of those of you with real "knowledge" of the business, and get educated. So please, feel free to weigh in! 

    We own and manage 4 Vacation Rentals in Austin, Texas. We began operating them in 2011. 

    We use Homeaway/VRBO and airbnb to market them. I believe Airbnb is a bit more popular in California and most of our Airbnb bookings are west coast guests.

    We typically look at the calendars of our competitors on the site to get a feel for what their rates and occupancy are when determining whether to invest in a new property. 

    We stay pretty booked. 150-200 nights per year. Some months are stronger than others. In Texas, the summer is slow, but we can usually stay booked by lowering our rates.

    The best locations have good walkability. Near restaurants, parks, concerts, events, downtown, etc. But they also tend to be the priciest neighborhoods, so it's a balancing act to get the best ROI.

    Our net income after all expenses is about 2X what we would generate in a long term rental scenario. 

    Karen,

    I’ve been renting my Waikiki condos as vacation rentals since 2011. I answered your questions below and then added some more things to think about at then end of the Q&A.

    Is there a site you look at to determine vacancy rates?

    I use VRBO and look at the calendars of several comparable rentals to see how many nights the units are booked. One calendar could be misleading since the owner might book her own place for a couple months at a time.

    What number of weeks do you rent your VR out?

    My condos are booked 85-90% of the year.

    On the off months, what do you do with your property?

    There are no off months in Waikiki! The fall is often slower so I lower my rates to attract the people that do travel.

    Do you manage your units yourself or pay manager?

    I do all my own bookings through VRBO and then hire out housekeeping and maintenance.

    What has your overall experience been in renting VR?

    I love the experience! I get to rent to guests from all over the world who are tickled to be traveling to Hawaii.

    What do you think of your location as it relates to VR?

    It’s the best! A block from beaches, shopping, and restaurants. The bus stop is right outside.

    Would you buy another VR?

    Yep.

    More things to think about when deciding to rent out your unit as a vacation rental or as a straight year-long lease.

    Pluses of VR

    The biggest plus of renting out a unit as a vacation rental is that you receive a much higher monthly rent on the place! And, if your VR is in a place like Hawaii with no off season, then you can be making good money every month.

    Downsides to VRs

    You have to deal with 25-50 people and their move-ins/move-outs per year instead of just 1 long-term renter.

    The owner pays for utilities in a VR as opposed to a renter. Since I own a condo, all my utilities are paid for in my HOA fee. If they weren't, then I'm not sure how I would handle a guest who left the A/C on 24/7 and I got a shocker of an electric bill that month.

    The owner has to furnish the VR with high quality beds/towels/kitchenware, etc to attract the best guests as opposed to a renter bringing her own belongings.

    Items do have to get replaced more often due to wear and tear.

    Lastly, I’m not sure the legalities of renting out a place as a VR. My units in Waikiki are zoned for VR so I’m fine. I have a business license and pay taxes.

    So, bottom line is that VRs are a great option if

    They are legal.

    They can be booked enough nights to cover all the costs associated with a VR.

    You can find dependable cleaners and maintenance staff.

    You don’t mind dealing with lots of people per year instead of 1.

    Aloha,

    Dana

    Hey Karen!  My family owns a condo in mammoth that I help manage.  

    • Is there a site you look at to determine vacancy rates? We use VRBO and looking at the calendars of other rentals gives a good idea of vacancy rates
    • What number of weeks do you rent your VR out? it's booked solid in the winter (around thanksgiving-march/april)  and June-August is pretty strong as well.  Sept-Oct are pretty dead
    • On the off months, what do you do with your property?  nothing, usually make 1 trip up i spring and fall to get the property ready, bring wood, supplies, do any repairs, etc.
    • Do you manage your units yourself or pay manager? we manage ourself
    • What has your overall experience been in renting VR? Great, we've been lucky so far, no significant damage from renters. Been using VRBO for about 5-6 years now
    • What do you think of your location as it relates to VR? great, 50 yard walk from door to shuttle
    • Would you buy another VR? yes, I've been encouraging my parents to look into picking up another in mammoth.  If you have the time to exchange emails with renters, set up deposits, coordinate cleaning, then it's great.  We make more money than if we just did a year lease to a local, but it's also much more time consuming 

    Karen,

    I own 4 VR's (3 with a Partner/Builder) in the Destin FL area.

    VRBO/HA/FK platforms give a good indication via the calender. Some are up to date & others are left open for various reasons...

    The number of weeks rented is approx 26 with a few weekends.  These are large houses that can accommodate 30 plus so vacancy will differ vs a condo.  Peak season is very important as it pays the bulk of the bills.

    The off weeks are left open for last minute getaways, personal use,...

    The VR houses are managed by my partner who has approx 8 other houses with other investors.

    My overall experience has been quite good...but as with everything, it depends :0)

    The location is great for VR's!  It is coastal with a  with great beaches, infrastructure, shopping, family activities...

    Yes, I plan to keep buying, building, developing with my partner more VR's.  It has been a profitable & overall good experience.

    Lynn

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