I am looking at a bay-side vacation rental. I didn't anticipate looking at vacation buy and holds, but this seems like deal too good to pass. Calculating ROI is different with vacation rentals, how are the out of season rents and expenses calculated?
I have been look at vacation rentals. The important thing seems to be to evaluate if you think the house will be used in the winter sea on or if it will be boarded up? From what I am seeing that is key. One of the reasons I am looking gin areas that have 12 months vacation seasons, is to make sure the rental will stay occupied all year round. As that is easier to cash flow.
I have been look at vacation rentals. The important thing seems to be to evaluate if you think the house will be used in the winter sea on or if it will be boarded up? From what I am seeing that is key. One of the reasons I am looking gin areas that have 12 months vacation seasons, is to make sure the rental will stay occupied all year round. As that is easier to cash flow.
Look on VRBO and FlipKey and AirBNB and check out comparable properties occupancy and rates. The danger you run into is that some of that calendar blockage you see could be owner blocks and not paying guests and there's no way to tell. Sometimes less-than-scrupulous sellers will add a bunch of blocks to their calendar to make it look busier than it actually is.
Look at the ID number of the property on those sites and compare to properties on the same sites flagged as "new". What you are trying to figure out is the 'tenure' of the property on the site. Obviously properties that have been on the sites a while and have had time to develop a following (and good reviews) will have higher occupancy than brand new rentals. So if a property has been on VRBO for 3 years and has 80% occupancy -- and you will be a brand new rental, cut it to 1/3rd for the first year.
If you are buying an existing vacation rental, make sure that you keep all existing bookings after closing. Make sure that you are given all the contact information and records of past guests -- if they have had a good experience, being in touch with them can be a great source of future bookings for you. Very carefully go over the financials of the vacation rental business. Strangely enough, what the prior owner/current seller says about their rental revenues may not match their tax returns. ;-) When in doubt, only trust the lower of the two.
If the property has been professionally managed, get figures from and have a long talk with the vacation rental manager. They can (and will once the owner has given them the OK to release the figures) tell you everything that you need to know, and they have no incentive to inflate the books. Heck, if the property is fairly decent, they want to keep managing it. They will tell you how to make it more successful, hoping that you will get to see their value and let them manage it for you. Often the biggest barrier to success for a vacation rental is the owner.
Are you talking OC Md or New Jersey? If ocean city maryland, I have rental properties myself, as well as sell them to clients.. Message me if you like!
Thanks for the advise. I am still looking at this property and i will use the advise you have given. This has the potential of being a 12 month rental, but not in a traditional vacation rent way. i have been told that a lot of the local and seasonal vacation employees need places in the off season. I checked out AIRBNB and VRBO... great samples of rent potential. I have another question: I'm going to need a property management company. What are the fees to look for?
Good day,
I currently own a vacation rental in Ocean City, MD. I cash flow positive, and am able to spend time here with my family. I do employ a property manager (PM) and the rates you asked about seem well worth it, especially when compared to other vacation areas. I use a 3 tier system with my PM. Tier 1) 16% - PM finds tenant and collects payment. Tier 2) 10% - I find tenant and PM collects payment. Tier 3) $75 flat fee - I find tenant and I collect payment.
All three tiers include the same level of customer service for my clients. Any issues within the unit during their stay, PM acts as my agent, this also includes pickup and drop of keys, as well as supplying parking permits for our lots.
I hope this helps you in your search for a deal that works for you in the Ocean City area. I believe it to be a great town with literally something for every type of vacationer.
Please feel free to reach out to me, and I will assist you anyway I can.
Good luck,
Rob