Vacation rentals

[Brady Lee]

As I am beginning my journey into Real Estate Investing here in Utah, I was wondering what everybody's opinions were on vacation rentals vs. long term rentals? I listened to the BP podcast with Matt Landau and really like the idea of vacation rentals in the right market. However I have heard that they really aren't as profitable as they seem. What experiences have you guys had? What would you recommend and why? 

Thanks in advance for the advice!

Brady 

[Robert Smith]

@John D. I can see your point and have....argued this case from time to time. I would rather not leave money on the table if I don't have to however I recently, last week, had an issue with this on a home. The previous year they bought the home and did not move the rent and had the home rented 265 days for a mid level price. During the slight off season we have in Jan/Feb they spent money on the home to "maximize revenue" which in turn raised the nightly price and have seen a large decrease in nights rented forcing them to lower the price. The price they were asking per night fixed up was well within the means for the market and area however given the chance to stay at a mid-level rental like everyone else or a higher end rental because things are newer they took the cheaper 2/3 of the time. I lived in a beach market for a while and dealt with the same thing there. The off season for the beach was double or longer what I have here in Gatlinburg and would see the lower end rental with the bright pink and orange walls and 90's furniture rent time and time again while the nicer higher end homes would sit. Case by case and investor by investor, I guess. I can see your point like I said, and will spend more money and maximize revenue in a long term rental but for a short term I think you have to do what everyone else is doing and stay with the flow. 

I have my own thoughts on this but I would like to know your opinion for what works for you or others in the vacation market. A minimum 4 night to weekly rental or a nightly rental. I have seen this go both ways here and would reserve the minimum nights for a larger home that would sleep an entire family compared to a smaller studio - 2 or 3 bed home with a nightly. Again, no minimum here rented 2X more then when the home had a minimum required. Nightly rentals during the off season seem to go to locals wanting a night away and same for the on season. It is rare that I stay over anywhere, but on the beach I would spend many nights in a rental due to the $30 night price instead of the $150 or more a night on season. Maybe offer no minimum for the off season and reserve the longer minimum for the on season. It is also not uncommon to rent a home for $150 a night during the season then jump $100+ for the thanksgiving and Christmas week.