Vacation Rental, Bed and Breakfast, Short term rentals ..
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
I must admit, I do NOT have any Vacation Rental properties. I am however; fascinated by this niche, and in fact was the one that pushed to get a forum devoted to it.
My question is this, how many of you actually have Vacation Rental, Short Term Rental Airbnb or similar type room rental, Bed and Breakfast or other type properties, or are interested in the niche?
What is your rental or area of interest, and why?
What are the pros and cons of each in your opinion?
If you actually own one of these types of properties, what made you decide on which type of rental you offered?
If you own such a property, describe it.
@J Kelley Sullivan how much are properties selling for there?
We have a single family home in Laguna Niguel CA that we had as a short term rental home until the HOA passed a rule prohibiting it in October.
It was lucrative mainly because it was our home that we used and it was furnished well above average. It offered a gourmet kitchen with Viking professional appliances, leather furniture, the best beds, etc. That resulted in off the chart reviews from those that stayed there.
The biggest issue is vetting the guests you rent to. You need to ask questions to discover their purpose. Going to a bachelor party, 30th birthday, etc. resulted in a "were booked". Finding the right house keeper who can get there on the day between rentals is important. We were able to use our regular housekeeper so we got lucky.
Now, with our new HOA rule any rental has to be for at least 30 days and the HOA has the right to see the agreement. That makes it a little more difficult for us to plan our visits, and the income is less, but there's also less time management... so its a wash.
We were getting $300/night as a short term rental and now we get $4,500/month as a furnished corporate rental. We have a guest there now until the 5th. Another arrives on the 28th for 53 days which is the prime time to be away from Oregon. So the longer "short term" rental can suck a little if its also a home you like to visit.
My advice is to invest your money on furnishings and present the property online as best you can. A 3D scan similar to this click here (that's not our home) gives the best representation available . Professional photography is a must.
I find it surprising how much money someone pays for the property and then they won't spend $300 for the marketing that will generate the income. The marketing is evergreen. Spend it once and reap the rewards over and over.
Show what you have, pair what you have with the appropriate price, then eliminate the uncertainty with transparency, and you'll increase your occupancy. The fear of the unknown by the "guest" is what prevents 100% occupancy.
My feeling about Portland, and other communities having difficulty embracing the sharing economy, like my HOA, has to do with the horror stories that @ Marcia Maynard mentions. I've never known of anyone who actually experienced squatters in their vacation rental. I've experienced it many times with my "short sale" listings, but even then the odds are so small of that happening that it isn't worth planning for. I believe it's an urban legend.
Be that as it may for squatters; breakage should be part of your business plan. It'll happen so plan for it.
We have thermostatically controlled faucets in our bathrooms. One old guy couldn't figure out how to use them so he assumed my water heater was broken. I spent 20 minutes on the phone explaining it to him but now we have laminated pictures with instructions: no more calls (BTW those faucets are the simplest things in the world to use). The handle on our Fisher Paykel dish drawer was broken because a guest didn't know how to unlock it: more pictures. Same thing happened to our Duet washing machine.
Now everything in the house has a laminated pictorial instruction.
The remotes were the biggest hassle so I eliminated them with a Harmony remote that handles everything by pressing on a... wait for it... a picture! I also have a Nest thermostat, Rachio sprinkler system and MyQ Garage door opener so everything in Southern California can be monitored and controlled from our diggs in Portland.
Vacation rentals can be lucrative if you think it through. Bernadette did just that. She spent weeks researching everything from sources to by coffee, soaps, shampoos, towels, linens, evaluating dozens of agreements, how to present the property, how much to charge, how to work with the various portals (this is very interesting) she's thoroughly evaluated everything you can imagine to launch a short term rental. It's astonishing how much there is to it.
She's putting it all together in a "How to" package... I'll post it up here when it's ready.
Cheers!
Currently, we have a right to use deed in a resort that provides cabins as well as rooms in a lodge at the resort.
It's located int the Smoky mountains in an absolutely beautiful area in NC. We chose to purchase this after we vacationed there and realized the opportunity to make money and stay for free. This option was also attractive because of the easy maintenance. We pay our maintenance fees and I handle the bookings from home. We have 2 websites that connect me with people. I have a huge return customer base as well as capitalizing on the rallies held in the area.
The area has a huge tourist industry due to the roads and a local attraction called "Deal's Gap". It is also a hour and a half from Gatlinburg TN.
We quickly rented all of time on our contract and then bought 2 more contracts.
I now need more rental opportunities for my customers because I am once again out of time to rent out. So, we are expanding to buy a vacation rental in the form of an actual house. It's a great market niche.
I am researching the different properties in the area. Location and certain required amenities to satisfy my clients and the financing as a Canadian in the US has kept me looking for longer than I would have liked. But the opportunity to learn more here on BP has been invaluable.
So, we have been successful in this area and are still building our portfolio.
Thank you for having this forum. I subscribe to it.
We have 16 standard rental units in Vancouver, WA.... SFRs and small plexes. One of the houses became available and we are presently outfitting it to do Airbnb over the holidays and will see how it goes. In September we stayed in an Airbnb in Copenhagen and it was a terrific experience.
We have a good friend in Portland who is doing this and is doing incredibly well. She networks with others who do short-term rentals, goes to conferences about it and such. I'm going to get some tips from her, as she is well situated, smart about it and can mentor me.
My nephew took one of his duplexes off line, changed it to Airbnb too and is making so much more than the standard monthly rental rate. However it requires more time to coordinate the guest stays and to do the housekeeping between stays. We've heard potential downsides .... horror stories about squatters and damages. We aim to go in with eyes open and intend to mitigate our risk with solid operating practices.
On another note, we're exploring ways by which we could purchase my parents retirement home on the Oregon Coast from their estate. That's a trickier property because it is in a HOA community, off the beaten path. My mother is age 96, in assisted living, and until this year was interested going once a month to her Oregon Coast home; we would take her. We don't want to let the property sit idle, so it's available for family and friends to use from time to time. We accept donations for upkeep, but it's not officially rented. If we make it a vacation rental, then we will need to register it with the county. The HOA allows vacation rentals. We will also need to change the furnishings and contract with a local management company. The house still has most of my parents furnishings and I have handled the maintenance for it since my father passed away in 1993. It's in a Living Trust for my mother's benefit and I am a co-trustee. It's not the ideal beach rental because of it's size (sleeps 10), and location (high up on a headland, tucked in the woods with partial ocean view).... but it's out of tsunami range!
I was also considering doing an Airbnb in Portland or Vancouver, WA. I found out that Portland and I believe Vancouver as well regulates the industry so that a permanent resident has to be in the home for majority if not 12 months of the year. Portland is not too keen on short-term rentals if someone isn't living on the property 12 months of the year. I understand that the city is cracking down on that. We considered option of buying a rental home with room to add an accessory dwelling unit (ADU) and use that as an Airbnb. In Washington the homeowner must be in the main dwelling 12 months of year to have an ADU (which killed the idea for us) and in Portland they do allow a non-homeowner (renter) in the main home to legally do ADU and Airbnb. We considered hiring an Airbnb management company but they have fees as well plus the hotel tax. Seems like it's a wonderful idea if you can do it yourself and/or live on the property.
We ended up buying a home to in Ventura, California near the beach where they allow short-term rentals. But in that neck of the woods I wasn't able to find an Airbnb manager (yet). So we decided we're listing with a vacation rental company for at least one week and possibly monthly vacation or corporate short-term rental. If it works out, we'll make some decent income from that and intend on building a second unit on the property for short-term rental as well.
I have two other long-term rentals in Portland and California and prepping the home in Ventura fir short term rental has been a new challenge and another perspective in appealing to the renter. It's like you need to create a "resort"/ vacation home and have to look at it through those eyes. It seems like good reviews and repeat customers are the life blood of a vacation rental.
Good luck with yours. Let us know how it goes! And if anyone knows of an Airbnb manager in the Ventura, California area please let me know! Thanks!!
As A Canadian that started investing in vacation real estate far from home (3hours flight away), it is imperative that you realize that you cannot micromanage the investment and expect stellar results in either terms of revenue and reviews. Ultimately, it is best to let you money work for you and not the other way around!
Airbnb is one way to do it for sure, but you really should use that for smaller hands ON investments where, like a resort property / hotel you can respond right away. But the farther away you need to essentially become a passive investor in to such vacation real estate located farther away (besides when you do go you want to enjoy and not spent that down time away yet still working!)
Yes the shorter the rental term, in theory the more revenue you can generate, but with so many more turn overs, it is in fact a LOT MORE work.
Why are more and more individuals investing in this type of income generating vacation real estate? Even if you break even you are still way ahead because you get to enjoy it whenever with out the expense associated with your desired type of vacation. By example, and do your research, more and more people are making a passive investment into resort vacation type properties in the Caribbean. Some places like Turks and Caicos are becoming very attractive compared to the States or Canada because there is NO TAX on income, property tax, realty tax or even capital gains tax if when you decide to give up such an investment. Actually it is better to just keep it in the family and will it upon death with no death or inheritance tax either.
Sound interesting? Have questions. I have been doing this a long time. Come on down for a few nights and experience what could be an amazing LIFESTYLE investment...passive investment and active returns.
Great posts,with real information! What a variety of ways in which you accomplish your goals. Hope more post.
@J Kelley Sullivan how much are properties selling for there?
We have a single family home in Laguna Niguel CA that we had as a short term rental home until the HOA passed a rule prohibiting it in October.
It was lucrative mainly because it was our home that we used and it was furnished well above average. It offered a gourmet kitchen with Viking professional appliances, leather furniture, the best beds, etc. That resulted in off the chart reviews from those that stayed there.
The biggest issue is vetting the guests you rent to. You need to ask questions to discover their purpose. Going to a bachelor party, 30th birthday, etc. resulted in a "were booked". Finding the right house keeper who can get there on the day between rentals is important. We were able to use our regular housekeeper so we got lucky.
Now, with our new HOA rule any rental has to be for at least 30 days and the HOA has the right to see the agreement. That makes it a little more difficult for us to plan our visits, and the income is less, but there's also less time management... so its a wash.
We were getting $300/night as a short term rental and now we get $4,500/month as a furnished corporate rental. We have a guest there now until the 5th. Another arrives on the 28th for 53 days which is the prime time to be away from Oregon. So the longer "short term" rental can suck a little if its also a home you like to visit.
My advice is to invest your money on furnishings and present the property online as best you can. A 3D scan similar to this click here (that's not our home) gives the best representation available . Professional photography is a must.
I find it surprising how much money someone pays for the property and then they won't spend $300 for the marketing that will generate the income. The marketing is evergreen. Spend it once and reap the rewards over and over.
Show what you have, pair what you have with the appropriate price, then eliminate the uncertainty with transparency, and you'll increase your occupancy. The fear of the unknown by the "guest" is what prevents 100% occupancy.
My feeling about Portland, and other communities having difficulty embracing the sharing economy, like my HOA, has to do with the horror stories that @ Marcia Maynard mentions. I've never known of anyone who actually experienced squatters in their vacation rental. I've experienced it many times with my "short sale" listings, but even then the odds are so small of that happening that it isn't worth planning for. I believe it's an urban legend.
Be that as it may for squatters; breakage should be part of your business plan. It'll happen so plan for it.
We have thermostatically controlled faucets in our bathrooms. One old guy couldn't figure out how to use them so he assumed my water heater was broken. I spent 20 minutes on the phone explaining it to him but now we have laminated pictures with instructions: no more calls (BTW those faucets are the simplest things in the world to use). The handle on our Fisher Paykel dish drawer was broken because a guest didn't know how to unlock it: more pictures. Same thing happened to our Duet washing machine.
Now everything in the house has a laminated pictorial instruction.
The remotes were the biggest hassle so I eliminated them with a Harmony remote that handles everything by pressing on a... wait for it... a picture! I also have a Nest thermostat, Rachio sprinkler system and MyQ Garage door opener so everything in Southern California can be monitored and controlled from our diggs in Portland.
Vacation rentals can be lucrative if you think it through. Bernadette did just that. She spent weeks researching everything from sources to by coffee, soaps, shampoos, towels, linens, evaluating dozens of agreements, how to present the property, how much to charge, how to work with the various portals (this is very interesting) she's thoroughly evaluated everything you can imagine to launch a short term rental. It's astonishing how much there is to it.
She's putting it all together in a "How to" package... I'll post it up here when it's ready.
Cheers!
I was also considering doing an Airbnb in Portland or Vancouver, WA. I found out that Portland and I believe Vancouver as well regulates the industry so that a permanent resident has to be in the home for majority if not 12 months of the year. Portland is not too keen on short-term rentals if someone isn't living on the property 12 months of the year. I understand that the city is cracking down on that. We considered option of buying a rental home with room to add an accessory dwelling unit (ADU) and use that as an Airbnb. In Washington the homeowner must be in the main dwelling 12 months of year to have an ADU (which killed the idea for us) and in Portland they do allow a non-homeowner (renter) in the main home to legally do ADU and Airbnb. We considered hiring an Airbnb management company but they have fees as well plus the hotel tax. Seems like it's a wonderful idea if you can do it yourself and/or live on the property.
We ended up buying a home to in Ventura, California near the beach where they allow short-term rentals. But in that neck of the woods I wasn't able to find an Airbnb manager (yet). So we decided we're listing with a vacation rental company for at least one week and possibly monthly vacation or corporate short-term rental. If it works out, we'll make some decent income from that and intend on building a second unit on the property for short-term rental as well.
I have two other long-term rentals in Portland and California and prepping the home in Ventura fir short term rental has been a new challenge and another perspective in appealing to the renter. It's like you need to create a "resort"/ vacation home and have to look at it through those eyes. It seems like good reviews and repeat customers are the life blood of a vacation rental.
Good luck with yours. Let us know how it goes! And if anyone knows of an Airbnb manager in the Ventura, California area please let me know! Thanks!!
Hi Kiki! What are you looking for with an Aibnb manager? I'd be interested in connecting with you to see if it is something I could do. My husband and I live in Oxnard, so we're right down the road. Take care!
All last summer I did short-term vacation rental in one of my triplex units which is a 3 bed 2.5 bath townhouse style unit in Snohomish County, Washington. During construction I actually put bedrooms on Air BNB for really cheap and the people who stayed loved it (like $50/night with a blow up mattress) - I wanted to get my reviews up to get on the search que. I also subscribed VRBO (which I dislike and wouldn't do again). While Air BNB's customer service isn't "awesome" it's no where near as bad as VRBO. Expedia just bought VRBO though and I've had good experiences with Expedia so maybe they will change that. I also had it listed on Craigslist and was contacted by an insurance company for a local displacement, that was probably the best, I just filled out a lease and kept 100% of the profit (Air BNB keeps a %). Overall, Air BNB was the easiest though. I had people from all over, but mostly people in towns with a family for wedding. I did all of the cleaning and stuff myself which was too much. I've had bad luck hiring "good work" this summer and since my reviews were so new, I wanted to make sure it was perfect so I just did it all myself. I made a lot of money on it and ended up upgrading all three units in the building with the proceeds, which was sweet. Now with just two of the units rented I cover my mortgage, taxes and insurance + $200 so on the third I am going to air bnb again next summer and it should be nice profit. I am also going to open up a little cabin I own as well as another 2 bed 1 bath smaller unit.
We have the classic RI beach house. Not high end, middle of the road, 3 bedroom, pool table , 1 block from the beach and a deck view of the water. Our primary rental for this house is the URI 9 month lease and we do supplemental summer weeklies. Frankly we could do all summer easy if we chose but we also like it. When rented it is a family rental with pullouts and a kick back style. Sleeps 6, could do more. We go by word of mouth and other unit overflows. Good beds, decent furniture but no leather couches, Sat - Sat rental. Key things for us are simple appliances, lots of dishes and good cleaning. And location because of that nice little beach down the road. Most important thing is to know the area and leave some area information in the house.
We are looking at another because it is a good RI market albeit a short one.
@Lawrence Belland Great post, I'll be watching for your "How To" just so that I have it when other BP members are asking.
Does anyone happen to know of any sites for advertising houses that are perfect for vacation rentals for sale? I've tried to get them to put a category on BP for that, but so far, no luck. There's a zillion sites for rentals, but nothing for those wanting to sell a VR property. We design and build our properties with VR in mind, NO HOA, and would like to market to such buyers, I just don't know where
@Karen Margrave is there a reason you don't list it with a broker? The SoCalMLS is going to give you the greatest reach for Orange County buyers.
Marketing specifically to VR buyers is not going to do you any favors. You need the broadest reach; not the narrowest.
Lawrence
My wife and I bought our 1bd/ 1bth Kihei, Maui condo in 2012 and love owning a vacation rental! We only market on VRBO and we've really liked our experiences w/ VRBO and like the changes they've made to their site over the past few years. We also made a complementary website to our VRBO listing which also acts as a info site and Maui guide for our guests/ potential guests. Due in large part to our location, these are the only two marketing avenues that we use.
The past few yrs we've been able to keep our occupancy rate in the high 80% range and this year we will break 90%. These occ. rates also include the 17 days each year we use the condo and we count these dates as "vacant" since we are not bringing in any income. However, like I mentioned before, even though we are not bringing in any rental income during our trips, it's also not $2,000+ coming out of our pockets going towards hotel fees!
Pros: There are so many pros w/ VRs but one I will bring up is on the customer service end. We invested in an area that we just love and we really enjoy sharing that admiration with our guests. We have a great PM, but we choose to do all of our bookings. This gives us the pleasure of interacting with all of our guests and we really enjoy this part of the business as it allows us to be kind of a tour guide for them. We've created some great relationships with some of our guests through the years. We get to host many couples that are getting married, on their anniversary or celebrating other special occasions such as retirements, engagements and more. Many will send us pictures of their trips while they are staying with us and we've gotten invites to stay with guests with them in their hometowns if we were to ever visit there. Many great relationships and experiences that we probably wouldn't be able to get with most other types of REIs.
Cons: Really, the only con I can think of, as some have mentioned above, is general wear and tear on items and since our VR is located in Maui, replacing items is a little more expensive than most areas of the U.S.
As for choosing what type of rental, we looked at few different avenues in several different parts of the country including our home city of Denver. We chose a VR in Maui so that we can have a place to use when we go on vacations and have a place that will more than likely be where we retire.
Thank you for the thread. I love the idea of vacation rentals and plan on moving in that direction eventually. I have stayed in a number of them and LOVE it! getting ready to do another in Mexico. I was part of planning a retreat on the Oregon coast just two years ago and it was a huge success. Rentals for 10 or more are harder to find, but I believe definitely on the corporate or family getaway list. We used oregonbeachrentals.com to locate our venue.
I will be following and interested to see the up and coming laws and regulations for this type of rental income.
Laureen