All Forum Posts by: Andrew McConnell

@Steve Siran Thought this might be helpful...

If you’ve invested in a vacation home in Palm Springs, you may find yourself with the unique challenge of marketing in a place where so many of the travelers have an incredibly high luxury expectation compated to many other vacation markets. The Greater Palm Springs Convention and Visitors Bureau reports that Palm Springs visitors spent $5 billion in 2015, a nearly 11% increase over 2013. So there's no shortage of tourist dollars being spent in the region. To maximize your returns, you may want to consider more effectively targeting the luxury travel market sector.

How Can You Market and Brand Your Vacation Rental to Appeal to Luxury Vacationers?

The first step to targeting high-end renters involves upgrading and decorating your home in a way that's going to be appealing to that crowd. Palm Springs is known for being a luxury travel destination, but not every home is a “luxury home” per se. Still, that doesn't mean you can't appeal to luxury vacationers.

You'll want to take a few steps to ensure your home is appealing to luxury travel enthusiasts:

• Upgrade the landscaping and exterior to maximize curb appeal.
• Upgrade appliances to the best and most modern.
• Upgrade bathroom and kitchen fixtures.
• Add small upgrades that allow for greater convenience or an element of novelty.
• Decorate the home to suit a particular design aesthetic. Consistency throughout the home is essential.
• Consider providing a car or SUV for use by guests, so they do not need to rent a vehicle. You may also provide ATVs and other recreational items.

Do your best to eliminate anything that could be perceived as “cheap” or tacky. For instance, avoid linoleum or fiberboard and laminate cabinetry. Opt for quality materials wherever possible. In cases where you don't have the finances to go for the best and most luxurious option, choose a good quality alternative. For example, if you don't have the money to redo your entire shower with an automated, 360-degree shower experience, consider replacing the tiling, installing a waterproof mp3 player and in-shower TV screen, and adding a new, high-quality LED shower head.

Building a Brand for Your Palm Springs Vacation Home

Once you've transformed your home into one that's worthy of a luxury clientele, you'll be tasked with branding and presenting your vacation home in a way that's appealing to a wealthier luxury demographic. This can be achieved in a few different ways.

Your branding efforts should begin with coming up with a name for your property-- something that's memorable and appropriate for the home. A home that's surrounded by lots of cacti might be aptly named Sonoran Springs Lodge or The Purple Cholla House. You could also opt for a family name, such as Miller Ranch or Hannah-Coy Estates.

You'll also need to think of a brand identity, which is the home's personality, both in “real life” and in your marketing materials, including the logo and website. So you might go with Southwestern desert décor for a spacious ranch property, or perhaps you have a modern luxury home that's better suited to a clean, futuristic look. Whatever you choose, the name, logo, website, marketing materials, and the actual home should all have the same feeling and personality. Distinctiveness and consistency are key.

Once you've named your property and decided upon a brand personality, you'll want to focus on creating a website and marketing materials that deliver an experience -- just as your vacation home should do. You'll be promoting it as more than just a “place to stay.” You’ll be promoting it as a Palm Springs vacation experience. This is key for appealing to a luxury demographic.

Tips for Showcasing Your Home in an Appealing, Luxurious Way

Your vacation home's brand identity will go a long way toward appealing to a luxury demographic. In addition to this, you'll also want to include eye-catching elements that showcase your vacation home in a classy, engaging way.

Most vacation homes have photos and perhaps a quick “tour” video. But the pricier, luxury vacation rentals go to the next level with more engaging, dynamic elements, including:

• Aerial drone videos of the property. These are especially good for homes located in a beautiful neighborhood or amidst a beautiful landscape that just can't be captured well from ground level. Lots of Palm Springs homes look better when captured from the air, particularly at dusk or first thing in the morning when the Sonoran Desert sky takes on some stunning hues.
• Home staging and photography. Invest in a firm that can perform home staging, making your vacation rental look super appealing and inviting. (Notably, many cleaning companies or property management firms are willing to perform a bit of basic home staging to prepare your vacation home for its new guests, although you can expect to pay a bit more for this.) Once staging is complete, the home can be photographed. The results are often worthy of a magazine, and they're captured in a way that is inviting and compelling.
• Virtual tour videos of the property. These videos use the same technology as Google Earth Street View, which allows you to “walk” through a neighborhood. Instead of capturing your neighborhood on video, the interactive video captures the interior of your home, allowing prospective guests to “walk through” and tour your vacation rental from anywhere on the planet. This not only showcases your home more effectively, but it also makes your property stand out from all others. On a subconscious level, you're saying, “See, this vacation home is so wonderful, we're willing to go above and beyond to show you!”

Also, don't hesitate to capture marketing photos with actual people in the frame. Think of the websites and brochures that you encounter for luxury spas and resorts. Many of those photographs include people. This helps to reinforce the experiential aspect that's so very important when selling to a luxury demographic. By including people in your photos, you're emphasizing an experience more than a mere “place.” So consider hiring some professional models who can be photographed in your vacation home, relaxing on the deck while watching the desert sunset, enjoying champagne while soaking in the spa, or unwinding with the family while relaxing in front of the large stone fireplace.

Additional Advice for Promoting Your Palm Springs Rental to a Luxury Clientele

Palm Springs is well known as a luxury vacation destination that's popular among the rich and famous. So there are many local attractions that you can (and should) promote on your website and in your marketing materials, from the local spas, golf courses, and boutiques, to the nearby music festivals and desert hiking.

Many Palm Springs vacation homeowners may also make the extra effort to join forces with local businesses and tourist attractions to offer perks to their guests. For example, you may contact a few local spas, restaurants, and golf courses to see if you can secure a special coupon or discount for your guests. You might also consider offering passes or tickets to local attractions, such as theaters, museums, and nearby Joshua Tree National Park. (in the case of the latter, it’s $30 for an annual pass for one vehicle -- perfect if you provide a vehicle that your guests can use.) These little perks can go a long way toward sealing the deal for any prospective guest who's on the fence and deciding between two vacation homes.

Once you've booked those guests, don't forget to treat them with a little something special, such as a nice “welcoming” basket of goodies, along with a delightful gift basket delivered midway through their stay. It's the little things such as this that can help you turn a one-time guest into a repeat visitor.

Your property manager can also make your guests feel welcome, serving more as a liaison who can check in and ensure that everything meets their approval. Not every property management firm is willing to go the extra mile for a luxury clientele, so it's important you interview prospective property managers to determine if they're right for your needs. But once you find one that does meet your needs, relying on a property manager to execute the tips I’ve listed above can be extremely helpful.

If you're in search of a property manager for your Palm Springs vacation home, I have some quality individuals in the area that home owners I have worked with in the past have had very good experiences with.  

@Timothy Swindle If you like Michigan, check out the southern coast of Lake Michigan there, towns like South Haven and Grand Haven.  I have worked with a number of owners along that coast who have had a lot of success with vacation rentals there.

If you want more details, I have a number of local vacation rental experts there I would be happy to get you in touch with.  Feel free to direct message me or call me if you are interested.

@Pete T. I have seen some really interesting examples recently in urban markets where property investors purchase multi-unit traditional long-term rentals, which they then convert to short-term rentals hotesl on Airbnb for a nice profit.

If this is something you are interested, feel free to direct message me or give me a call as I have some helpful individuals that I can get you in touch with.

@Shane Kelley

Vacation rentals are a great option.  You just need to get a vacation rental property manager if you want it do indeed be less hassle than a long-term rental. Let me tell you why.

Growing up in Florida, I have known for a long time to avoid the beach during Spring Break. Unless you’re one of the ones partying hard and running away from the hundreds of police officers, it’s just not that much fun to be in that atmosphere. Friends of ours have had to replace brand new sofas in their vacation properties after that week due to … questionable damage.

I've found that you can see some significant challenges when it comes to managing bookings for rental homes in destinations that attract a crowd that might like to party (re: Gulf Coast).

There are some risks associated with renting in this area, including a higher risk of cancellation, a higher potential for parties and disturbances, along with a greater risk for property damage or even theft.

But as the owner/investor of a vacation rental, you can mitigate and sidestep many of these problems by using the right property management firm to handle your guest bookings, guest vetting, and property maintenance and monitoring. Let's look at how a property management company can benefit you if you own a vacation rental.

A Property Management Firm Can Oversee Marketing and Reduce Income Loss from Vacancy

The right marketing for your rental property can mean the difference between a profitable vacation home and one that is a significant expense to you as the owner. Your management firm will know how and where to advertise and market your property to attract the guests you’re looking to reach. The marketing dollars will go further when you promote your rental in the right places.

Depending on the property management company’s model, working with one can also offer a degree of risk mitigation when it comes to losing money when your home is vacant. Guaranteed income models, for example, places the risk of losing money when you’re not able to secure renters on the property manager -- not on the owner. That means you’re guaranteed to make a certain amount of money on your rental property regardless of how often it’s booked.

A Property Management Firm Can Oversee Guest Vetting

Once you've found potential guests, it's important to vet those guests, especially if you're dealing with short-term renters. As a property owner, liability can be a significant concern. Liability becomes a greater concern when you add alcohol or other substances to the equation -- a common occurrence when dealing with short-term renters.

The reality is that many short-term rental guests have never owned their own property and as such, there is a risk they may lack a sense of responsibility and respect for your vacation home. For this reason, it's important to perform vetting so you can gain greater peace of mind knowing that you're renting to guests who are likely to be responsible and respectful. The vetting process can be a bit inconvenient. It may entail a background check and making calls to check references. A property management firm is well-positioned to oversee this element of the process.

If you are selective in choosing your guests, it's not uncommon to spend time and money vetting a potential guest yourself, and if you ultimately decide against renting to that person, there's no way to recoup your time and money expenditure. But if you turn to a management firm, there's less “waste” on guest vetting because a guest that's a bad fit for one property may be the perfect fit for another property that the firm manages. This results in savings for everyone involved.

A Property Management Firm Can Handle Deposits, Financials, and Rental Agreements

Short-term rental guests in a group tend to be more likely to cancel due to the fact that the rental fee is usually paid by contributions from multiple individuals. If just one individual drops out of the trip, then the group may be unable to cover the cost of the vacation rental.

This makes it especially important to get a large portion (if not all) of the rental fee at the time of booking. Your property management firm can oversee this aspect of the process, and if a group does cancel, your firm is more likely to find a new guest, particularly on relatively short notice.

Additionally, short-term renters are more likely to spend their time partying, which can lead to damages and even thefts. This is especially true if they invite others to the property -- others who they may not know well and who won't bear any responsibility if anything is stolen or damaged. For this reason, it's standard to request a sizable damages deposit.

Your rental management firm can also draft a rental agreement that holds the guests liable for the full cost of any damage or thefts, while releasing the owner from any liability for injuries that occur on the property.

Similar to the procedure used for a car rental, your property manager can welcome the new guests and perform a walkthrough to note any existing damage. Some firms will even record video of the walkthrough to provide indisputable documentation of the property's condition.

A Property Manager Can Perform Check-Ins

Your property manager offers you an opportunity to have “boots on the ground” so to speak -- a point that is key for any property owner who lives a significant distance from their vacation home. This is more important when you're renting to short-term renters who are vacationing in a prime partying location. Disturbances can create a major problem for the property owner, especially in a condominium or gated community because the owner could face fines and other penalties.

Your property manager can perform periodic drive-bys at night to ensure everything is under control. They can even perform a check-in midway through the guests' stay, serving as a great opportunity to check up on the property. The “check-up” can also serve as a chance to build rapport with your guests by delivering a small gift basket and offering tips or recommendations for activities, restaurants, and attractions. By building rapport with guests, you can increase the number of repeat visitors. This is especially true of college students who often return several years down the road to vacation with their spouse and children.

Many think of property management as a service that's most suitable for vacation rental property owners who live out of state. The reality is that even local property owners can benefit financially and in terms of reduced stress and time savings. In fact, according to HomeAway, owners spend an average of 8.4 hours per week tending to their property. That's a full work day! And the effect is amplified if you have multiple units or properties.

Vacation home and short-term rental purchases have been on the rise lately. You can see huge profits if you use the right strategy or you may suffer major losses if you fall victim to some of the most common pitfalls. I've found that the right vacation rental management firm will help you avoid the latter by overseeing the booking process and lots more.

@Shawn Tang I have worked with some home owners who have been very successful doing so.  Renting an entire private residence out on Airbnb is strictly prohibited (unless you are in one of the casino condohotels like the MGM Signature).  Thus the private Airbnb rental market supply is not as large as you would see in comparable markets with a great deal of Airbnb activity.   The hotels are still big competitors. You just have the benefit of being a private accomodation.

@Taneisheo Ferguson Thought something I worked on with my team at my company might be helpful for you as you go through your process...:

When a couple I know decided they were ready to purchase a second home for vacations, they immediately knew an oceanfront property in Miami was the place for them. It had been a favorite vacation spot for their family for years—they couldn’t justify spending any more money on hotel or Airbnb stays. But they also knew that to afford this second home, they’d need to rent it out when they weren’t using it. But they had questions. Where was the best place to buy? Should they be right on the ocean, or a few blocks in? Where could they get the most for their money?

In Miami, there are thousands of waterfront properties to choose from, but it's important that you carefully evaluate the home and its potential as a vacation rental property. Your Miami vacation rental's location can have a tremendous impact on property value, the cost of ownership and, ultimately, the return on investment (ROI).

When projecting the ROI for a piece of real estate, you'll need to consider:

• The purchase price of the property and monthly mortgage cost.
• The average rental fee for comparable Miami rental properties.
• The number of “rentable” weeks per year.
• The property tax fees and insurance rates.
• The cost to maintain the property.

If you decide to buy a Miami vacation rental, you'll have a major advantage, because South Florida real estate rentals are popular year-round. But your property's location relative to the water can impact other key figures, like the purchase price, average rental fee, property taxes, insurance rates, and maintenance costs. So let's examine how these and other issues will factor into the equation.

What Factors Impact Real Estate Rental Price for Properties Near the Water?

For vacation rentals located near the ocean, there are many factors that will impact the rental fees and thus, the ROI. You'll want to ask a few questions, including:

• Is the home on the water or near the water? Oceanfront homes tend to be the most desirable and valuable as vacation rentals because vacationers want convenience and simplicity (and what's more convenient than stepping out the front door and onto the beach?). Homes that are near the water (but not technically on the water) tend to have a slightly lower property value and lower rental fees.
• Are there ocean views? Water views increase a vacation property's value, desirability, and profit margin (although you can expect higher property taxes too). A home with unobstructed ocean views from every room will have a high ROI, whereas obstructions or view limitations (such as the ocean only being visible from certain rooms) result in a comparatively lower ROI.
• Is there beach access? Properties with private beach access command a higher rental fee, while those with access to a public beach have a slightly lower rental fee. The closer and more convenient the beach, the higher the potential ROI. If you own property with water views but no beach access, consider buying annual passes to a nearby beach so you can provide convenient access to your guests.

What Are the Average Sale and Rental Prices for Miami Coastal Properties?

According to Trulia.com's Miami area real estate heat map, the average sale price can vary by millions depending on precisely where you seek to buy. The table below provides a quick reference for the average sale and rental prices for Miami's coastal areas.

A Look at the Flood Risk and Elevation of a Miami Vacation Rental ROI

A Miami waterfront home's ROI as a rental property is largely impacted by the precise location and elevation. Miami is prone to some serious flooding, especially during hurricanes, which can create a destructive storm surge. This means higher insurance rates. But more concerning is the sea level. The Miami area—especially Miami Beach—is expected to see a fair amount of its land reclaimed by the sea if sea levels rise by the predicted height of two feet by 2060.

Beachfront properties are apt to be at the highest risk—and this includes highrises, since the foundation and ground level would be partially underwater, resulting in structural damage that could render the building unfit for occupation.

Many South Florida properties will also be prone to more frequent flooding in the coming years, resulting in higher insurance and maintenance costs. So if you're investing in real estate, you'll want to be sure to learn more about its elevation and the flood risk. Otherwise, you may find yourself the owner of a vacation home that sees a sharp decrease in value over time.

Always Crunch the Numbers When Choosing a Miami Vacation Rental Property

It's important to crunch the numbers when deciding between two or more rental homes.

The oceanfront home with an unobstructed view and private beach access may not always be the most profitable. This type of real estate also has the highest rates for insurance, maintenance, and property taxes—expenses that can really cut into ROI.

In fact, some of the most profitable Miami vacation rentals are condominiums, especially those in beachfront high-rises. These properties often have lower maintenance costs when compared to a house, even with condo association fees factored into the equation. The insurance rates are often much lower, especially since many condominiums do not require flood insurance. What's more, high-rise units have some of the best unobstructed water views, driving up the overall desirability in a big way.

Finally, remember to calculate your anticipated rental fees based on comparable properties in the same area.

Think outside the box @Tom Horan .

The short-term rental demand for spaces to rent on Airbnb is still super high with monthly revenue being realized on short-term urban Denver rentals significantly outpacing typical monthly rent on a traditional 12 month long-term arrangement.

Fortunately for you, much of the real estate in the market is still priced based on traditional 12-month lease potential rather than the increased rental revenue potential from short-term rental revenue potential from renting out on Airbnb.

I have seen many owners be very successful in Denver either going straight into Airbnb renting or converting their long-term rental into an Airbnb rental.

@Jamie Garcia That's a very creative approach.  

One thing to consider is that if you are planning on living on the property, you will probably have to handle all of the rental property management duties yourself.  Oftentimes, property managers do not want to deal with a place that the owner lives at as well.  That is just the reality.

If you are cool with that, then I believe your strategy is certainly adequate.

However, if not taking on another second job is important to you, it might make sense to rent a place nearby and get a property manager to rent out the property for you (with the added benefit of now having an additional unit in the property to rent now that you are not living in it).

@Michaela G. Great point.  Property values have risen quite nicely lately.

One other underreported aspect is the fact that there has been the addition of short-term/vacation rental demand in areas nearby the Beltline.  For instance, Poncey-Highlands was recently named on of the 15 fastest growing Airbnb markets in the world.

If there are investors looking to pursue a short-term rental investment strategy in the area, feel free to direct message me or call me. I have some experienced individuals in the area who can help you get the place rented out while you are out of state.

@Skyler Pearson I know this isn't the answer you want to hear but it varies.

An owner sold this rental property (1 BR condo) in Denver’s Union Station neighborhood in October 2016 for $135K more than the price they purchased it in June 2015. That’s a 250% return on the amount of a 20% down payment of ~$54K on the initial purchase price.

An owner sold this rental property (2 BR condo) in Denver’s Lincoln Park neighborhood in September 2016 for $51K more than the price they purchased it in September 2012. That’s a 320% return on the amount of a 20% down payment of ~$38K on the initial purchase price.

Check out Lincoln Park & Union Station in Denver. They have been super hot right for some of the investors that I have come across.

The smart investors are covering (or even making more profit on top of) their holding period monthly/annual expenses (mortgage, property taxes, maintenance, etc.) by renting out the property as a short-term rental (more information here in this utlimate guide to short-term rentals that I recently helped collaborate on with some other professionals in the industry) while biding their time for the market to rise as Millennials and Empty-Nest Boomers continue to spike prices as they flock into theses cities in droves.