After you have purchased your vacation home in the location that suits you and your family best, you might want to consider renting out your home. By renting out your vacation home, you can likely offset most, if not all, of your monthly bills on the unit. In this article, I am going to give you a few steps to guide you on how to start renting out your vacation home and making money.
Download Your FREE copy of ‘How to Rent Your House!
Renting your house is a great way to enter the world of real estate investing, but most first-timers (understandably) have a lot of questions. Fortunately, the experts at BiggerPockets have put together a complimentary guide on ‘How to Rent Your House’. All the skills, tools, and confidence you need to successfully rent your house are just a mouse-click away.
Find a Good Property Manager
I know you can save a few dollars a month by managing the vacation home yourself, but unless you live close by, I would strongly recommend finding someone local who can look after your property for you. One of the best ways to find a good property manager is to call some of your neighbors who rent their units out and ask them for recommendations. Usually the same neighbors will give you a list of the good property managers in the area and the ones to stay away from.
Know How to Market Your Property
The key to making sure your unit always has guest in it is to make sure vacationers to your area know about your property. Here are a few ways I recommend to market your vacation home:
Most property managers can assist you in booking your vacation home, and when you are interviewing them, be sure to ask how they are going to market your property. You should also ask how many nights they aim to have your place occupied on a yearly basis. Make sure that they are going to get you some business in the off-season as well as the high season. A lot of property managers talk a good game, but they really only get bookings during high season.
HOA or Community Websites
Many HOAs or private vacation home owners set up community websites for people to list their vacation homes for rent. These are extremely good places to list your property.
Homeaway or VRBO
These are great places to list your vacation home, but make sure you have enough time to manage the bookings. Getting a booking for your vacation home is not as easy as it sounds. Potential guests usually call during working hours, and if you let these guests go to a voicemail and call them back at 5 p.m., you are going to miss out on most of these guests.
In addition, be prepared for guests to try and haggle with you over the price of the vacation home, as everyone is trying to get the house for as cheap as possible. Plus, after you have secured a booking and the guest has paid their deposit, you still need to make sure they pay their remaining balance on the day that it is due. While taking your own bookings will give you the highest return, it does take quite a bit of time and you need to be very organized.
Tell Friends & Family
It is really easy if you explain to them up front that you rent your house out to offset your expenses so you cannot just give it to them for free. But friends usually like doing business with friends.
Create a Nightly Pricing Strategy
Come up with a nightly pricing strategy. One that has worked really well for us is to set the prices a little higher than your competition during high season, and set your prices as one of the lowest in the area during low season. During high season, there are usually more guests than there are vacation homes, so you will more than likely always sell out.
Also, do a little yield management as well. If your house is rented out three weeks in July, raise the rates quite a bit for that fourth week; you will be amazed at the end of the year how much bumping the rates here and there will really impact your yearly income on the property.
Take Great Pictures
Before you list your house online, you should have a professional photographer take pictures of your house. This should run you around $200 to $400, but as they say, a picture is worth a thousand words.
Get Paperwork in Place
Before you start renting your vacation home out, you need to make sure you have a contract or a written agreement for you to send to a guest once they have put down a deposit. You can usually find these documents online for around $10 to $15.
After you have had your vacation home in the rental pool for 3 or 4 months, you should then evaluate what is working and what is not working. Then you need to make changes based on these evaluations. To be successful, you should do these evaluations three or four times a year.
What tips do you have for getting your vacation rental occupied fast?
Let us know with a comment!