Crucial Lessons I’ve Learned by Owning a Vacation Rental [Video!]

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Buying a vacation rental can be highly profitable, but can also be a money pit if you do not go into the transaction with the right expectations. On this video blog, I will walk you through what I have learned through my experience owning a vacation rental.

Investors: What has YOUR experience been with vacation rentals? Any pointers you’d add?

Let me know with a comment!

About Author

Ken Corsini

Ken Corsini G+ is the host of the Deal Farm Podcast (on iTunes) and has 10 years of full-time real estate investing experience. His company, Georgia Residential Partners buys and sells an average of 100 deals per year and has helped hundreds of investors around the country make great investments in the Atlanta market. Ken has a business degree from the University of Georgia and a Master Degree in Building Construction from Georgia Tech. He currently resides in Woodstock, Georgia with his wife and 3 children.

14 Comments

  1. Bea Maia

    Your video confirmed what I already suspected: not to count on cash flow, but to enjoy your property and have renters help you pay for it.
    I’m contemplating buying one in the St Petersburg area, just don’t know about appreciation… Or flood insurance! Anybody has any experience with the area?

  2. Astrid Lindstrom

    Hey, Ken,

    These are some really great tips, but I think it’s worth making you aware that there’s a management option that doesn’t involve forking over 50% of your income to a property manager.

    A property manager charges you 30% of your income and then ADDS money every time they have to, well, manage the property. Which, as you say, often brings your total costs up to as much as 50% of your income. That’s not a smart investment. And what are they doing to earn their 30%? Often property managers don’t want to invest in marketing your property as they should, and you make few bookings from their efforts.

    Evolve Vacation Rental Network charges a 10% booking fee and helps you set up on-the-ground services that you only pay for when you use them – so, a person to answer the phone in the middle of the night, a handyman, etc. Since the most necessary service, a cleaning fee, is included in your booking price, you’re not paying for that out of pocket, and you’re really only paying for basic maintenance and an on-the-ground contact person. That’ll total less than 20% of your income.

    Plus we put an enormous amount of effort into marketing our properties and list every property – for free – on every major listing site: HomeAway, VRBO, Airbnb, FlipKey, and TripAdvisor. So your booking rates go up and you make more money every year.

    You get a higher income overall and pay less than 20% of your profits to be completely hands-off as an owner. It’s a lot better than the 50% scenario you describe with a property manager.

    We’re a new startup, so not a lot of people know about us yet, but I think it’s worth noting that there are options beyond paying a huge amount of your rental income to a property manager – or working your tail off to do it all yourself.

  3. Brock Adams

    Love the visual lesson. Good Job Ken. As to the bottom line question: Investors: Agree with the cash flow analysis. 0 or usually negative, especially when on or near beach. Insurance will eat it up. Any pointers you’d add? Vacation rentals are like time shares except it might be easier to sell. Also, I would only own a vacation rental if I could be at the property within an hours drive. Again, Let the vacation place be the main place you and your family enjoy going to since they will be the ones to use it the most.

    • Scott Dobos

      I really think his point on the market research that could dictate your rental consistency (how many weeks a year can you actually rent out) is pretty important. In coastal Maine there are essentially 8-10 really good weeks (peak season) a year that you can rent. July, August, and the last week of June, or last two weeks of June depending on children’s summer vacation around the country/world. So here in Maine it’s slightly easier to be able to generate the numbers that if you’re using a professional to help you price it, or pricing it yourself, you can typically understand the gross cash flow coming in before having to pay for your property management/maintenance that Ken mentioned.
      In an area that’s inundated with rentals, you might not see 100% occupancy throughout the summers, it’s a bit more risky as there may be a lot more competition among other local property owners, and your estimates might be considerably off.

  4. Scott Dobos

    Ken – I thought that was a great informational video. I happen to be the Director of a Rental Division for a brokerage up in Maine where I exclusively deal with more high end vacation rentals and I think it’s a very conservative/wise approach you’re recommending. There are many different reasons folks do end up buying their vacation rental. I think your situation is most common from what I have seen up here – Buying to use, and renting it out to offset costs when you aren’t using it.

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