Not every home makes a profitable VR. Before you dive in and purchase, there are several necessary requirements to ensure your success. Each of the six following factors should be carefully examined before you make your purchase.
Legally allowed—This tip alone is worth the price of this program. An increasing problem in the industry is tighter restrictions, such as one month minimums and outright bans on vacation rentals. The hotel industry is feeling the competition and lobbying for tight restrictions or bans on vacation rentals. They are using scare tactics to stir up local homeowners against the industry. It is urgent that you check with your local authority for any restrictions on short-term rentals. While not widespread in most areas, a simple phone call or two can save you the nightmare of starting a business that you cannot legally run.
While I am vehemently against the rights of homeowners being taken away, the fact is, they are. Do not buy in an area where your business will be illegal. If coffee shops were outlawed in your city, would you open a coffee shop? That would be madness. How will the authorities find out? The same way your customers will, through the Internet and other advertising. Once you purchase the property, it’s critical to go through the proper steps to make sure that it is legally authorized as a vacation rental. Requirements vary widely, so check with your local government.
Location—Anyone in real estate knows the importance of location, both the big picture—like beach, city, mountain; and the small picture—the exact location of the property in proximity to the major attractions of the area.
The most successful properties are located in highly touristic areas, like beaches, the mountains, or near major cities. Areas that aren't visited by many tourists but that do very well are near hospitals and universities. Is it in a safe area of town? Is it noisy? Does the home fit in the surroundings? Is the area already saturated with rentals? Is there room for yours?
I was recently asked to manage a property. Three bedrooms, two bathrooms, walking distance to a lake. The possibilities were great. Until, that is, I saw it. While the house itself was gorgeous, it was the lone beautiful house in a dumpy area. The neighbors on all sides had tires piled up in the yard, cars on blocks, couches on the front porch. I could have taken pictures of just the house and the beautiful inside. I could have written it up to play up its positives, the proximity to the lake and downtown, the spacious living room, the tasteful décor. But I would have misrepresented a major aspect of the house. And in doing so, ruined someone’s much anticipated vacation and my reputation. I had to decline the property. —Sandra Cloer, Cranmore Cottages
Fact—not every property makes a good vacation rental.
Desirability—The property itself must be desirable. Your guests will first see your home on the Internet, so your "curb appeal" will be the photos you take. If you own a condo, you could use a photo of a well-staged balcony with a view of the ocean. If your place is very basic with no amenities, your only option is to decorate it well and add a Wow Factor. (Photos and Wow Factors will be covered in this program.) Do not make it seem better than it is, be ethical and truthful in advertising. Chances are, you’ll have renters who are very glad for a budget accommodation.
Amenities—What kinds of amenities can you offer your guests? Some will come with the home such as a pool, and some you can add, such as a hot tub, Wi-Fi, or flat panel TV. Different areas demand different standard amenities.
Income—The financial burden of the property must be scrutinized before purchase. What are your goals for the property? Are you interested in supplementing your mortgage payment for your retirement home? Do you need to cover expenses on a house you can’t sell? Do you want this to be a business and earn income from it? Spend time assessing your costs, including insurance, taxes, utilities, mortgage, and advertising. Costs also include time and/or payment for staff. Older properties generally cost more to maintain than newer properties.
Safe—Visitors will expect that you’ve done any necessary work to ensure the house is structurally sound, free of mold and mildew, and safe electrically. Equally important, although harder to determine, is the safety of the neighborhood. Guests should be able to come and go without worry of theft or personal safety.
Now is time to get out your pencil and print out the pages of the first section of the Workbook, Benefits of VR's. When you are ready to start looking, use the Pre-Purchase Worksheet to make sure the home meets the above 6 requirements.
Next, we'll explore how to Find Your Perfect Vacation Rental.