To rent or not to rent: Making your vacation home pay for itself RISMEDIA, June 27, 2006—As you consider your vacation home purchase, keep in mind the hidden financial treasures you can step into: rental income from vacation homes. According to the U.S. Bureau of Census, one-half of all second-home owners leave their home unoccupied for more than 330 days a year. Perhaps its time to be in the other half—the ones with vacation homes paying for themselves.
Renting can be a loaded question. For some, the idea of “strangers” in their home feels, well, strange. For others, the burden of being a landlord and property manager stops them cold. Then there’s the question of when to rent—do I lose use in the prime season to get income? While these are real concerns, they pale in comparison to the financial reality: if done correctly, renting can bring very easy money.
Before You Buy
If you already know you will rent your vacation home, consider these questions as you look at properties:
Is there a rental market in the area?
What is the average rent that your neighbors receive?
If you are looking in a development, are there any by-laws which restrict your rental capabilities?
Is this a seasonal area or year-round location?
The answers to these questions will help you select a more lucrative property for your vacation home.
Rental Seasons
How do you decide when to rent your property and when to use it yourself? Since you are buying primarily for your own fun and enjoyment, you shouldn’t sacrifice this. If the home is in a one-season area, for example, summers at the Maine coast, then giving up that time of year for rental income defeats the purpose of having the home. In this case, you might look for a long-term (9-month) renter for the off-season, among the local population, while you use it in the summer.
On the other hand, if you buy a winter ski condo or chalet, it is still highly rentable in the summer time for the mountaineering types. If you buy a property for weekend use, perhaps there are local people who need a Monday-Friday escape option. In short, if you balance your own needs with the market demands, you get both fun and money.
Practical Considerations
For successful renting, first find out the going rental market rate. Second, determine if you want to market it yourself, or use a rental agent.
Self-marketing takes time, but often generates more qualified renters as you are not competing with all the other properties of an agent. Third, be sure to arrange for a property manager. This is different from a rental agency. The manager will take 10 to 20 percent of the rent, and free you up from cleaning, being on call for maintenance (especially important if you live far away), and dealing with the daily needs of the renters.
Make it Personal
By far, the most important factor in success is your personal investment in the process. This means your personal contact with your renters. From a simple welcome note and local maps to a thank-you note and on-going contact, your relationship creates a repeat flow of guests who not only love your second home as much as you do but also pay for the privilege of using it. What could be better? |
