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Any pointers on Vacation property rental management?
Old 10-28-2014, 11:24 AM   #1
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Any pointers on Vacation property rental management?

DW and I are toying with the idea of buying a vacation property that would also be used as a rental. The property is question is a condo and appears to be relatively inexpensive, so should be fairly low maintenance and not a big nut to cover. It is about 200 miles away from where we live in an area we have visited several times and would enjoy spending more time in. If we decided to buy this thing, I would expect to rent it for short term vacation rentals to offset some or all of the cost of carry. Since we are not local, I imagine we would need the services of a property manager. Has anyone done this? Pitfalls? How do you do the marketing of the property (VRBO/Air B&B?)? What do local agents usually cost per rental?

I am still penciling this out and we have not seen the property yet, so this is early stages and may go no further.
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Old 10-28-2014, 11:49 AM   #2
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I haven't owned a vacation rental property, but have rented quite a few.

You would need a local "host"/manager. This person makes sure tenants check in/check out properly. This person coordinates with the cleaning team to get it cleaned between renters. This person is the local contact for renters who have questions or need repairs.

The right manager/host will make the renters experience positive, and then they're more likely to post positive reviews.

Most vacation rentals also rent better if you put in amenities you might skip at home - cable and internet are very important for renters. Having an onsite laundry is important for weekly renters.

We considered putting our granny flat detached casita as a vacation rental but we would have managed it ourselves. In the end run we decided having a quality long term tenant was a lot less w*rk than having to clean the casita every 3 days to a week.
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Old 10-28-2014, 11:55 AM   #3
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we are just starting to look into this as well. A Realtor said that property management in Southern Utah typically take between 10-20%.
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Old 10-28-2014, 12:39 PM   #4
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After dealing with property managers for the past 2+ years, I say proceed with caution. Being a long distance landlord has been a very frustrating experience for me. I am done with it.
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Old 10-28-2014, 02:41 PM   #5
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We just sold our vacation condo about a month ago. It was located in Park City, Utah, a ski mecca for sure, but boy, is it expensive to own a condo. Several reasons we finally had had enough:
1. The monthly HOA's had climbed to $600/month, and the HOA board was hinting at another increase next year.
2. Every property management organization took 40% off top, then additional expenses. They must have all agreed to 40% because we couldn't find one mgmt firm charging less.
3. We had to pay $150 cleaning fee (per the property mgmt agreement) per every rental, which could be as frequent as twice a week.
4. Our electric/gas bill went through the roof during winter rental season. Weekly renters don't care if they run the furnace at 85 degrees. After all, it's snowing outside.
5. Property mgmt companies will never care for your property as much as you would if you were close enough to take care of the rentals yourself.
6. Vacation renters will trash your condo, and take everything from pillows, to dishes, to artwork off your wall.
7. In our situation, Park City has thousands of condos for rent during the winter, during the Sundance Film Festival, and other holidays. The competition is fierce, hence, the property mgmt firms set rental prices based on competitive rates per sq. footage and location to a ski resort. We were not allowed to have any say in the rental pricing. This was true with several property mgmt firms we dealt with throughout our condo ownership.
8. We finally made a profit, but we made it on the day we sold it (it had doubled in value).
9. Property taxes on a vacation rental are taxed at a much higher rate than a full time residential home (at least in Utah).

Yes, we had loads of fun using the condo during the off season. But honestly, the headaches of a rental, dealing with property mgmt companies, and the never ending expenses were too much. I'm glad we sold when we did as it'll help us ER much sooner than planned.
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Old 10-28-2014, 03:22 PM   #6
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We have three income producing vacation properties that we rent exclusively using VRBO/Homeaway. We bought these properties in 2009-2010 and been doing this for 4 years. They are all located in vacation/areas of interest in the northeast. As a caveat, our primary residence and two vacation homes (that we do not rent) are located in the vicinity of our rental properties so we are not geographically far from them. Our experience has been very positive. We decided upon the idea of vacation rentals because the annual rental offers we received did not provide as a high a return. Ultimately this proved correct and our return is almost double the rent we would have received if we rented each annually. Location is the reason for this. THEY ARE ALL LOCATED IN VACATION AREAS THAT PEOPLE WANT TO GO TO FOR BETWEEN 3 DAYS AND 2 WEEKS. Here are some additional thoughts:

1. We do not use a property manager. This has become my wife's hobby/job. I still work full-time in the real estate field so my background is helpful for leasing issues.
2. We have a reliable cleaning service to clean between rentals. Normally, we personally inspect between rentals.
3. In my opinion this is not a clip the coupon type of investment. You must remain active.
4. Choose your non-refundable deposit amount and security deposit wisely. Having said that we have had hundreds of rentals and have never had to keep a security deposit.
5. Reviews on the VRBO/Homeaway websites are the whole game. You live and die by them.
6. You must be organized and available to respond to interested parties within hours.....not days.
7. It helps if your property is different from all of the others in the vicinity on VRBO/Homeaway. Nice view....close to town....close to beach etc. Take a look and determine your competition. See what they are charging. Often the guest is choosing between your property and one or more hotel rooms depending how big your place is.
8. Lastly, MAKE SURE THE PLACE IS CLEAN ALWAYS AND TASTEFULLY FURNISHED. SPEND A LITTLE EXTRA ON FURNITURE AND MATTRESSES. IT PAYS OFF.

As stated our experience has been very positive. We have met people from all over the world who have rented our homes.
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Old 10-28-2014, 03:24 PM   #7
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WestcoastRN,

Thank you for sharing your experience.

I have often considered doing this and can make the numbers work just fine in a spreadsheet; so, I was watching this thread closely. Occasionally I just need to be reminded how much of a pain owning a vacation rental can actually be, not the kind of headache I need to inflict upon myself.
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Old 10-28-2014, 03:45 PM   #8
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6. Vacation renters will trash your condo, and take everything from pillows, to dishes, to artwork off your wall.
What did the property management company do in this case (and is it any different from what a hotel would do)? Do they try to recoup the costs from the renter?
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Old 10-28-2014, 03:46 PM   #9
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My mom rents a condo pretty often at the beach in NC and the owner lives in VA somewhere. I don't think the owner has a manager for the condo. She hires someone to clean it, and presumably the cleaner lets the owner know if something is F-ed up with the unit. So far my mom hasn't had any problems with the rental, other than a cancellation with short notice since the pool was going to be undergoing maintenance and that was an important part of the rental for my mom, so she canceled with a full refund and rented elsewhere (for more $$).

Otherwise, I'm accustomed to renting at the beach through a real estate agency that hands out the keys at their office and coordinates cleaning/repairs if something comes up for me. It's been a good experience so far, and the responsiveness of maintenance or cleaning folks has been great, so I have been a repeat renter at one place. I think the property management company takes a fat cut of the rent, but it might be worth it to handle all the minutia on sight locally.

In terms of go/no go, I'd look at the hassle of owning the property. At one point a few years ago, I could have bought plenty of oceanfront houses/duplexes/condos that penciled out to leave me with a small profit and a free place to stay when it's unrented for most of the 9 months/yr during the off season. However I've never heard anything but negative stuff for those owning a beach house and renting it out. One house is enough to maintain for me, and we'll keep paying the $1000/wk or so to rent off season. In hindsight, we could have made a nice sum off capital appreciation due to the recovery in the housing market.
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Old 10-28-2014, 04:32 PM   #10
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You are very welcome, CoolChange! I too had the spreadsheets which showed a yearly profit, figured I had it all worked out. Had we lived closer to Park City, we would have used VRBO or iTrip because in hindsight that's the only way to generate a profit. Giving up 40% to management fees (which I admit I hadn't estimated fees that outrageous) doomed us from the start.

One other thing I didn't mention was this feeling of obligation to use the condo when it wasn't rented. We found it difficult to justify spending limited vacation funds/vacation time on anything other than vacationing at the condo.
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Old 10-28-2014, 04:52 PM   #11
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What did the property management company do in this case (and is it any different from what a hotel would do)? Do they try to recoup the costs from the renter?
One mgmt company did absolutely nothing, told us it was the "cost of renting to weekly renters." Another mgmt company claimed they did an inventory of the condo in between every renter. Found out later this wasn't true. When I discovered missing items (long after the winter rental season), I was told to gather an inventory of what was missing with a dollar amount and they would submit an insurance claim. When I asked about the inventory that they were supposed to be performing in between renters, I was told they just carried a large policy to cover ALL renters, so they couldn't pinpoint which renter had stolen the painting and cookware. After a deductible THAT I HAD TO PAY, I got $58.75. This was followed by being chastised by the head of the mgmt firm for stocking our condo with nice things which might be too enticing for some people. Unbelievable...
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Old 10-28-2014, 06:58 PM   #12
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One other thing I didn't mention was this feeling of obligation to use the condo when it wasn't rented. We found it difficult to justify spending limited vacation funds/vacation time on anything other than vacationing at the condo.
Yes, this is one big reason I wouldn't consider buying a vacation condo or home. My wife and I rent a vacation home every winter somewhere on the Gulf Coast, but we enjoy the flexibility of moving around a bit. Even if we really like the general area and plan to return, I wouldn't want to be tied down to renting the same house, as things change from year to year. This past year, for example, we found a house with a better location, for less money, than we had the previous year (in the same general area, which we like a lot). Also, our costs are limited to what we pay to rent the house, plus a small cleaning fee......no other costs of home ownership, no hassles with renters trashing the place, etc, etc..
It works well for us.
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