Many people look for a cabin or a beachfront property to rent during vacations. That fact provides a huge opportunity for an owner of such a property. This owner might be too busy to travel to their home but doesn’t want to sell, or in financial straits but can’t sell it. The good news is that it is entirely possible that the home could actually pay for itself if converted to a vacation rental. Of course if the market exists, the owner has the option of a longer term lease, but treating it as a vacation rental provides some attractive advantages.
Advantages and Disadvantages of Renting as a Vacation Rental
There are four main advantages of a vacation rental:
- The rent potential is increased. For instance, the going lease rate might be $1000/month, but the potential nightly rate might be $150. If rented for ten nights the rent income would be $1500.
- The home is available for the owner when it isn’t rented.
- The renter is usually a different “type” of renter than a longer term renter.
- If the owner decides to sell, they don’t have to wait for a lease to end.
The three main disadvantages are:
- Multiple rental arrangements, therefore, more work.
- Clean up is required after each quest.
- The home is exposed to a larger volume of strangers.
Vacation Rental Business To-do List
This arrangement is basically running a business, and must be organized to run smoothly. To prepare for a vacation rental business there are several things the owner must handle before the first guest is booked. He must:
- Obtain adequate insurance and address liabilities
- Remove valuable items, and remove or lock up personal belongings
- Determine the competition’s rental rates and deposit requirements
- Arrange for advertising to a wide audience
- Arrange for someone to manage property (keys, cleanup)
- Create a method to collect payment from renter (such as Paypal)
- Create documents, a rental agreement, instructions on using the home, guest rules and requirements
- Determine what decor might be added to increase rental interest and what supplies will be provided to guests (paper goods, kitchen utensils, linens)
- Create a recordkeeping system
Advertise a Cabin or Beachfront Home as a Vacation Rental!
One of the to-do items from the list above is advertisement. This is the key area to address in order for this plan to succeed. Existing vacation rental sites exist such as VacationRentals.com in which the home can be advertised fairly quickly. The other option is to create an individual website, which gives the owner more options to attract guests to their specific vacation home, and not be in competition with other cabins, villas, or beachfront cottages. There are many sites that provide information about setting up a website and the steps involved. Using a combination of both advertising methods is also an option, tracking results from each.
The owner should check out various other vacation rental websites to see how they are set up and what kind of pictures they use, rental rates, etc. They might find a rental agreement that can be adapted for their use.
Keep Good Records on Rental Activity
Good recordkeeping will be required to ensure proper liabilities are covered and full payments collected. As well, each guest is a potential future guest, therefore the owner should develop a contact list for the future. Most importantly, he will be happy he kept good records when it comes tax time.
Renting out a vacation home is a big decision, but a great way to turn a financial drain into a money making asset . As well, the short term nature of each renter provides flexibility for the owners when their situation changes.
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