ER, I own property in a tourrist destination and want to rent it out on VRBO or something like that.
A friend’s friend is doing that in Florida and is apparently successful. His customers are repeat snowbirds who come vacation in Florida every year.
Thanks for bring it up. Sounds like a good opportunity.[/quote]
Hi FlyerinHi.
You are certainly welcome. I realize that the vast majority of property owners don’t want to hassle with short-term rentals vs. a traditional rental but if done properly, the ROI is MUCH MUCH greater than a traditional renter. Plus if you structure it properly you don’t have to really worry about problem tenants as most of them are in for one week or less on average.
You CAN get corporate executives that do rent longer term but this is also a GREAT type of clientele because you will find they are mostly in the apartment to sleep and shower and that is it. I have some properties that I own that I rent out to corporate executives or corporations and the places look brand new even after several years of rentals.
I found that most of these types are in their office all day. They typically work late and come home to sleep and shower and around on the weekends but that’s it.
And tourists as well are mostly out all day.
If you do it, I’d recommend a few things that have really helped.
-Have a formal contract that covers all the bases including releasing you from ALL liability in the event of ANY accident in the property.
– Clear policy that the tenant will pay for any damages in the property. And best to get them to agree to leave a credit card form signed that clearly states they will pay for any damages.
– Have a detailed inventory that lists all the contents of the property and have a client sign it at the check-in. Make it mandatory that they let you know within 24 hours if something is missing. Part of having a great property manager is making sure that whatever is listed is there at the check-in and also there at the check-out. Make sure that the inventory has a replacement value of each item so that both sides are clear on what price will be charged in the event something is damaged or missing (and make sure the price is fair and reasonable).
– Make sure the photos are representative of the property and “what you see is what you get. I’d even recommend getting to-scale floor plans of the property so they can get a visual sense of what the property is like. It goes a LONG way and separates yourself from the competition. (But I DO recommend to get professional photographs taken by a photographer that specializes in real estate or properties. Best investment you can make).
– Detail on your VRBO listing exactly what is included or the main features of each room in the property and also the amenities in the building (if it’s a condo).
– Make a VERY detailed welcome guide that explains everything in detail. Make it idiot proof so that a kid could understand it. It will save a LOT of hassles. Explain things like where the fuse box is, what the internet network name and password, how to reset the code on the safe, any instructions for getting into the building, using the pool, gym, etc.
Also, basic things like including the address, phone number to the property, maps, how to use each electronic in the property (stove, microwave oven, telephone, AC/heat, etc. The more detailed the better. Even things like having a channel guide with the channels and the stations in each bedroom goes a long way. (And it’s a GREAT idea to email them the PDF welcome guide before they arrive and also have a bounded copy in the property). Think of every small detail and how you can improve their experience/stay with you in your property.
– The higher end the property and the nicer it’s furnished the more you can obviously charge and typically higher end properties attract people that will take better care of it.
– It might cost more with a property manager but have them do a formal check-in and also a formal check-out so you can meet the people and also be there at the check-out. It’s also a good idea to have them fill out a guest survey so you can see what they really liked or what they didn’t like. If there was any problems, FIX it ASAP so the next guest doesn’t experience any problems. Be proactive.
– Make sure you are clear on the front end what is NOT allowed. i.e. NO smoking in the property, loud parties, music, maximum occupancy, etc. The more clear you are on the front end the better things will be.
– It’s a good idea to include a programmable safe in each bedroom if possible. They aren’t expensive and people really appreciate them if they are on vacation.
– Have very clear terms of the cancellation policy and have them sign and agree to it when they are making their deposit.
– Take advantage of ALL the possible places to advertise. You will typically find that the ones that you pay for yield better results. But you can list free on several sites. Check out ALL the possibilities including:
– Craigslist in your City
– VRBO.com
– Homeaway.com
– Flipkey.com
– Airbnb.com
– HomeExchange.com (you can do home exchanges but also advertise as a rental as well).
If you are in a very desirable destination you can do VERY well. One thing you will quickly see if your place is high end, furnished nice and in the best location is there will ALWAYS be wealthy/affluent people that are willing to rent a high end place vs. an expensive and small hotel room.
I own several properties in different countries and been renting them out for over a decade now and my ROI has been incredible.
The higher end you go typically the better. For example, I put in $1,600 dollar mattresses in each bedroom, use high end sheets and towels, expensive furniture, fully furnished in the kitchen with just about everything you can think of. The key is to think of everything you would use in your home and include it and more in the rental property.
Don’t cheap out. For example, if you have a large property and you have wi-fi. Make sure you have a very good package that is fast. And if the signal is weak in one part of the house, don’t hesitate to put in multiple routers so the connection is very fast everywhere. Remember to think of every detail like this.
I go with the latest technology in the property with high end TVs in each bedroom. DVD players, Apple TV, ipad/iphone alarm clock radios in each room, laptop, and in a few properties even include iPads. Remember your security deposit covers you in the event they break something. I’ve dealt with tremendous numbers of clients over the years and I’ve never had any problems except for minor type stuff and they have always paid for what they broke.
It’s also helpful to include a cellphone or at least a SIM card with a local #. Almost every city (even cities outside of the USA have pay as you go SIM cards) so you can include a local cellphone number which many people appreciate, especially when they are traveling abroad. Also, you can include a VoIP phone so they can call pretty much any landline phone across the USA, Canada, Europe all for free.
If you think outside of the box a bit and offer incredible properties and service you can make a small fortune doing these types of rentals. Part of the key is not only to be in a desirable city but also the most desirable neighborhoods of these cities where people want to hang out.
A good rule of thumb is just look where some of the highest end 5 star hotels are and try to buy within a few blocks radius. That’s typically a recipe for success if you set the property up right.
You will find the most successful short-term rental owners are the ones that don’t view other rentals as their competition but look more at the 5 star hotels as their competition. If you can tap into some of the 5 star hotel clientele there is a lot of money to be made. When I look for clients to stay in my higher end properties I’m NOT looking for John Doe cheapo tenant that might not take good care of my property.
I’m looking for the guy that would typically stay in a nice hotel but the hotel can’t offer what I can offer at that price and size. The average hotel room is less than 350 sq. feet so play on that advantage. The typical 5 star hotel tries to nickel and dime you for everything. Make a local call? $1 a minute. Take out a bottled water? $5. Internet? $25 a night. Use these things to your advantage.
The key is to think of it as a VERY organized business and have excellent property managers and take super good care of the clients. NOT everyone has the patience, mindset and ability to do this. But if you do it right you will typically have repeat clients and they will stay with you each year they come back.
I have some clients that have rented with me for 10 years in a row and several of them stay with me several times a year. You can bet when their friends or family come, they also stay with me.
Owners that are able to do these things above is what separates the successful from the VERY successful property owners.
