You already know that vacation rentals are big business. With the advent of VRBO, Home Away and Airbnb, it seems everyone is talking about vacation rentals. So it’s natural that they are also the hottest investment option for people wanting to add a real estate component to their portfolio.
But….did you think about everything before you bought that cute mountain cabin or beach cottage? We didn’t either. Here are 5 more things you didn’t think about before you bought your vacation rental.
- Don’t Fall in Love with your Vacation Rental
This is what I say to all new VR owners. The biggest obstacle we had to overcome our first year as a Vacation Rental owner was seeing how our guests treated it. Now don’t get me wrong, most of the guests are courteous and respectful to the property, but a fraction do treat it as a party pad and can do some damage. Over time, it gets easier to handle, but the first season was very difficult for my wife and I. Fortunately, we have good insurance and a solid policy in place to pay for damages but it was disheartening to realize that not everyone would treat it as if it was somebody’s home. Now we have a gentle reminder with this sign. We like to think it helps quite a bit.
- Family and Friends Will Want to Use It
While this was not entirely unexpected, we were surprised that a small percentage of family and friends would expect to get the home for free or at a deeply discounted rate. We found “friends” literally coming out of the woodwork to ask about using our VR for their summer vacation, for free! The fact is that this is a business and you need to treat it as such. We decided the best way to handle these dear, old Facebook friends was by offering a 20% discount for the off-season months. This served two purposes. 1) It clearly defined that our VR was a business which needed to sustain itself and is not available for loan and 2) it allowed me to sleep at night, knowing that I wasn’t being a complete “Grinch” with my friends and family.
- Sad Story Cancellation Requests
I’ve been lucky to only have this happen a few times, but spend enough time on VR support sites like Bigger Pockets and you know that this is a common occurrence. Someone calls or emails last minute and tells you some sad story, trying to cancel last minute without travel insurance. How you handle this is up to you. We always felt badly about keeping their money and tried to accommodate the cancellation where we could.
So our policy is that if they give us at least 2 weeks notice, we will go ahead and cancel for them, knowing we can get a last minute booking. However, if it’s truly a last minute cancellation, well, this is a business and that’s the chance they took when they didn’t buy travel insurance. I try to be reasonable, though. When I’m unable to refund the stay, I will offer them an equivalent amount of time for free during the off-season. This allows for the fact that sometimes the stories are true, so again…I can sleep at night. (Always my goal)
- Unreasonable Guests and I mean REALLY Unreasonable
There is no way to truly prepare for the unreasonable guest. Imagine this. You get a call from your latest guest saying, “I’m not really happy with the shower head, water is not coming out of every hole which is what I like.” Really? On top of these, they had about a dozen other mundane complaints and requests. Sure, this is not common but you will experience strange things when you let strangers into your rental. You need to be prepared to handle them.
In this case, I took off work and headed to the property to discuss all their complaints and make corrections where I could. I try to accommodate the requests as best I can and in this case, she was satisfied that I did my best. In some cases, you’ll need to offer a discount to make your guests happy. Try to stay calm and have a handyman/housekeeping service on call for the times when you’re unable to get there yourself. In the end it’s all about preserving your review ratings, they are the lifeline to the success of your VR, especially if you are just starting out!
- Finding Reliable Services
This brings me to my last point, have good service people on call….on speed dial. Finding reliable service people is going to be difficult, especially in areas which are particularly popular for Vacation Rentals. Chances are, the good ones are too busy to take on new clients. It’s worth spending time on Yelp and be willing to pay for the good ones. I only use services which have 4+ stars rating on Yelp. The real estate agent who helped you buy the Vacation Rental is a great source for local information and recommendations. I also highly suggest that you buy a home warranty and keep it current. While there is no guarantee the service technician is going to be the best in town, typically they respond in a timely manner and it’s the best way to manage costs, since you’ll only pay the deductible for each problem….anywhere from $65-80.
All of these situations are rare and not intended to scare you away from owning a Vacation Rental. We’ve found that our VR not only is a Vacation House 4 Free, but the increasing value of the property ensures that this is a great investment tool. By having the right expectations, you will find ownership of a Vacation Rental not only profitable, but enjoyable.
Do you have any good stories to share about your Vacation Rental experiences you didn’t expect? Leave a comment here and share!