Why Are You Offering A Vacation Rental?
1. Perhaps you've purchased a vacation home primarily for your family and friends to enjoy and want to make some extra money on the side when you're not using it. In that case, you'll want to select the weeks of the year when you and your family and friends would like to enjoy the home as well as those weeks you would prefer not to manage guests. Offer the remaining time to potential renters.
2. If you have particular financial goals such as paying off your vacation property's mortgage over a particular length of time, then you'll want to spend some time reviewing the numbers. Look at your mortgage, interest and insurance payments as well as the time horizon. Consider ongoing expenses to maintain, repair and upkeep your property as well as costs to hosting renters. Once you have that annual figure, you'll want to calculate how much revenue you will want to generate as well as how much you can charge for rent. Remember that particular seasons and times may generate more revenue than others.
3. On the other hand, you may want to rent out your home because you enjoy being a host. Perhaps you enjoy talking with different people from other areas of the country. Maybe you like to serve others and find it fulfilling to help them create a relaxing vacation. If this is the case, then you'll want to define the amount of time you'd like to spend on this hobby. Remember that if being a host is no longer enjoyable and you don't need the money, this hobby will quickly become a chore.
How Does The Income Vs. Expenses Look?
Although financial goals may differ from one vacation rental owner to another, one thing is certain: you don't want to lose money on your vacation rental property arrangement. In order to ensure that you come out on the positive side of the balance sheet, you'll want an accurate assessment of all your costs as well as a reasonable estimate on what you can earn in your particular geographic location through renting your property.
Here is a list of potential costs:
- Property and other taxes
- Homeowners, liability and other insurance
- Homeowner, neighborhood or community association fees
- Electricity, gas, water, cable, Internet and other utility fees
- Repair and maintenance expenses
- Landscape or outdoor upkeep expenses
- Cleaning, laundry and supply expenses
- Listing, advertising, and marketing expenses
Once you assess your estimated annual costs, you'll want to do some research on what you can reasonably earn by renting out your property. Here are some ideas to accurately assess the income side.
1. Scout out the competition. Pretend you are searching for a vacation home in your area and select several online listing services to conduct a comprehensive search for prices, availability and comparable amenities. Take a look at each month during the calendar year and note the busy seasons as well as local events that might drive demand higher. Write down average rental prices for comparable properties to generate a rough idea of how much you can earn.
2. Research other options. What are other housing options that vacationers have? Are there plenty of hotels in the area? Campgrounds nearby? What do they offer and at what price points? Can you differentiate yourself from other lodging options as well as other hosts renting out their homes?
3. Rely on some industry math. The peak vacation period for most areas is in the summer months when school is out and families traditionally spend more relaxed time together. This period generally spans 12 weeks. If you can charge a weekly rental fee that is greater than or equal to your monthly mortgage payment, you can pay for that biggest portion of your expenses during your peak rental weeks. Experts report that an additional five rental weeks will cover the majority of other expenses.
Click here for more tips on how to figure out the price of your vacation rental.
Regardless of how you define your vacation rental time boundary, remember that you want to keep both your financial and personal goals in sight to keep the entire vacation rental business a positive one.