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For New Property Owners - Getting Started with your Rental
Tips for the first-time owner on vacation rentals.
- Do you have tips for first-time vacation owners?
- Will I make a profit?
- How do I write a rental contract?
- How do I set my rental rates?
- Do you have any other tips for success?
- Can I manage and maintain my rental remotely?
- When should I collect a deposit?
- How do I handle my taxes?
- How do I remotely handle renter access to my rental?
- Do you have tips on responding to rental inquiries?
- Should I hold a reservation for a renter?
- How do I handle cancellations and refunds?
Do you have tips for first-time vacation owners?
Renting a property as a vacation rental can sometimes be a very daunting task for the first-time rental owner. From determining how to find bookings, to taxes, to maintaining your calendar, to setting up phone service, there are quite a few things that must be learned. This FAQ is an attempt to convey some of the most commonly asked questions from our owners and our most popular tips. While we do our best to include everything, we welcome your comments and suggestions regarding anything we’ve missed. Additionally, we strongly recommend consulting with your attorney and CPA regarding tax and legal issues of vacation rentals in your locale.
If you are looking for a detailed guide to renting your vacation rental by owner, you might want to purchase How To Rent Vacation Properties By Owner.
Last Updated on Monday, May 10, 2004 - Top - FAQ Home
Will I make a profit?
This question is impossible for us to answer. Can you? Certainly. How much revenue your rental generates depends greatly on how many weeks it can be rented, how much you spend to maintain it, how discriminating you are when renting, how effectively you advertise, and how popular a destination your rental is located in is.
Additionally, many folks rent their homes out not to make the largest profit possible, but simply to supplement their income and help to pay the bills for their vacation home. In this case, although you are losing money on your rental, you are gaining use of a vacation home for you and your family and building equity in a property that hopefully will grow over time!
In summary, the vacation rental market is a very volatile market and it’s very possible that you could make money or loose money on your rental. It’s imperative that you thoroughly plan your investment as much as possible to meet your individual goals.
Last Updated on Thursday, July 10, 2003 - Top - FAQ Home
How do I write a rental contract?
To protect both you and your renters, a written rental agreement is critical. Contracts are available from very basic and straightforward to extremely detailed legal documents. Rental agreements, in addition to giving you basic protection, will spell out the terms in such a way that there is no ambiguity between you and your renter in terms of what is expected. Since confusion can arise from verbal communication between you and your renter, they will appreciate this too!
You can often find sample rental agreements by searching the web or by visiting an office supply store. As always, you should contact a lawyer with expertise in vacation rentals to get an agreement appropriate for your circumstances. However, make sure that any agreement you contains at least the following:- Basics of Rental
- Owner information, contact information for the renter, dates and time of check-in and check-out.
- Finances
- Amount of rent, rental deposit, pet fees, additional guest fees, cleaning charges, applicable taxes, total amount due.
- Cancellation Policy
- Damage and Security Deposit Policy
- Signatures of both parties
Last Updated on Thursday, July 10, 2003 - Top - FAQ Home
How do I set my rental rates?
Correctly pricing your vacation home is critical in the success of your rental. If you are managing your property and handling all of your bookings, then make sure your prices are competitive with other property owners in your rental complex or neighborhood. Remember, travel agents and management companies charge a premium for the services they provide: many are on-site or nearby, they are an established and usually reputable business, can provide immediate and local support, etc.
Once you know what rate is competitive, make sure to adjust your rate up or down based on the available amenities. If you increase your rate, make sure to let potential renters know what wonderful amenities you provide that justifies your rate.
If you’re just starting out, we recommend setting your rates a little lower to help get your property rented. Pricing just below market can help fill your rental with bookings quickly, which means increased revenue for you. If you find you are having no problem booking your rental, you can easily adjust your prices upward.
Make sure to post rates for the different types of bookings you expect to receive. For example, most properties have a nightly and weekly rate, and often a monthly rate. If appropriate, you can offer a weekend rate, mid-week rate, or any rate that is appropriate to your location and rental. Be sure to offer a discount for longer stays which increase your overall bookings, reduce cleaning fees, and help reduce those empty mid-week nights.
Additionally, know the peak and off-peak dates and set your prices accordingly. In addition to the normal seasonal rates (summer, winter, etc.), remember any special weeks or events that could create high-demand. These can include holidays (Thanksgiving, Christmas, etc.) and local events (spring break, nearby sports events, etc.).
Last Updated on Thursday, July 10, 2003 - Top - FAQ Home
Do you have any other tips for success?
Organization is paramount to a successful vacation rental! Make sure you have procedures that you follow with a documented trail of any important aspect of your bookings. At a minimum, you should track: communications with renters (save all emails, take notes of phone calls), when a date is reserved, when you received a payment from a renter, what the payment was for, when you receive a contract, when you schedule a cleaning for the property, when you paid for cleaning service, when you returned the deposit, when you sent out keys, etc. When starting out, it’s extremely easy to forget to document something and then wonder a week later whether or not a particular step in your booking process was completed. This can lead to some awkward and potentially disastrous results!
Additionally, it’s important to maintain communication with your renters. Every time you receive payment, send the renter a note (email, postcard, etc) letting them know that it was received, what is still due, and how to contact you with any questions. This will help the renter be more comfortable with the process and help them remember what they need to do next.
When all payments are received, send a note to the renters with check-in/check-out procedures, directions, your contact information, who to contact during an emergency, etc.
Lastly, if you haven’t heard from the renter in a while, don’t assume all is well. It’s possible that they’ve misplaced your email address or phone number and are waiting for contact from you! Another reason why it’s important to “touch base” with them periodically.
Last Updated on Thursday, July 10, 2003 - Top - FAQ Home
Can I manage and maintain my rental remotely?
Many vacation home owners don’t live near their property and must manage the rental remotely. In order to effectively manage your rental from a distance, you’ll need the service of others that are nearby. First and foremost, a good cleaning service is a must. Having someone you can trust that can report to you the status of your rental, do an inventory and damage check, and make sure everything is “in order” is indispensable. Additionally, you’ll want to keep on your list a plumber, electrician, housekeeper, carpenter and pool maintenance service if applicable.
Be sure to keep this list handy and available to you at all times!
Last Updated on Thursday, July 10, 2003 - Top - FAQ Home
When should I collect a deposit?
Make sure to collect a deposit upon reservation. Some homeowners collect a flat-fee deposit (for example, $200) while others will collect a percentage of the rental (for example, 50%). Collecting a deposit upon booking of your rental will help decrease your cancellations and, therefore, increase your bookings. Most renters expect to pay a deposit when they book the rental and then pay the rest of the monies due sometime before check-in (often 2-6 weeks before check-in). Remember that you are not a hotel and are not competing with hotels. Renters are actively seeking out your private home for their comfort and you can expect them to understand the rules are a little different than booking at a hotel.
Last Updated on Thursday, July 10, 2003 - Top - FAQ Home
How do I handle my taxes?
Additional record-keeping and paperwork come hand-in-hand with running your own “business.” Although one of the benefits to owning a vacation rental can be tax savings, you must maintain careful organization over all of your expenditures and income, as well as staying aware of all taxes you are responsible for. Make sure to keep an organized record of all your income and expenditures with regards to your rental. Consult your tax adviser on help in handling any federal, state, or local “tourist” taxes that you may be responsible for. For help on your federal taxes, the IRS provides a publication on rental property (publication 527) which is available at http://www.irs.gov. Be sure you are aware of your responsibility with regard to taxes!
Last Updated on Thursday, July 10, 2003 - Top - FAQ Home
How do I remotely handle renter access to my rental?
If you are remotely managing your rental, you have a few options to make sure your guests get access to the property. For those that have no way to have an “in person” check-in, you can either send the keys to the tenants or provide them with access to a key lock-box on the rental property. Never give renters access to your property until you have been fully paid for your rental.
Key lock-boxes are available usually for $20-$30 from hardware stores such as “The Home Depot.” These can be securely mounted on the outside of your property and you can set a pass-code that will open the lock-box. Inside the lock-box is usually enough room for a single key to get access to the rental which will have additional keys on the inside. Your renters can then return the lock-box key to the lock-box and close the box.
Make sure all of your rental keys are clearly marked on their own key ring. This will help renters to remember to return your key when they leave.
Last Updated on Thursday, July 10, 2003 - Top - FAQ Home
Do you have tips on responding to rental inquiries?
Here are a few tips on your inquiry responses:
Be Quick
The common phrase “the early bird gets the worm” is an important motto when responding to inquiries. The later you wait, the less of a chance you will have at getting the booking. Additionally, it’s good to show your potential renters that you are prompt at responding to any questions they might have.
Be Friendly
A little “human” touch to your emails can help convey to the renter that they’ll enjoy renting from you. Additionally, if they have provided a phone number, you can call follow up with them by phone to let them you know want them to book with you!
Answer Yes or No
Even if your property is booked, a prompt “No” reply is appreciated by the renter. Also, you’d be surprised how flexible renters can be if they like what they see with your rental. Providing them a list of alternate available dates could get them to book with you anyway!
Include a link to your listing
Potential renters need to know who you represent when they receive your response. Since they often will inquire about several properties, they’ll want to visit the website again to review your rental when making their final decision. Not including a link will cause extra work for them and you at best, and will get your response discarded at worst!
Include the original inquire in the response
Just like including a link to your rental listing is important, so is the original inquiry text!
Last Updated on Thursday, July 10, 2003 - Top - FAQ Home
Should I hold a reservation for a renter?
We recommend against “holding” a reservation for a renter while they finalize their plans or try to gather a rental deposit. Although you might have the best intentions, renters will sometimes use a lenient booking policy to their advantage. This can often result in late cancellations by the renter because of the lenient policy and lost rent to the owner. There’s nothing worse than turning down a potential renter because you’re “holding” dates for someone else that eventually cancels. Be sure to make this policy known up front. Renters typically understand this policy and are happy to oblige. Owners will enjoy the increased simplicity from not dealing with “holds” and the increased revenue from increased bookings.
Last Updated on Thursday, July 10, 2003 - Top - FAQ Home
How do I handle cancellations and refunds?
Make sure to have a specific cancellation policy that is spelled out in your rental agreement signed by the renter. Although cancellations are unfortunate, they are a “fact of life” when providing accommodations.
Typical cancellation policies set a date after which deposits are non-refundable. This date is typically 2-6 weeks prior to check-in, with 1 month being the most common. Additionally, it’s common for owners to return the full rent (less a small fee) if the unit is able to be rented out to other individuals.
It’s also a good idea to recommend trip cancellation insurance to your renters in your rental agreement. This can be purchased inexpensively from their insurance agent or travel agent and covers their travel cost loss (airfare, car, accommodations) in the event they must cancel their trip due to a covered condition (illness, death, etc).
Last Updated on Thursday, July 10, 2003 - Top - FAQ Home
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