Will my vacation rental cottage pay for itself?Most vacation rental homes do not pay for themselves right away. In fact, depending upon the economic conditions it could be as long as ten or fifteen years before the cottage does not cost the owner a significant amount of money each year. However, with a little effort the owner can usually increase the rental income substaintially.
Back to topWhat can I do to increase rental income?One of the best things to do is talk to a local property manager at the property and ask them make some recommendations for improving rental income. Besides good, newer furnishings and décor, Internet access and a well maintained property make a big difference. Some additional ideas are in another frequently asked question below.
Back to topWhat amenities generate the most income in a vacation rental?Since you can not change the location of the property you should do what you can to maximize the views. Little things like board games, books and a playstation can make a difference. Other more expensive features that help rental income are pools, hot tubs, game rooms and theater rooms. You can also allow pets.
Back to topDoes VRBO.com help with rentals?There is no doubt that VRBO.com (vacation rental by owner) can make a big difference in the number of weeks booked in a cottage. However, time and effort on the owner's part is a critical aspect of increasing the rentals. It is a proven fact that the owner of a cottage is much more successful booking the cottage than a reservationist at the property management firm. Many vacation rental owners handle talking with the prospective tenant and then turn them over to the property management firm to complete the reservation.
Back to topWhen can the rental company give me the tenant proceeds?Vacation rental statues allow the owner to receive up to 50% of the rental proceeds prior to the tenant arriving. The second half of the tenants rent is given to the owner upon their tenants' departure. Property management firms begin to collect reservation deposits in January. Therefore it is possible that the first rental check for an owner will be received at the end of January or the beginning of February. This makes it easier to carry the home through the quiet winter months.
Back to topHow much is the property management fee?Property management fees vary from company to company and from property to property. There is no maximum or minimum property management fee but a high rate for the Outer Banks would be 25% and a low rate would be 10%. The 25% rate would likely be for a small cottage a long way from the ocean that only generated around ten thousand a year in rental income. The 10% rate would likely be for the owner of multiple large ocean front homes that generate in the hundreds of thousands of dollars each year. There are other variables as well. Some companies have all inclusive services and others have a small fee for different services they offer.
Back to topWhat does the rental company do for their fee?Each rental company is different but there are a core number of services that are generally offered by all vacation rental companies. They advertise the property though various media, they keep the reservation calendar, account for all the money collected, pay the taxes collected, provide tenants with keys, clean and inspect the cottages after each tenant and work with vendors to make sure the property and its systems are good working order for each tenant.
Back to topWho is responsible for paying the utilities?Utilities are just one of the other expenses an owner has to carry when they own a vacation rental property. There are not choices in this area for electric or water but phone, Internet and television do have choices. Often the local telephone company or cable company has a special on a bundle of services that makes these utilities relatively inexpensive.
Back to topWhat is trip insurance?Trip insurance is insurance for the tenants' vacation. Most property management firms offer this type of insurance in case a weather event or other circumstance prohibits a tenant from going on their Outer Banks vacation. This insurance is sometimes paid for by the owner to guarantee their rental income.
Back to topHow often can I use my vacation rental property?Most property management firms require that you allow them to book the property a minimum number of weeks. Each company is different but most will want to book at least eight summer weeks a year. Also, your tax situation can limit the amount of use. A common tax scenario is two weeks out of every year to be used as a vacation property with unlimited use to maintain the property.
Back to topWhat happens if I get a bad tenant?Early in the summer season occasionally Realtors will hear about a parent who rented a cottage for their child's senior week and then left them and their friends to party. When the party finally draws complaints to the police the rental management firm is also called. Current vacation rental statues allow the property management firm to evict the tenants within just a few hours of the complaint. Since this law has gone into effect it has significantly reduced the number of bad tenants.
Back to topWould this home work as a vacation rental?Most vacationers come to the Outer Banks to be near the beach. Therefore, homes further from the beach and homes in wooded areas typically do not make good vacation rental properties. There are exceptions to every rule and some owners have worked very hard to create a unique niche for their vacation rental in location desired less by most vacationers. It is a good idea to talk with a property manager about a specific property. They should be able to give you a rough estimate fairly quickly.
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