Renting Your Recreational Property for Profit - Heather Bayer Reference Series

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is not how it was supposed to be. And as you worry about what to do next, you remember that in your haste to get away last night, you forgot to ask for the rest of the rental money and the damage deposit. What a mess!

      Fortunately, the next time you phone you reach someone, but when you explain about your neighbors’ concerns, you find it’s too late — your renter is complaining because the neighbor has shouted at his children and told them to stay off the raft. Your renter says your advertisement mentioned a swimming raft, and they had assumed it was a shared one. It’s clear this is getting out of hand, so you apologize for your neighbor’s anger and point out the swimming raft for your place has the cottage name clearly painted on the side.

      Finally able to calm everyone down, you go back to your neighbor and assure him you’ve made it clear to your guests what is available to them and what is not. He suggests that maybe you hire a caretaker to look after your cottage, someone who could be on hand to deal with problems when they arise. You begin to realize this is just one of the things you’ll have to think seriously about if you are ever to rent your property again.

      Of course, this is a worst-case scenario. It is very unlikely that you would have to face nearly that many problems during just one guest weekend. However, each one of these problems could have been prevented with forethought and good planning. This book will deal with all of these and more, so your rental experience can run smoothly and successfully. You will still encounter difficult clients and experience the occasional challenging situation, but if you follow the advice and tips contained in this book, you will be far better able to deal with any situation that may arise, and you’ll have contingency plans in place to cover almost any eventuality.

      2

      The Big Questions

      If you’ve made the decision that you are going to take the vacation home rental business seriously, you’ll need to know where to start. It’s time to ask yourself some searching questions, and this is probably best done with the whole family involved. Some decisions may affect how much time you will spend on the rental enterprise, as well as how much income you will generate, and others will affect your family (as would any other business you run from your home). If you are intending to handle the renting alone, family members should be part of the decision-making process from the outset. Take some time thinking this through. Once you’ve started the ball rolling, it’s difficult to stop!

      This chapter addresses some key questions to ask yourself.

      What Do I Want To Get Out of It?

      Not just money, but personal satisfaction, enjoyment of helping people with planning their vacation, and the challenge of marketing and achieving rental objectives are a few of the goals you might wish to aim for. If you have not been involved in a small business before, you might not have considered the importance of knowing where you want to get before you plan the steps to get there. The section on setting goals gives more ideas on how to tackle this question.

      How Much Time Do I Want to Spend Doing This?

      An hour a week, two hours, a day, or more? The decisions you make about renting your recreational home will determine, to some extent, how much time you will need to devote to make it a success. If you have created or are planning to create your own website, it will need continual updating to make sure it is rated highly on search engines; managing your own bookings means being in constant touch with your clients, confirming reservations, handling money, and keeping the paperwork up to date; and during the rental season, considerable time will be needed to look after the property between rentals.

      Do I Want to Market the Rentals Myself or Use a Rental Agency?

      The answer to this question may follow naturally from the answer to the question above. If you don’t have sufficient time or inclination to deal with promoting your rental property and dealing with potential and confirmed guests, then you might want to hand over that task to an agency. There is a hefty cost implication here — one you need to consider carefully — as an agency can take up to 40 percent of the income. The section on choosing the right rental agency has suggestions on researching the agency that will work with you best, and includes a list of questions you should ask. If you want to do the marketing yourself — which can be very satisfying — go to the sections on marketing strategy; creating your own website; developing your own brochure and stationery; advertising; and choosing Internet advertising options.

      Who Will Look After the Property When I’m Not There?

      When you choose to manage renting your vacation home yourself, deciding who will look after it when you are away is a really important question. At the outset, many owners are happy to drive up to the place for a few hours on a Saturday to do a “clean and turnaround” before the next renters arrive. This will save on expenses, but is it really worth it in the long run? And who will handle emergencies? Chapter 10 helps with this dilemma and gives some sound advice on choosing the right person to take on the responsibility of property management.

      How Will I Take Bookings?

      It’s easy to think, “Hey, I’m only renting a few weeks a year, why do I need a booking system?” If you are extremely well organized, you may be right, but the pitfalls of accommodation provision — double booking, no-shows, late cancellation, etc. — can adversely affect even the smallest setup. The simple booking system suggested in Chapter 7 will help you to keep the paperwork organized and reduce the potential for mistakes.

      Can the Cottage Be Rented Year-Round and If So, What Are the Implications?

      If your cottage has a potential for year-round rental it is probably a good idea to exploit this. However, in many locations winter rentals bring a whole range of issues that are not a consideration in the summer. Marketing out-of-season rentals also brings with it additional challenges as the market becomes overloaded with available cottages, and there are fewer people wanting to rent. Chapter 8, Seasonal Rentals, and Chapter 9, Marketing Your Vacation Home, offer ideas that will raise your cottage profile above the competition and attract those hard-to-find guests.

      How Much Am I Willing to Spend to Increase the Rental Opportunities?

      Although location and the condition of the waterfront go a long way to determining the rental rate, the inside of your rental property can also have a major effect on the price you can reasonably charge. Setting a rate is not just a matter of looking at what the market will stand. It also requires an objective look at what you are really offering and whether it would be economically sound to make any improvements. Chapter 5, Getting Ready for Renting, provides useful advice on adding value, not just for renting during the high-demand times of year, but also for attracting guests throughout the off-season.

      What Are the Tax and Insurance Implications of Renting?

      This is a question to ask your accountant and your insurance broker, and one to consider early on in the planning process. There are implications not only in terms of personal taxation, but also in the status of the property should you come to sell it in the future. Insurance companies view vacation rentals differently than single-occupancy residences, and you may find that your current provider will not cover a second home for vacation rental. Some insurers will have stipulations that you may find unworkable, so it is important for you to tackle this issue well before you get set up for renting.

      How Will This Affect My Family?

      Do your grown-up children see the cottage in the same way as you do — as an investment rather than a place to go to with friends at a moment’s notice? If not, this may be a major issue to sort out. Will your family help in “the business” or be an obstacle to it?

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