LITMIR.BIZ

      I recently asked a real estate friend how appraisers arrive at a figure for property valuation. After getting a short explanation of the principles of appraisal, I realized that setting a rate for a vacation rental week is not dissimilar.

      What you will charge on a weekly basis for your property should be largely determined by what the market will bear, and this will depend on a number of criteria. Location (regional as well as physical), facilities offered, size, and ambience all play an important part, and it is well worthwhile spending time looking at comparable properties before making a decision. Regardless of whether you decide to go it alone and do your own marketing and advertising, or if you choose to use a rental agency, have a realistic idea of what rental fee you are expecting before you start planning. Doing the research now will pay dividends in the future as it will be a daunting task to make changes to your rental rates once you start advertising.

      First of all, look at the websites of rental agencies servicing your area, then check local advertising sites. Finally, check out the larger sites where your potential competitors might advertise.

      One way of setting a price is to decide whether you want to go the Wal-Mart route — high volume/low price — or the Chanel route — low volume/high price. However, setting rental rates is not an exact science; we will discuss different factors that will influence your pricing in this chapter.

      High-season rates are generally applicable from mid-June to early September, and for Christmas, New Year’s, and the Spring break. Long weekends in the low-season period will generally attract higher rates. The rest of the year can be set at one rate, although if you are near a ski area, you might want to have an additional high-season or mid-season rate that covers the January to March period. Your location may dictate your seasons, so take a look at what your competitors are using for their low/mid/high-season dates.

      Location

      Look for similar-sized recreational properties in your rental area. If your property is in a much-sought-after location, it may fetch a premium price. If it is a relatively short drive from a major city, rental rates can also be higher than in a more distant location. If your property has a unique selling point that may appeal to a particular section of the market, that could justify a higher price. For example, people looking for a peaceful, relaxing break will pay a premium if your vacation home is located on or near a no-motor lake. In locations that feature winter sports, properties that offer ski-in/out facilities will command a higher rate than those where additional driving is involved. In very popular tourist areas, vacation homes are more sought after than in quieter, less well-known locations.

      If your property is located on good waterfront, this will clearly benefit your bookings in the summer months. However, if you are on or near a river offering canoe routes, you might expect additional bookings in spring and fall. Many European visitors, or those with young children, may prefer a swimming pool to open water, so if your property has a pool instead of (or even in addition to) waterfront, this could have a considerable impact on the potential rental value. Chapter 9, Marketing Your Vacation Home, will show just how you can boost your off-season income through reaching special interest groups with targeted packages and deals.

      Interestingly, one Canadian rental agency infers on its website that cottages on rivers are virtually unrentable. However, as an owner of a riverside cottage myself, this is certainly not my experience. Indeed, visitors from the UK are happy to be near any water, despite the fact that no part of the UK is more than 112 kilometers from the sea! It is the fact that it can take three hours to get there (on a good day!) that prevents them from traveling, so water-based vacations of any type are what they are seeking. They don’t bring boats so don’t need marina or docking facilities, and, in general, demand less in terms of location than the home-grown Canadian market. So if you do have a charming riverside property, just find a more enlightened agency or adjust your marketing to target the guests who would find your home to be the right one for them.

      Size

      Most rental agencies would agree that larger properties tend to book up first for the high season and command higher prices. Many families or groups of friends like to vacation together, so a large vacation home sleeping ten people or more offers a more attractive and economical prospect than independently renting smaller properties. However, the market for smaller properties grows off-season when there are fewer families taking vacations. Rental guests in fall, winter, and spring will tend to be couples, either on their own, or two to three couples renting together. Whereas a large property sleeping eight to ten may achieve a high rent in the summer, it may remain largely empty in low season as the target audience at this time of year is unwilling to pay the price. A smaller, perhaps two-bedroom property, while yielding lower rents in high season, is more likely to rent additional weeks throughout the year. It’s also worthwhile considering this if you are planning a renovation. Adding a sleeping cabin to offer additional summer sleeping space may be more cost-effective than spending a lot of money on additional bedrooms in the main residence.