Any vacation rental condo owners here?

[Heather in OK]

Wondering if anyone here does this while living in a different part of the country.  Is the management company fee $$$$?  Do you roll most of the management/cleaning fees into the cost of the rental?  Do you actually make a decent income off the property?

Edited September 5, 2017 by Heather in OK

[Happy]

Not an actual owner--yet. But I have a couple of clients who do vacation rentals in various areas--I've learned a bit from them. Plus we looked hard at buying a condo on Galveston Island this summer. Here's what I've learned. 

 

On the condo we looked at management fees took about 30%. That's more than I expected, frankly. They care for the cleaning, but it's wise to have someone else in to clean from time to time. 
 

My local clients own property close by and do their own management. They hire a cleaning crew or two to see to the place between bookings. One of them says that one of the hardest things to do--find good, reliable cleaners. There's been times when she cleaned and laundered sheets herself. One of them also highly recommends you put as many beds as you can fit into a place. More beds--more dollars. 

​The more you can keep your condo booked, the better. There are some tax advantages to owning rentals. Check with your accountant for specifics. 

​With the amount of cash available to us, we passed up purchasing the condo. I just didn't have enough cushion--and based on Harvey, I'm kinda glad I'm not a brand new owner. In two more years, perhaps, we will have enough to buy a vacation rental. My clients buy rather high end homes and make very good money doing it. If you can make the numbers work, it can pay for your place. 

[zaichiki]

Not yet, but we're considering the idea...

 

[milovany]

Do you mean something like this?  The Tides in Seaside OR. Each unit is owned by an individual and they can choose to put it in the vacation rental pool and have it rented by the night (two night minimum). The HOA and other fees provide for an office, management, and cleaning.  From the guest's side, it's like a motel/hotel on the beach. 

 

We looked at this a year ago and didn't have the finances to purchase, but if we ever do have that kind of cash, I'd be interested.  I did call the lawyer or accountant or whoever they passed me to when I called for information, and I thought that -- while the regs were specific and the costs decent -- it sounded like it could work well if run well.  

 

If you mean an individual unit, I am an Airbnb host with a pretty successful apartment in our small-ish town (18,000 people).  We live in an area where a lot of travelers pass through, plus we have a state university here and a great downtown area, and I keep pretty busy.  I do my own management and cleaning.  

 

Edited September 5, 2017 by milovany

[Beth S]

Or consider Air BnB? 

[Random]

I think this will depend 100% on the market in your area.  If I were you and conducting research, I'd probably look at the VRBO website and find a few owner operated homes in the area you wish to conduct your business, then call the owners and have a conversation.

 

Additionally, you could contact some property management companies and discuss their fees.

 

You would want to roll all of the fees into the price your customers pay, right?  It's a business, so you'd want to keep your expenses low enough that you could make a profit when you charge a reasonable rate.  I don't mean to be obtuse, but I'd guess this is something specific to the area you want to buy, the going rate of property managers and cleaners, and what you invest and/or owe on your property.

 

I live in a touristy area where there are a gazillion VRBO properties, and they are all doing great (no exaggerating).  Some hire management companies and some are owner/operator.  They're all booked, all the time...but that's because of where we live.

 

Regarding the tax advantages, it's my experience that is also dependent on your specifics.  A VRBO that you work at is a different tax situation than a passive income rental property.

 

Best wishes!

 

 

 

 

[Heather in OK]

Not an actual owner--yet. But I have a couple of clients who do vacation rentals in various areas--I've learned a bit from them. Plus we looked hard at buying a condo on Galveston Island this summer. Here's what I've learned. 

 

On the condo we looked at management fees took about 30%. That's more than I expected, frankly. They care for the cleaning, but it's wise to have someone else in to clean from time to time. 

 

My local clients own property close by and do their own management. They hire a cleaning crew or two to see to the place between bookings. One of them says that one of the hardest things to do--find good, reliable cleaners. There's been times when she cleaned and laundered sheets herself. One of them also highly recommends you put as many beds as you can fit into a place. More beds--more dollars. 

 

​The more you can keep your condo booked, the better. There are some tax advantages to owning rentals. Check with your accountant for specifics. 

 

​With the amount of cash available to us, we passed up purchasing the condo. I just didn't have enough cushion--and based on Harvey, I'm kinda glad I'm not a brand new owner. In two more years, perhaps, we will have enough to buy a vacation rental. My clients buy rather high end homes and make very good money doing it. If you can make the numbers work, it can pay for your place. 

Good info!  Thanks!!! 

 

Do you mean something like this?  The Tides in Seaside OR. Each unit is owned by an individual and they can choose to put it in the vacation rental pool and have it rented by the night (two night minimum). The HOA and other fees provide for an office, management, and cleaning.  From the guest's side, it's like a motel/hotel on the beach. 

 

We looked at this a year ago and didn't have the finances to purchase, but if we ever do have that kind of cash, I'd be interested.  I did call the lawyer or accountant or whoever they passed me to when I called for information, and I thought that -- while the regs were specific and the costs decent -- it sounded like it could work well if run well.  

 

If you mean an individual unit, I am an Airbnb host with a pretty successful apartment in our small-ish town (18,000 people).  We live in an area where a lot of travelers pass through, plus we have a state university here and a great downtown area, and I keep pretty busy.  I do my own management and cleaning.  

Actually that's the exact part of the country we are considering!  It's all still in the planning/dreaming phase (our hope is to eventually relocate to the OR coast) so I have no idea if we'd want to go through something like you posted or through AirBnB or VRBO.  We've had really good experiences getting places to stay via VRBO and it seems the coast books up well during tourist season. 

 

 

You would want to roll all of the fees into the price your customers pay, right?  It's a business, so you'd want to keep your expenses low enough that you could make a profit when you charge a reasonable rate.  I don't mean to be obtuse, but I'd guess this is something specific to the area you want to buy, the going rate of property managers and cleaners, and what you invest and/or owe on your property.

 

 

Regarding the tax advantages, it's my experience that is also dependent on your specifics.  A VRBO that you work at is a different tax situation than a passive income rental property.

 

 That's one thing that's part of the learning process...how most do the fees.  In our experience booking through VRBO,  it seems that many have the price per night then tack on the fees. 

 

Good to know about the differences in tax situations of a VRBO vs an income property.  Again, we're still new in investigating this idea and haven't talked to our accountant yet.  Just getting feelers out there with people who have experience.

 

[milovany]

Actually that's the exact part of the country we are considering! It's all still in the planning/dreaming phase (our hope is to eventually relocate to the OR coast) so I have no idea if we'd want to go through something like you posted or through AirBnB or VRBO. We've had really good experiences getting places to stay via VRBO and it seems the coast books up well during tourist season. They do have a fee that the guest pays but it does not come out of my nightly fee. It's on top of that and they decide if they want to pay it or not.

 

Message me! We might be neighbors someday, haha, that's our dream too. I would totally consider Airbnb over VRBO. I have virtually no experience with VRBO but a lot of experience with Airbnb and think it's a lot more popular these days. Maybe just in the area, I live, but for sure it is here. I think VRBO has an annual fee and I think you do the updating of your booking calendar and/or payment collection yourself. With Airbnb. everything is within their system and they take care of everything, including, in some areas of the country, collecting and paying the state and local sales taxes. They do have a fee that the guest pays but it does not come out of my nightly charge. It is aside from that. Edited September 5, 2017 by milovany

[Guest]

We sold our beach house, but before we did so, we looked at renting it out and having it property-managed by a local company.  We could have made money on it, probably about $50K a year or more, but it also would have meant we could never use it ourselves--even though we would have set a no-pets policy, people cheat.  And so it would have made the place unusable for me.  :0(

 

The people who bought it from us spent (I'm guessing) about $10,000 to make it fancier and usable by one more couple.  They themselves reserve it for at least 2 weeks of the high season--maybe a month, I'm not sure--and they charge a little more than we would have and use a management company.  

 

Here is the difference:  we *owned* it outright, where they have a $600K mortgage on it.  The math makes it look to me like they are pretty much a little above break-even.  But that is only if there are no repairs/tsunamis/bad tenants.  I think one bad tenant could eat up all their profit.