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5 Things Your Vacation Home Investors Need to Know

Uncategorized Mar 16, 2019

Buyers come in all shapes and sizes with all types of perceptions and expectations. With your focus on the vacation rental market, it’s important to be able to present them with appropriate and comprehensive detail so they can make informed decisions on the purchase of a second home

Having this information to hand will also stand you out from the bulk of your competitors – something we all want to achieve.

Here are five basic pieces of information that will position you as a vacation rental sales expert.

Buyers need to know….

 

1…that they can rent at all

Although the vacation rental industry is valued around $100 billion worldwide and is becoming more main-stream, many investors don’t know or understand the income potential that short term rentals can offer. They may have considered residential rental as an option, but the possibilities offered by the vacation rental industry may need to be explained to them.

Whereas destination markets were once seen as the only viable location for a successful vacation rental, they are now popular in just about every town, city and rural location. Wherever travelers go (either for business or leisure), there is now potential for rental business. 

Take Midland, Texas for example. When driving I20 all you see is oil field production sites, and associated supply industries. It’s not the most attractive of terrains and hard to imagine why anyone would want to vacation there. However, given the reviews on some of the Midland VR listings on VRBO, it’s a good location for families to spend time with their loved ones working in the area.

It’s good to put away the mindset that only people on vacation rent; there are a multitude of opportunities for a short-term rental to achieve good occupancy. Proximity to colleges, teaching hospitals, sports & music venues, vineyards, hiking & biking trails….the list is pretty much endless. A decade ago travelers looking for a short term stop always stayed in hotels – now they have other options, and are actively seeking them out.

  

2…if there are any rental restrictions

Whether a buyer knows about vacation rentals or not, your presentation of every property should be accompanied by information on the legality of short-term rentals in case you are asked. 

Home Owner Associations may have restrictions written into their by-laws and have an outright ban, or limit the amount of a rental period to 30 days or more, for example.   In other areas, there may be municipal zoning restrictions that are buried in the by-laws that have lain dormant for years. However, it only takes one complaint from a neighbor for that by-law to be activated again and then vacation rental owners are embroiled in a legislation fight.

Different municipalities can have varying restrictions so it’s important to research different locations thoroughly and advise accordingly.

 

3…what inbound travelers are looking for 

If a second home is going to be used for short-term rental, it’s useful for a buyer to know the likely demographic of their guests. For example, in an urban area close to a convention centre, most travelers will be business people so the desired layout of a property may be different than in a traditional holiday hot-spot where families go for vacations. 

Studying the intentions of the inbound traveler can be a useful exercise as it can determine which property will be more likely to rent, as well as the amenities that contribute to its success as an income-generator. For example, something as simple as a designated parking space can be a strong differentiator.

 

4...the potential rental income

“What will this property rent for?” may be the first question your buyer will ask, and you will need to know the answer. Not only for a week in high season, but also for low and shoulder seasons, special events and premium weekends. You’ll need knowledge of comparable rental properties, their occupancy levels, seasonal variations, discount strategies and the rate differences between various types of homes/condos.

Consider creating fact sheets for different locations in your area that have all this information neatly presented.

 

5...how they can find a property manager

The nature of second home ownership means that the buyer is likely to live some distance from the property. Issues of property management in their absence is going to be at the forefront of the buyer’s mind so you will need to be prepared to offer assistance with finding an appropriate service provider. It’s better to have several tried and tested PMs in your portfolio, to ensure a good match with your purchaser’s specific needs.

Creating a niche as a vacation rental expert can bring a significant increase in your business, and delivering what buyers need before they ask, can grow your reputation.

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If you have these figures ready for your clients during your initial consultation, it will be the key to securing a contract.