If you've ever considered renting out your summer home to make some extra income, the time is now; the market's hotter than ever.
Renting your property can be extremely profitable. Many homeowners use it as a passive income source to fund their own vacations and lifestyle. For some, investment properties are so lucrative they become their main source of income.
How amazing does that sound? People all over the world, just like you, have benefited from the rental property model.
Before you dive in, there are lots of things to learn and think about. Keep reading to find out if renting out your vacation home is right for you, and just how profitable it can be.
Why Do People Rent Our Their Summer Homes?
There's a variety of reasons people enter the income property business; many times, they don't go in thinking it'll become as profitable as it does.
Here are the most common reasons people rent out their vacation properties:
- They want to purchase a summer home for themselves and renting it out part-time makes it more affordable
- It's their second home and they don't spend as much time in it
- It's a retirement property purchased early and the owner doesn't want to live in it yet
There are lots of different reasons people enter this business, and the outcomes are just as varied. Although many properties are very profitable and bring the homeowners a new source of income, some properties aren't as successful.
It's crucial that you do your research to know if this business model will work for you.
Here are 10 things you should consider before you rent out your summer home:
1. Location Matters
Think about where people like to go on vacation: beaches, warmer climates, near exciting attractions.
Where is your summer home located? Your location may be the number one factor in whether or not guests rent with you. There must be selling features in your location that makes renters want to spend their vacation in your city.
Therefore, places like Myrtle Beach are fabulous rental home locations. The Southeast Coast has beaches, warm weather, and attractions (Disney, the Everglades, and more).
New York is also an amazing rental location because it has tons of landmarks, entertainment, and an atmosphere unlike anywhere else in the United States.
Time of Year
Second to location, the time of year you choose to rent out your summer home is important.
Peak season, when tourists swarm your city, is when you will get the most interest and bookings.
In the South, it's more likely to be when it's cold in other parts of the country. When it's cold in Michigan, the vacationers head South to wait it out.
In New York, people visit the city for big events and attractions, like New Year's Eve and Fashion Week.
Analyze your city. How popular is it for tourists? What does it have to offer visitors? When are they most likely to vacation there?
Before you create your listing, check with your city's laws and regulations regarding short-term rentals.
Some cities, like New York City, try to limit (and even ban) short-term rentals because some homeowners don't pay tax on this income source, and it takes business away from hotels and licensed short-term rental locations.
You should also check with your condo or homeowners' association to see if they have any regulations against short-term renting. It's not uncommon for these associations to frown upon a constant coming and going of new renters.
It's best practice to go the legal and transparent route when renting out your summer home.
3. Market Trends
Once you know your summer home is in a popular location and it's legal to rent out, you need to research what the market's like in your city.
Look up similar property types on rental websites for your city. Some common ones are:
How much are properties similar to yours charging per night?
Look at their reviews and notice how many guests they've had, when those guests stayed, and the kind of feedback the owner is receiving. This information is a good forecast for what you can potentially expect in your area.
It's also important to stay on top of popular amenities people want when they go on vacation.
The main one: access to water. If you don't leave near a beach, consider adding an in-ground pool. We'll discuss amenities in further detail later in this article.
4. Return on Investment
You need to decide if the maximum amount you can charge per night will cover all the expenses that come with renting out a summer home.
It's best to create a detailed list of every expense you will have. For example, utilities, taxes, insurance, repairs, maintenance, etc.
If the average amount of income you'll receive from your property is not enough to cover those expenses, or even if you just break even, it may not be worth the effort.
It's a lot of work to prepare and maintain a rental home; you should be rewarded with regular profit.
5. Risk Evaluation
Every new investment comes with its own unique risks and concerns. For your summer home, there are a few common risks you should be aware of:
- Rowdy guests; noise complaints from neighbors
- Damage to the property
- Amenities that stop working mid-stay
- Utilities that need emergency repairs
...and many more. Make a list of every potential thing that could go wrong. Then, detail two possible solutions for each risk.
This will ensure you have a solid plan when an unplanned risk occurs (which it inevitably will). You could even include phone numbers and contact information of who you would call in each situation to repair the damage.
6. Management Company or Run It Yourself
If you'd rather skip all the mundane tasks and extra work that running a rental property entails, you could hire a property management company to take care of it for you. There are advantages and disadvantages to choosing to go this route.
The benefits of hiring a company:
- They oversee advertising, listing, and booking
- They employ a cleaning service
- They ensure repairs are fixed
- They are knowledgeable of rental legalities that must be followed
The disadvantages of hiring a company:
- They charge from 20-50 percent of what you earn per booking
- You don't have as much involvement in knowing who will be in your summer home
- You'll want to establish a level of trust with the company that has access to your home
- You could potentially fulfill their services yourself, cheaper
You should go over the reasons you are renting out your property. If you wanted to create a passive income source and not have to be nearby the rental property, then hiring a company is an excellent option for you.
If you'd prefer more involvement in the rental process and want more control over who rents your space, then it may be better for you to run the property yourself.
You can also hire out some services and complete others yourself.
7. Amenities and Decor
When you go on vacation, you're looking for a break from your regular routine and lifestyle. Usually, this includes accommodations that are more luxurious than what's available in your home.
Here are some examples of popular and attractive amenities:
- Water access (beach, lake, hot tub or pool)
- Free WIFI
- Complimentary towels and toiletries
- Outdoor space; a BBQ
- Entertainment packages, like cable or a streaming service
- Access to a gym
If your property is located in a snowy climate, consider including ski and/or snowboard equipment, toboggans, or snowshoes free of charge.
Ensuring your summer home has the best amenities possible will attract renters who are willing to pay more to use those features.
It's crucial for you to stay on top of design trends and the current popular home d?cor. As with amenities, guests want to stay somewhere that has a luxurious and holiday-esque atmosphere.
Here are some ideas to boost your summer home's interior style:
- Wood flooring
- Modern finishes
- Jacuzzi tub
- Extra large dining table
- Neutral paint tones with pops of color in the accessories
- Fireplace, if you're located in a winter destination
The key is to make your rental property look like a vacation from your guests' normal lives. Consider hiring an interior decorator to stage your property and increase its appeal.
8. Attractive Listings
There is a myriad of ways to make your summer home listing stand out from the competition and attract high-quality renters.
The first step is to look at other listings in your area and see what they're doing well.
The main takeaway is that your listing is 100% accurate in its depiction of the property. No one wants to book a home based on the listing, and then be disappointed in person.
That's just begging for poor reviews and refunds.
As mentioned above, your pictures need to be 100% accurate.
They should be high-quality photographs; you could do it yourself or hire a photographer to take the pictures and do some slight editing. However, the use of fish-eye lenses to make space look bigger will turn off potential customers.
Most property photographers will understand how important this is. Also, discuss having the pictures taken when the lighting is natural and optimal.
You want to show your home in its best state; the best it can possibly be while still remaining true to how it looks in person.
The description is your chance to really sell the idea of renting your summer home. You should go into detail about how wonderful the location is, each and every amenity, and how clean it's kept.
Consider hiring a professional real estate lister or writer to curate the best description. You will want to include specific keywords that will ensure your listing shows up in search results.
And, consider including testimonies of past renters who enjoyed their stay. Most listing sites have a section for reviews, but it doesn't hurt to include your best one in your description.
9. Find a Cleaning Service
This is a highly important component of running your summer home as a rental property.
During peak seasons, you may have guests checking out and checking in all in the same day. Since it needs to be fully cleaned and laundered between stays, you need a highly efficient cleaning service who can work well under pressure and get the job done.
As mentioned above, when you hire a property management company they usually take care of the cleaning service hiring.
But, if you're running it yourself, do your research on local cleaning companies. Research their experience with short-term rentals, the products they use, and even talk to current clients if you can.
This is an important element that if done poorly, will result in negative reviews.
10. Think About Your Renters' Needs First
Your renters are your customers; they pay the bills and potentially spur more business from their recommendations to friends and family.
When you get an inquiry about renting your summer home, reply as soon as possible. Renters will usually message a group of properties they're interested in, and your quick reply reflects well on your listing.
Create a welcome package for their arrival that describes all necessary passwords, appliance instructions, directions to the beach, restaurants, or other attractions.
You can also include any house rules or requests for how you'd like your guests to leave the property.
Ready to Rent Our Your Summer Home?
There's no better time to rent out your vacation property than when the market is hot; people love heading south to spend their holiday in the sun!
If you're interested in learning more about owning a rental property, or perhaps even buying a vacation home in Myrtle Beach, contact us for more information or call 843-839-9870. You have questions, we have answers. We are here to help you avoid the pitfalls that are costly and help you make smart decisions.
Jerry Pinkas Real Estate Experts - 604 N 27th Ave. Myrtle Beach, SC 29577
Are You Ready To Own Your Own Summer House?