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RENTING YOUR RECREATIONAL PROPERTY FOR PROFIT
Heather Bayer
Self-Counsel Press
(a division of)
International Self-Counsel Press Ltd.
USA Canada
Copyright © 2012
International Self-Counsel Press
All rights reserved.
Introduction
Why Should You Read This Book?
Whether you are planning to rent your vacation home for the first time, buying a property as an investment, or already have second home rental income and want to know how to increase it, this is the book for you. The principal aim of Renting Your Recreational Property for Profit is to provide you with a wealth of information to help you be successful in renting your property. The information and anecdotes in the book have come from my own experiences renting cottages in both England and Canada over the last fifteen or so years, as well as invaluable contributions from owners and renters alike, who between them have racked up years of rental know-how.
If you’ve had your recreational home for a number of years and are now thinking of renting for the first time to provide additional income, you may have to look at it from a different viewpoint and be prepared to make some tough decisions. What you may have considered acceptable quirks of the cabin, cottage, villa, or condo will have to be dealt with or fixed, the worn furniture replaced, and kitchen appliances updated. This book will help you with those decisions, provide checklists to make sure you don’t overlook anything, and offer advice on preparing for successful rental.
There will be plenty of choices to make in terms of where you will advertise and how to manage a marketing budget; whether it is in your best interest to use a rental agency or manage the renting yourself; and who will look after the property when you are not there. This book draws on experiences of owners with all types of rentals, from those who manage every part of their business, to owners living halfway round the world who rely on rental and property management agencies to look after their properties.
Armed with your copy of Renting Your Recreational Property for Profit, you will be able to maximize the rental potential of your vacation property and have great fun running your own rental business.
1
Is Renting for You?
Second home ownership is booming across North America and year on year, real estate companies are reporting rising interest in the purchase of vacation homes with rental potential.
In the US, the National Association of Realtors (NAR), in a review of the 2003 census, found 43.8 million second homes, of which 6.6 million were determined to be vacation homes. NAR says 23 percent of all homes purchased in 2004 were for investment purposes, and another 13 percent were vacation homes. Sales of investment homes were up about 14 percent from 1.57 million in 2003, with sales of vacation homes rising to 1.02 million, up almost 20 percent from the 850,000 sold in 2003.
The Canadian vacation home market continues to boom, with 40 percent of prospective purchasers planning on renting out their property to help cover some of the costs. Realtor Royal LePage reports, “Low interest rates, people redirecting their investment dollars from the stock market into recreational real estate, and Americans buying slices of Canadian recreational paradise are the compelling factors that are sustaining demand.”
The typical recreational or second home owner is a baby boomer, so there is a good likelihood that sales of these properties will remain high over the next decade as this generation approaches retirement age. There are also indications that more people in their thirties and forties are investing in recreational home real estate, not only to provide for their economic future but to support the growing trend to stay fairly close to home for vacation time and to bring family together in a safe and known environment.
The Costs of Recreational Home Ownership
The rush to find the perfect waterfront property has forced many people to buy earlier than they anticipated just to be assured of their future retirement dream. For those who have chosen this path, recreational property ownership comes at a price, as the initial investment and furnishing costs are closely and relentlessly followed by a welter of expenses. Some of these are expected and budgeted for; others come as a surprise. A sheared water line; the need for water softener or purification systems; winterizing; maintaining decking and sidings; prevention of water ingress in spring — these are just some of the challenges faced by owners I spoke to during the research for this book. In most cases, even where owners had substantial contingency funds, the additional expenses of recreational property ownership — including spiraling electrical costs and property taxes — came as quite a shock.
So, as reality overshadows the initial enthusiasm for the purchase, many new owners and significant numbers of seasoned owners will consider renting their recreational property to offset these costs. Meanwhile, others have deliberately bought property to take advantage of the investment opportunity and the potential for rental income, which is clearly there for high-season weeks.
What can you realistically achieve from renting your property? The simple answer is that you will not make your fortune — unless, of course, you buy several properties, renovate them, rent them for a time, and resell them — but that’s the subject of another book!
Renting Your Recreational Property for Profit will explain how, by giving careful consideration to marketing, property management, guest services, and added value, you can make enough money to pay the bills, meet the mortgage payments, do the routine maintenance and repairs, and have a surplus to make improvements that will ultimately increase the value of your property and the pleasure you get out of owning it. In short, this book is about maximizing the investment you’ve made so the return amply covers the expenses. Renting your recreational property requires work. It’s not enough to scour yard sales for bargain furniture, place a small ad in a couple of newspapers, then sit back and wait for the money to roll in. Making a profit from vacation rental requires sound planning and forward thinking, and of course adopting some of the tips from this book.
Is Renting for You or Not?
You have probably invested a lot in your recreational property. That investment is in money and time, and for many people it is also an emotional investment. Maybe you’ve owned a cottage for many years, or it has been in the family for a long time. That property holds many happy and precious memories of fun, laughter, sunshine, and relaxation. Or perhaps you are a new owner, enjoying the wonderful feeling of owning your own piece of paradise that you can return to after a long week in the city. Perhaps you’ve bought the property for your retirement and visit occasionally to dream and imagine what it will be like when you can be up at the cottage full time.
Opening your place in the country to strangers often raises emotional issues. You imagine them inhabiting your precious space, using your bedrooms, watching your TV, and sitting on your deck enjoying your sunsets. For some people, the very thought makes renting a nonstarter. If the weeks your vacation home is rented fill you with dread — if you worry that damage is being done, your watercraft are being wrecked, and candle wax will be spilled on your oak table, then renting is probably not for you.
In an ideal world, of course, you would rent your property only to lovely families who