Purchasing a vacation home can be exciting and may even seem glamorous. Whether it’s in Canaan Valley or Boca Raton, Florida, there is a lot to consider when taking on such an investment, especially if you plan to rent it out. It is certainly an investment. Not only do vacation homes offer additional income through short term rentals, but the property itself can appreciate overtime if you’re in the right market. There are also significant tax benefits to consider, which you would want to discuss with a tax professional. Of course, one of the best parts of owning a vacation home is simply having your own place to escape to.
Will you hire a property management company or will you attempt to manage vacation rentals yourself? Aside from who will manage the rentals and turnover, a vacation home owner should also prepare for any unexpected expenses or issues that may arise and have a game plan for how you will address issues from afar. Location and accessibility will have a huge impact on these decisions.
If you plan to rent it out for additional income, are you prepared to manage it yourself or will you pay a property management company? Depending on the location and market, property management companies charge on average anywhere between 10-30 percent of rental income. In my experience, fees are typically higher in the mountain markets than beach markets. This is because mountainous areas usually require more maintenance and are more isolated from services needed to maintain the property.
Once you start looking into management companies and their fee structures, you may feel inclined to manage it yourself. In addition to the percentage of the rental income, management companies’ fee structures may vary with who pays for the cleaning fees, local occupancy taxes, booking fees, marketing, cleaning, pool or hot tub fees, laundry and other items that will reduce your rental income. These are only some of the things to consider when deciding on using a management company, which one, or managing yourself.
Management companies will greatly reduce the stress of coordinating renters, maintenance, bookings, property access, etc. It seems easy to rent it out through vacation rental sites but who will prepare and clean the property in between your renters? If the property is within reasonable driving distance, you may feel it’s something you can take on yourself. Although, taking on this task alone can add an abundance of stress. Not only are you never prepared for whatever mess you could be walking into, but the time and work it takes could become overwhelming. Having extra sets of bedding and towels will help speed the process up, but at the end of the day, there is still laundry that needs to be done, floors that need to be mopped, dishes that need to be washed, and whatever mess that was left that needs to be cleaned.
If you don’t want to deal with the messes left behind, but also don’t want to pay a property management company, a solution could be to hire a cleaning company you can trust. Keep in mind that in addition to a cleaning company, you will likely need to hire a maintenance crew to respond to any unexpected issues. If the property has a pool or hot tub, try finding a maintenance company that specializes in these services as well. Hot tubs require constant upkeep and pools require even more than that.
If you are considering purchasing a vacation home, you shouldn’t let any of these factors deter you from doing so as there are solutions to all of it. Just be sure to consider every issue you could face, and have a plan in order. Most importantly, allow yourself to ENJOY the property opposed to it becoming a part time job. Until next week!
Eve Leombruno, 2023 MBOR President