What It’s Really Like To Own A Vacation Rental – High Season Edition – The Bad & Ugly

The Bad and Ugly of What It’s Really Like to Own a Vacation Rental

As with all things, too much of a good thing can actually be come too much of a good thing. Vacation Renal Homes and high occupancy is no exception. Today, we’ll be continuing our What it’s Really Like series and talking about the bad and ugly parts of owning a vacation rental home in the high season.

More Interaction with the Property:

We discussed in our first post that with the proper systems in place, the sales, marketing, and inquiry parts of running a vacation home actually get pretty easy during the high season because being fully booked will lead to less effort required and will also produce fewer inquires (if you’re calendar is kept up to date.)

The opposite is actually true from the property management standpoint. Since you’ll have guests in the home pretty much every day of the high season, there is always the potential need to address some guest or house concern. Because I don’t recommend a full blown “hands-off” property management setup (more on this later,) as an owner, you’ll need to engage more to either address or delegate these issues.

Case in Point from My Own Home:

http://www.dreamstime.com/-image24603364I always check in on my guests within a few days of their arrival to make sure that I’m engaging with them and showing concern for them and the quality of their stay. When I emailed my guest from last week, they were super happy, but also pointed out a couple of issues from the house, one being a broken blind in the living room, and also a torn towel. These are pretty minor things, but they do facilitate not only dispatching my on-site team, but also a claim form to our “guest protection policy” company.

When there are guests in the house all of the time, it’s much more likely that this will happen. It’s a fairly straight-forward and low-time commitment activity, but the point is that during the high season, that 30 minutes a week of extra interaction is required.

Wear and Tear on the Vacation Rental Property:

There’s a direct correlation with the number of nights the house is occupied each month and how much wear and tear is occurring. That only makes sense, right? A home is really just a big group of systems, from A/C, to pool, to plumbing, and appliances. The more they get used, and the more people use them, the more likelihood an issue will arise.

This is actually another reason I don’t do highly discounted nights to “fill voids” in my schedule. Sometimes, especially during the low-season, I feel like it’s better to just let the house “rest,” and I’d actually rather it sit empty than squeeze every ounce of revenue I can. There’s a balance between wear and tear and those costs (a pool heat pump is $3200,) that come with additional guests.

Plan and budget:

Again, during the high season, this is just one of the things for which to plan. You’re making more revenue, but you should always have a funds available to address issues with systems as they arise. The high season is a good time to continue to build and maintain your “emergency fund,” so that the money is there either during the high season or more importantly, during the low season when revenue is less. You can’t really just tell guests that you don’t have the cash to pay for the new pool heat pump, it will have to be replaced.

Higher Touch and Interaction:

As I said before, I do my best to check in with each guest that starts with us at some point during their stay. I also do a follow up and review request for each guest, which then I use for my Facebook page, my website, and my newsletter.

Obviously, during the high season, these to-do-list items are much more frequent during the high season than in the low season. Just like other items, this isn’t necessarily a bad thing, but it’s something to be planned for. If you allot only 30 minutes a week for marketing and guest interaction, you may find yourself either ignoring part of these items during the high season, or you might do them poorly. I spend roughly three times the amount of time doing these things during the high season than I do in the low season.

In addition to the marketing side, the paperwork side takes longer, whether it’s paying bills, preparing and sending in your sales tax payments, or other related items, more guests typically means more paperwork as well.

Higher Operating Costs:

Just like the wear and tear that comes with more guests, your variable costs will also increase. Each home will have some variation in these costs, but in most cases, the primary two are electricity and water. My house is in Florida, so both of these are expensive, and if you have an island house, yours will be even more expensive. Either way, owners should plan for these additional costs.

This is also a great way to identify potential issues at the house. If you see a huge spike in water usage, you may have a sprinkler system leak. If you have a huge spike in electricity usage, you may have an appliance issue, like the AC or pool pump is working way harder than it should. An electricity usage spike could also mean inconsiderate guests leaving doors open (the pool door, garage entry door, etc.) and wasting electricity.

Finding Information:

Referring to your billing history is the easiest way to plan for these increased costs. This information is easily found online if you don’t have a sophisticated filing and tracking system. You could also create a spreadsheet to track it, but I find that a quick look at my billing history online will give me most of the information I need to make informed decisions and plans.

Screen Shot 2014-06-10 at 7.19.11 PM
This is a usage analysis graph from my electricity provider.

What If You Just Bought the House?

If you have recently purchased the property, and don’t have your own history to refer back to, you can request this information from the utility in most cases. If you’re unable to get the information this way, you can do some educated guessing by doing a ratio of days with guests to cost. This won’t account for seasonal factors like high cooling requirements (or high pool heating) that are weather related, but it will give you an idea.

Example:

Last month you had guests staying 15 days, or about 50%. The average number of guests was 5, which is your standard average. The electricity and water bills together were $600, giving you a daily average “occupied” cost of $40. Clearly, there are 15 “unoccupied” days that also factor, but for the sake of the guesstimate, we’ll ignore those. You can expect that the future month, you’ll have about 75% occupancy, or about 22 days.  That would bring your bills to closer to $880.  It ‘s difficult to account for all of the factors in this case, but this will at least give you some planning info so you can set aside an extra $100-200 to cover these expenses.

Planning is Key:

With the High Season, there’s a mixture of both good and bad factors that come with additional guests. You get extra revenue for sure, but you’ll want to make sure that you’re planning for possible issues that might arise at any time. For most of us who own vacation rental homes, we’re okay with some of the additional issues that come with the high season, those checks and automatic deposits that arrive each week definitely make it easier to spend an extra 30 minutes on paperwork.

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