What it’s Really Like to Own a Vacation Rental – High Season Edition – The Good

As we begin to explore this great adventure of buying and owning a vacation rental homes together, I thought it might be interesting to do a series of blog posts about what it’s really like to own a vacation rental home.

To keep these posts a little shorter, I think I’ll do them in a series, The Good, then the Bad, and the Ugly.

The Good of What It’s Really Like to Own a Vacation Rental

For us, we’re in our summer season, which is our high season since we’re in Orlando, where families go to visit theme parks. This tends to be the easiest time of year to keep the houses full and inquiry and nightly rates high. The busy season comes as a bit of a catch-22, more guests equals more revenue, but also equals more issues to address and possible costs, so it’s good to have the right perspective.

Almost Fully Booked

When you look at your calendar for the next three months, it’s pretty satisfying to have it look like this:

calendar

As you can see, for May-July, we are/were almost fully booked. The small hole in June is a good thing for us, it allows me to get the pest control people in the house while there are no guests to annoy. The week in May was a bit of a fluke, but since I NEVER do any kind of “last minute” deals with guests (we’ll talk more about value propositions at a later time), I was okay to have the house rest a bit. All but the last week of August is also already booked, and I’m hopeful we’ll fill up the last week.

Our nightly rate is $129, plus tax, cleaning fees, and pet fees. No pool heat needed this time of year, so that’s actually a pretty reasonable rate, considering on property Motel-6 level accommodations are closer to $200/night.

 

Our monthly revenue in the summer is around $3600-3800, not including pet fees (we take pets). We don’t carry a separate mortgage on our vacation rental (it’s wrapped into our main home), so our profit margins are pretty high. As you might imagine, we like summer, and it allows us to take some of that profit and set it aside for both the months that aren’t fully booked, as well as the months that we as a family use the house.

More Confidence in Pricing and Inquiry Response

One of the advantages to being fully booked is that you can have a lot of confidence in your pricing model and what you’re offering, and most importantly, there is no temptation to do discounted or “last minute” deals on your home. With every “product,” including vacation home nights, it’s important to establish a pricing strategy and stick to it. Concentrate on value, not price. I’ve done this with my own rental. We decided early on that we wanted to attract guests that were willing to spend just a little more for a quality, well-run home. We’re about $10/night more for the market in our area, and we NEVER discount below our published rates. Of course, we use seasonal rates like everyone else, but it’s important for us to stand firm on pricing. This helps us establish value at a certain price point.

Each owner has to determine what their pricing structure should look like, and how to handle those empty nights. For us, I know that my guests, who are willing to pay a little more, are typically more conscientious about taking care of my home. Stereotypically, many super-bargain hunters represent a higher risk to your property. Before you get upset with me on that statement, realize that I mean that those guests to whom price is the most important factor are not as desirable as those that are more interested in value.

I’d rather leave the house empty than run the risk of guests not taking care of our home. We’ll talk more in a later post about attracting guests that you can build a relationship with and that will take good care of your home.

Dealing with Bargain Hunters

Being fully booked also helps you respond with confidence to “what’s your best price” or “what kind of deal can you give me” inquiries. These are one of the most annoying and rude inquiries I get on a regular basis, but it’s very easy to be nice and professional in response. Having confidence that you’ll get better inquiries allows you to reject these types easily. I usually just say “Due do the high demand for our property, we do not offer discounts. We have priced our nightly rates competitively, and feel that we provide excellent value at that price. I have attached a quote showing the total cost for the dates you have requested, if you are interested in booking a stay, please use the link in the form.”

Review and Referral Opportunities Increased

This is pretty straight forward math, but the more guests you have, the better opportunity you have to get great reviews and referrals. Happy guests bring more happy guests both through your review process or by telling others about your property.

Don’t forget to ask! I make it a point to ask every guest to fill out a review on my VRBO listing, and also ask them to go over to FlipKey and copy and paste that same review there. Currently, I have about an 80% review rate, and all but one of my currently 31 reviews are 5-star (the other is a 4-star, but very positive). I also make it a point to say in that request email that if there was anything that would prevent them from giving me a 5-star review, please let me know…this encourages them to leave good reviews and also gives me a chance to address anything that might have been an issue.

With any luck…fully booked means more guests=more guests! ;->

With Good Systems, Smooth Sailing

Having good systems in place for your vacation rental home is paramount for a lower-stress ownership experience. Again, we’ll talk more about topics like picking vendors, management teams, on site systems, etc., but for now, let’s assume you have those in place.

When you’re in the high season, since you’ve setup your systems well, and have someone “on the ground” to help with guest interaction, home management, and the like, your home should essentially be on autopilot. If you’re calendar is up to date (and it should be), then it’s likely you simply won’t get inquiries for most of the duration of the high season. These days, I’m getting mostly next year inquiries and the occasional “I know the calendar says your booked, but…” inquiries, but for the most part, people see the booked status, and look elsewhere, which is fine with me.

I have all of my utilities on autopay, and my pest, lawn, etc. services automated, so the only work to be done is to do my sales taxes once a month (some management companies do this for you…but it’s easy with the right templates), and respond to those occasional inquires.

Like I said above, most owners REALLY like the high season, for all of the reasons above. But, it’s not all sunshine and roses. We’ll talk about the Bad and the Ugly next time.

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