What it’s Really Like to Own a Vacation Home Rental – Messy Guests – Part 2

In part one of our article series about dealing with messy guests, we primarily focused on prevention, and discussed the best approaches to pre-screen and attract the best guests and how to minimize risks for your vacation home.

In this article, we’ll be talking about some strategies for dealing with the inevitable situation where guests leave your vacation rental home in less than ideal shape after check out.

a_messy_room_by_blalank-d50whl8On-Site Staff Education and Communication:

One of the best ways to keep tabs on your vacation rental home both when it’s empty and when it’s occupied is to utilize an on-site team. Over time, we’ll discuss management teams in more detail here and in the e-course, but for now, let’s assume you have someone that regularly visits the house for lawn/pool or guest services.

The key phrase for this part of your team is “be aware.” You need them to take notice of anything that’s out of the ordinary. This goes beyond just doing the work they are there to do, and is just a general awareness of what your house should look like when it’s occupied, and what it SHOULD NOT look like.

Here’s an example:

If your team goes over to do the lawn or pool, and notices that there is a big pile of bath towels on the pool deck, and one of the living room lamps is on the outside table, they should take notice and let you know immediately. Or, if they notice that the guest are parking in the lawn (this has happened to me), that would also be a red flag. These kinds of signs will be indicative of what the rest of the house probably looks like inside. When appropriate, if the guests are gone, a quick peek in the window might be warranted, just to prevent any further issues.

What to Do with the Information:

Let’s say the example above actually happens, what do you as an owner with this information? The best bet is to use the same strategy of soft-but-confident communication with the guests, while using the “team” as a source.

I typically use email to communicate with my guests, but you may find that guests aren’t checking email on vacation. You may need to send a text (less invasive) or even call to communicate directly. You can send an email first, and ask that they acknowledge it.

Here’s an example of what I would communicate:

“While my team was at the house today doing their routine care, they noticed a couple of issues that they had some concerns about. They saw that the bath towels are being used in the pool, and some of the furniture has been moved to the pool deck (lamp).

We have provided pool towels for all of our guests, and there should be enough to go around. As discussed in the welcome guide, our bath towels should not be used outside. If, for some reason, we are missing some pool towels, and there isn’t at least one for each guest on the reservation, let us know, and I will have my team bring you additional towels.

All lamps, accessories, and furniture should remain where they are and should not be moved. This prevents damage and injury, and we would appreciate if you returned anything that has been moved, back to it’s normal location.

If there is a reason for moving them that we can address as owners, please let us know so that we can do so.

As a reminder, per the rental agreement our guests are responsible for any damage to the house, furniture, or linens during their stay. Guests may also be responsible for additional cleaning and maintanence. Please refer to the Welcome Book for a copy of the rental agreement if there is any confusion about your responsbilities.

Thank you for addressing these issues, we want you to enjoy your stay, so please let us know if there is anything that needs to be corrected, and we will do our best to accomodate you.”

You’ll notice that I was friendly, direct, and reminded them of their responsibilities that they signed up for. I also tried to give them a chance to let us take care of any issues (shifting blame) that may be causing their behavior (maybe the light on the pool deck is out, or towels are missing.) Finally, I reminded them that there will be costs associated with non-compliance and the fact that we are aware of their behavior. Through all of these, the goal is to get mid-stay behavior changes to minimize any damage.

What Else to Look for?

The on-site team is invaluable for being your eyes and ears. Here are a few things they can take notice of:

  • Pets (either more than agreed on, different breeds, or unauthorized)
  • Doors Open (patio doors with the a/c on)
  • Pool Heater Controls Modified (most have locks, which can be broken into, so it’s good to be aware)
  • General Cleanliness
  • Parking Issues or Unauthorized Vehicles (if the reservation has 4 people on it, and there are 6 vehicles outside, that’s a big red flag.)

A Note About Entering the House:

In almost all cases, our on-site team does not enter the home while the house is occupied. This rule prevents guests from claiming theft or anything of that nature. If there were an issue that gave the team probable cause to enter the home, every attempt should be made to first contact the guest, then actually have the guest meet the team at the house so the team doesn’t enter without the guest there. Only in extreme or safety cases should the team go into the house without the guest there.

Documentation:

It’s always a good idea to document any concerns and issues with as much information and “evidence” as you can. For your on-site team, it should be just a matter of snapping and texting or emailing a few pictures of what they see, as well as making note of the dates and times, and issues they see.

Dealing with the Aftermath:

In most cases, you and your team will not even be aware of an issue with a particular guest until after they check out. In this case, some specific steps can help make dealing with the issue a bit more straight forward.

As discussed above, documentation is very important at this step. Photographs, dates, times, and issues should be recorded, as well as any anecdotal or observational comments from the on-site team on what they see (ie: the house was a wreck). All of this data can be very useful if any legal or punitive action is required with the guests.

Claims and Deposits:

I’m hoping that if/when these issues with guests arise, it’s a relatively straight forward situation, and you simply move on to the next step, which is making a claim on the PDP policy, holding back deposits, or possibly collecting additional property damage payments from the guests.

Cost of Damage:

The first thing to do is to assess the cost of any damage. As an example, let’s say that the lamp from our example above gets knocked off the poolside table and is broken. If your home is like mine, the lamp was there at the time you purchased the home, so it’s difficult to assertain a specific value. This goes for many of the other items you have in the house. I approach everything from a replacement value. I will seek out and find a comparible quality lamp, determine it’s cost (including sales tax), and use that value for the claim. For smaller items, a quick search on Amazon.com will give you a quick price on almost anything, which can make that process easier.

Filing a Claim:

Each company will have a different process for filing a claim. If you’re working through VRBO, the company simply requires that you complete and email a pdf form to them. The information is fairly basic, the guest’s name, your name and information, the reservation and policy number (keep these in and email folder,) and then information about the incident/damage, and what items and cost are being claimed.

Once you complete and send this in, you should either get a check in the mail, or communication from the company. In most cases, a quick communication with the guest is all that’s need (unless the damage is substantial).

Dealing with Deposits:

For small items, you should be able to communicate with the guest that the damage was found, and then follow up to get their “side” of what happened, how the damage occurred, etc.

To me, this is why the insurance policy side is nicer, as you may get push back from the guest that the damage was not their fault, they won’t pay, etc. You’ll have to make your own judgement call as to how you handle it, but in many cases, the guest will take responsiblity, then you just retain that portion of their deposit.

It seems that most people are more willing to take responsibliity when they have already paid for the insurance policy and they don’t really stand to lose anything financially since they’ve already paid. Again, I stand pretty firm that the policy is the best way to go.

Collecting Additional Fees:

Beyond basic damage, which is a straight-forward issue to deal with, there are other fees that need to be assessed that may be more difficult to handle, such as additional clean fees, utility overages, and other more dynamic fees.

For example, if a guest simply does none of their agreed-upon responsibilities as far as cleaning goes, your cleaning crew (often a third party) may charge you for additional cleaning, which then you will need to pass along to the guest. This can be an hourly rate, or whatever mark up you feel necessary. I charge my guests $95 for the cleaning fee, which is what my team charges me, so if they charge $200 for the cleaning job, then the guest would owe an additional $105.

Another example would be with excessive utilities. Let’s say that a guest stays for 2 weeks and leaves the door to the pool deck open and the AC cranked down in August. Assuming the AC doesn’t freeze up and require service (something the guests are warned about), a month after the stay, you may notice a huge spike in your electric bill. This can be difficult to prove that it happened with a particular guest unless the on-site team notices the door and has documentation. If that’s in place, though, you can pass along the overage to the guest (if it’s in your rental agreement).

There are other examples like pet fees if they didn’t tell you up front that they were bringing pets, extra guests fees, if applicable, etc.

This can be where the deposit might win out over the insurance policy because you already have cash in hand to collect from. Otherwise, you’ll need to be stern, no nonsense, and a bit forceful in getting paid.

Without a deposit in hand, you’ll need to “bill” the guest for the fees. With VRBO this is quite easy, you simply generate another payment request, which then allows you to include a message with the request. You may choose to include information here referencing a separate email (so you can be more detailed there), or if approbate, just use their form. I prefer the prior, so I can provide pictures and a copy of the agreement.

Let’s assume the guest checked out and left house trashed, here’s what the communication may say:

Payment Request:

“Per email sent 6/20/14, which also includes pictures and documents that I am unable to attach here, a copy of the email text is included below:” (then, put the text from you separate email in.)

Email to Guest:

Hello Guest (use actual name),

We would like to thank you for staying with us at Corvina Cove from 6/1/14 – 6/15/14, we hope that you enjoyed your stay. Unfortunately, upon checkout, the house was left in a less than desirable condition, which included substantial amounts of trash, unwashed dishes, groceries, and a wet spot on the carpet from a dog. As specified in both the provided Welcome Book, and your signed rental agreement (signed on 4/1/14 via VRBO from IP Address 69.22.11.22), all guests are required to dispose of trash and food, wash their dishes, and in general, leave the house in a clean condition. The condition the house was left in required us to bring in additional team members to clean the house before the next check in, at a cost of $105 in addition to the standard cleaning. As per the agreement, you are responsible for these extra cleaning fees. A payment request has been issued through VRBO for this amount.

We understand things can happen, such as a flight change or need to depart as quickly as possible. That does not, however, change the need to get the house prepared for the next guests and the fees associated with doing so.

Please pay the request as soon as possible, and feel free to let us know if you believe this is in error. We have attached pictures from the morning of your check out, and also a copy of the rental agreement that you digitally signed. Thank you very much!

KD”

I hope my tactic makes sense. I’m attempting to not give the guests an “out”, but rather just stating what we found and the costs associated with their not complying to our agreement. Attaching images and the agreement should be all that you need to get the fees paid.

What if They Won’t Pay:

This is an area where you’ll have to make a judgement call, and it may depend on the severity of the issue and cost. You have legal recourse, and could take them to small claims court, but that would likely be time wasted, and you’ll end up upside down financially in the battle. You could have an attorney draft a letter (free if you have a friend that’s a lawyer), which may be effective, but it might also be expensive. The other option is to contact your listing provider (VRBO) with assistance. They may be able to prevent the guest from renting from other VRBO houses, which would spur them on to pay for their negligence.

At the end of the day, you’ll have to decide if it’s worth the fight or not.

Notes in the Reservation:

Unless their is a “good” reason, such as a family emergency or other issue I feel couldn’t be avoided, I do not want these kinds of guests staying in my house again. So, I typically will add a note to their reservation stating what happened and “DO NOT RENT TO” in it so that I can see that if they try to rebook with you again. This goes for guests that left the house messy, but may or may not apply if there’s damage, depending on how it happened, and their response. Intuition can play a role here. I try to minimize risk with my vacation rental home, so I try to eliminate guests that increase my risk.

Example of an Inquiry Reply:

“Thank you for your interest in staying with us again. Unfortunately, we are unable to accommodate you at this time, but a cursory search on VRBO showed several other properties that appear to be available. Good luck with your search!”

This is likely to never happen, as most guests would not rebook with a property owner that billed them for extra fees, but you never know. I try not to be dishonest in my responses, so I just use the phrase “unable to accommodate you” instead of “we’re booked”. You can choose whatever response you are comfortable with.

Communicating with the Guests:

No matter what the situation, it is very important that you remain professional and non accusatory as much as possible when communicating with guests. You do not want to give them any ammunition for  a poor review. It’s quite likely that the guest would leave a bad review anyway, but you have some recourse with the listing site (VRBO), especially if you can show that the review was retaliatory. For example, you can ask that it be removed if they give you a bad review because you billed them. Even if the site won’t remove it, you can respond in a professional way to that review. Like Patrick Swayze says in “Road House”, “be nice.” You’ll be happy you did.

Summary:

All of these situations are ones that are likely to happen at least occasionally, so it’s good to know how to handle them when they do. Do your best to protect yourself and property ahead of time, attract the right kinds of guests, and minimize risk against bad guests.

 

What it’s Really Like to Own a Vacation Home Rental – Messy Guests – Part 1

One of the more challenging parts of owning a vacation rental home is the guests themselves. None of us have a crystal ball, nor are we allowed to do detailed interviews and background checks on our guests, so in most cases, we’re left with a certain level of trust and blind luck, and the belief that most people genuinely want to take care of your home.

This isn’t always the case, though, and in this series we’ll be discussing what you can experience, how to prevent issues, how to legally screen guests, and how to recover and deal with the aftermath of bad guests. In this article, part 1, we’ll start with prevention.

An Ounce of Prevention

The best way to deal with bad guests is to avoid them all together and to take steps to ensure that when accidents happen, you’re covered. That may seem obvious, but many owners might think that this is an impossible task. While it’s impossible to prevent all bad guests completely, you can take steps to keep them at a minimum. Using these same strategies, we’ve been quite fortunate to only have had one set of bad guests, and a few marginal guests out of 100’s of guest stays.

Pricing:

We’ve discussed in previous articles that pricing can help you pre-select guests that are more likely to take good care of your home. Now, we have to be cautious and ethical here, I’m not suggestion that you try to eliminate and particular demographic, race, gender, or other distinct group of people. I’m saying that setting prices to more moderate levels, along with some policies we’ll discuss, you can attract guests that will leave the home as they found it.

For us, we find that being $10-20/night more than other similar homes helps us not only maximize profit, but also attracts guests that are less price senstive. These types of guests are typically looking for a home that will provide a higher level of care from the owners, and thus, a better more “home-like” experience. With that expectation, I have found that the level of care they expect is also the level of care they provide. These guests are the ones you want coming year after year. They will usually leave the house the same or better than they found it, they are highly communicative (which can help you continue to improve the home for other guests,) and they are likely to rebook for future stays.

Allowing Pets (Dogs):

This section will likely sound completely counterintuitive to you, and in some cases, you’d be right, but for the majority of guests, I firmly believe that accepting pets will help you attract guests that will take care of your home. I say “pets”, but in reality, I’m only recommending dogs. While there are some people that have issues with allergies around dogs, there are far more people that are allergic to cats. Cats also usually require litter boxes inside the house. For these reasons, we don’t allow cats in our vacation rental home.

Obviously, not all dog owners are conscientous, there are those that would just as soon let a dog poop on your front walkway as any where else, and are not very responsible as owners. However, by and large, most dog owners are aware of the potential issues that come with their dogs and not only look out for them, but take care of them if they arise. These may include accidents or marking in the house, chewed up household items, barking, etc. They are also aware that with dogs can come a little more “dirt,” and most of the time, they go out of their way to make sure that the house is very clean when they leave.

We’ll discuss a more in-depth pet policy later. The point here is that with proper planning, pet owners can be some of the best guests you can have.

Rental Agreements:

One of the most important documents for interaction between you and your guests is the rental agreement. This is a legal document that details your policies, pricing, methods for dealing with issues, and other important matters. In most cases, it’s a required document, and I would highly encourage you to use one. One of the best ways to create one is to find an example from a local rental management company and use that as a guide for your area. Each state and municipality has different laws, so I always encourage people to use a good example from a local source. Mine is found below that we use for our Orlando (Polk County) home.

Example Vacation Rental Agreement

We’ll go into more detail on creating and using rental agreements in later articles and of course through the e-course, but for now, feel free to use mine as an example for your own. Most rental agreements should include basic information like check in and check out times, basic policies, safety warnings and disclaimers if you have a pool, what to do if there are issues in the house, etc. In the latter part of the document, it is common to discuss what legal recourse you have and will take if necessary including removing guests, additional charges for damage beyond any deposits, and other legally related items.

If you’re using a listing service like VRBO and FlipKey (and you should be), then having the guest agree to all of the terms of the rental agreement is required as part of the booking process. You get an IP address, date and time stamp, and confirmation they saw and agreed to it. This would be very important if anything should arise requiring legal action. If you’re not using one of these services, my advice is to obtained a signed copy of the document by email (signature page at least), or possibly by having the guest text you a picture of their signature on the signature page with “signed and agreed to rental agreement.” This will ensure you have some evidence that they saw and read the agreement, if you need it.

Over Communication:

One strategy that has worked well for us is to take an active approach to communication. So, when you send out your “thank you” or pre-checkin emails to your guests, make sure you highlight some of the issues they’ve already agreed to in the rental agreement. This is a perfect opportunity to remind them about their responsibilities. If you take the right approach, you can easily get buy-in from the guest as well.

An example email text (portion:)

“Thank you for your final payment, we have you all set to arrive on August 1, and we are looking forward to your arrival and your stay with us. Since this is your first time staying with us, our team has requested that I remind new guests of a few items:

1) Check in is 4pm, we need time to properly prepare the house for your arrival, and we want to make sure each guest has the same experience, so we need enough time to do so. If you need an earlier check in, let us know so that we can see if we’re able to accommodate you.

2) The cleaning fee allows us to have the house sanitized and as clean as possible, as well as doing laundry and remaking all of the beds. It does not cover basic cleaning, which is the responsibility of each of our guests. The basic rule of thumb is that you should do your best to leave the house as you found it, including trash pickup, dishes, etc. See the welcome book for more detailed information.

3) Please report any accidents or issues with the house as soon as possible so that we may document the incident for claim purposes.

Thank you!

Kevin Davis”

You’ll note that I’m taking a relatively soft approach. The welcome book goes into more detail about possible fees, their responsibilities for dishes, trash, vacuuming, etc. so they are well aware of the consequences. I try to keep things positive in the email with a  call back to what they already agreed to. I also shift responsibility from myself with “my team” as the asker. That allows them to look at it differently. If it’s the owner asking, they may feel less compelled to do what they are supposed to, but if it’s hurting a $10/hour housekeeper (or whatever they perceive), they may feel more compelled.

So far, the strategy has worked well for me.

Insurance and Deposits:

There are really three approaches to risk prevention when it comes to the guest damage side of vacation home rentals:

  • Per Stay Short Term Insurance Policies
  • Damage Deposits
  • Doing Nothing

Per Stay Short Term Insurance Policies

This is actually the way I handle my risk at my vacation rental home. These are basically short term insurance policies that are purchased directly by the guest at the time of check out. I include them for every rental, no exceptions. They start at a cost $49, which provides $1500 worth of damage coverage. Additional coverage can be purchased. The insurance covers things like ripped sheets, stained towels, lost ping pong paddles, broken lamps, and more. Basically, to cover accidental damage to the property. So far, I average about 10% claim rate, all in the $10-20 range, and the provider pays within just a couple of weeks. It’s a very easy process, and I highly recommend it. Both VRBO and FlipKey offer these automatically to your guests, unless you turn it off.

broken_couchThe only downside is you have no deposit to hold on to should you have any serious issues with a guest, but we’ll talk more about dealing with that in our next article. The benefit is not only the higher coverage (that you don’t have to pay for as an owner), but you also don’t have to deal with returning deposit money back to the guest, escrow accounts, or anything of that nature.

Damage Deposits

This has been the go-to standard in both the long-term, and short-term rental industry. You basically take a financial deposit that is held in case something happens to the house. Any damage is then taken out of the original amount, and a partial or full refund is given at some point after check out.

While this can work, I have always seen them as risky for the short-term rental industry, especially given how much work is required. For example, let’s say you take a $200 deposit. What if a guest decides to stage dive onto your pool table, destroying it? Now, you have $200 to go towards a $1000 pool table, and you have to go after the guest for the rest. For most homes, there’s almost no way to collect enough of a deposit (most people won’t pay it) to make it a worthwhile endeavor. This is why the insurance option has been gaining popularity.

Having cash in hand does help with addressing items such as extra cleaning fees, which can’t be handled as easily with the insurance policy. We’ll go more into detail on dealing with those next time.

Doing Nothing

If’ your’e a gambler, taking no precautions against guest damage might seem like a good idea to you. I would strongly advise against it. Either an insurance policy or damage deposit should be obtained for every guest!

As you can see, there are a lot of ways that you can protect yourself and vacation rental home from either accidental or negligent damage. Next time, we’ll look at ways that you can educate your on-site team, dealing with guests that leave messes, filing claims, documentation, billing for issues, and more. Join me in Part 2!

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.

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.

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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.