When packing up to leave from your favorite vacation spot, it’s natural to fantasize about having a place there that you could call your own and always come back to.
How difficult could it be? It’s in a popular place, so the monthly payments would take care of themselves, right? The prime rental season between Memorial Day and Labor Day would cover the mortgage, right?
Maybe. But a vacation rental property comes with expenses and demands you won’t face at your primary residence.
1. Property Management
If you are thinking of managing the property yourself, think again.
Managing vacation rental property is a totally different ballgame than residential rentals. In a residential rental, the tenant joins with the landlord in keeping up the property. The vacationing renter requires closer monitoring and more personal service, which can be a hassle if you don’t live near the property. Do you want to spend every weekend returning to your investment to clean it, prep it, fix things and hand out keys? Are you willing to drop everything and travel there whenever a vacationer calls with a problem requiring your personal attention?
2. Furnishings
If you want repeat renters, your rental unit has to be nicely furnished. It should be a place for people to relax, not ponder its frayed couch coverings, bad bedsprings and rickety tables and chairs. Your property has to compete with other nicely furnished and well-run rentals in the area. You may be able to buy a place that includes the furnishings. Otherwise, check out auctions and sales of used furniture—and brace yourself for how expensive it could be to outfit your place for guests.
3. Cleaning
Your guests could be paying $150 to $300 or more per day. They will expect to have the place thoroughly cleaned and maintained when they arrive. This means a gleaming kitchen and bath, fuzz-free carpeting, crystal clear windows and a fresh smell throughout.
4. Wear and Tear
Vacationers want pristine digs, but they may not treat your property with the same care and respect as their own. You will have to repair what they damage. And that’s in addition to the regular upkeep. Peeling paint? Repaint it. Mildew in the bathtub caulk? Re-caulk it. Sunburned or algae-covered decking? Blast and stain it. These may not be expensive repairs and fixes, but this property is now a commodity that requires greater diligence to maintain than if it were only for your private use—a commodity you want customers banging on the door each year to rent.
5. Utilities and Fees
Just like your house at home, your vacation property will have various charges and fees associated with it. When deciding what to charge for rent, make sure it’s enough to cover any association dues, water, trash, electricity and other utility costs (throughout the year, not just for the prime rental season). If the property has outdoor space, you may need to pay a landscaping crew. If you bought a condo, expect condo fees.
6. Prime Time
You bought this place because you wanted to spend time there, but your preferred vacation times might conflict with your renters’, and that’s a problem if you expect to rely on the rental payments to cover your costs. So, kiss bye-bye to your Fourth of July getaway—one of the most-desirable vacation weeks of the year.
7. Open and Close
Remember that week you wanted to take to enjoy your vacation property? Well, it could be the same week you are either de-winterizing the property in preparation for the upcoming rental season—hauling out furniture and other stored equipment, checking for rodents and other incursions or damage from the off-season—or getting it ready for the cooler months by setting blinds, storing the outdoor furniture and so on.
Vacation properties can be a great way to invest now for the future (retirement or actual vacationing) at today’s prices. But the smart investor will remember that with income and wealth building come expenses and upkeep.
M. Anthony Carr contributed to this article.
