RENTAL MANAGEMENT OPTIONS MAXIMIZE ROI ON VACATION HOMES

Savvy investors in real estate, and especially short-term rental homes have often seen their Return On Investment (ROI) top as high as 10%. While not all can claim that kind of return, there is a formulaic process when considering this type investment.

First and foremost is where the property is located. Most vacationers are looking for specific elements that they enjoy. Diving, snorkeling, fishing, boating, eating, sun-bathing; the list goes on. The point is when you are considering purchasing a vacation home and you anticipate placing it into a rental program to offset your costs of ownership, be aware of what is close by. Will others be as attracted to your vacation spot as you are? Will they enjoy it so much that they want to come back time and again? These are all emotional questions because vacationers rely on their emotions when considering their next trip.

If you have the emotional side sorted out, it’s time to turn your attention to the actual rental program. Many vacation home investors will consider several of the on-line rental platforms. While they can be very successful in attracting guests, you will most likely need to source a local entity to manage the asset. Just think about who will get a call for something as simple as the remote on the TV not working. And then, how quickly is that issue going to be resolved? Fees for this and other types of service can run high. Another consideration for you is how far the asset manager is from your property. All this and you are adding additional costs above and beyond the commissions paid to the on-line rental platform.

Many vacation home investors seek to purchase a vacation rental asset in developments with on-site vacation rental management. Most often they are owned by the developer or a close entity of the developer. Typically, they know the property and each rental asset better than any outside company. With a staff of maintenance, guest services, event coordinator, security and maids, this type company is more attune to your guest’s satisfaction.

When considering the fees associated with the overall program on-site rental companies will charge from 25% to as much as 45% to keep your asset rented. On average, most companies will fall in the 30% range. All things considered and that’s a relatively small price to pay for peace of mind knowing that your asset is being looked after every day.

Ask any rental company you are considering to provide you with an estimate of rental income and associated expenses. Further, check their references and talk to other guests if you happen to be on site. If everything checks out, your quest to have your real estate investment work for you is well underway!