Vacation rental is fairly low risk
There’s money to be made subletting property in locations where people like to visit. Vacationers who sublet will be your tenants for one or two weeks, tops. Many vacationers will sublet a home or a room in a different neighborhood every couple of nights they’re on vacation. Most vacationers will treat your property with respect and courtesy, so you don’t have to worry as much about these short-term tenants damaging your 2nd or 3rd home.
Image source Flickr by swizzle co
Short term rentals cost more than long term
This concept is easiest to see when you compare the cost of a one year lease to the cost of a six month lease on a longer-term rental. The more time someone plans to spend using your property, the less you’re able to charge for rent. This is because of something called the “time value of money.” Vacation rentals, some of the shortest “lease” terms available, are risker for the lessor, and those cost more for the lessee. If you have a nice house in a great area where a lot of people want to visit, it’s perfectly fair to expect to get a couple hundred dollars a night from visitors who want to use your property.
Bargain hunting vacationers look for rooms and houses in great areas where they want to visit, but the home itself means less to them than its location. If you have a room with a box spring and a mattress in a trendy Denver neighborhood, you’ll attract bargain hunters who won’t pay more than $30 or $40 a night to put your roof over their heads. The same room in a place like Williamsburg-NYC will go for a lot more. The cooler your place is, the more you can charge for it.
Be ready to work
Although most people you sublet to will treat your property with respect and courtesy, things do happen, and you will want to have people you can call to fix things should any issues arise. Knowing reliable plumbers and HVAC people you trust to work on your house if something comes up is a good idea when you’re hosting travelers. Vacationers will expect things like clean towels, fresh linens, wifi, cable TV, and maybe even a little something to snack on between their vacation jaunts out of the house.
How to find people to rent to
Like everything these days, “there’s an app for that.” One of the most popular is Airbnb. Another is called HomeAway. Try searching for “vacation rentals or vacation rental system” to see what’s out there. If you’re the type to take risks, or you’re good at reading people through email, Craigslist can be another good place to solicit people who want to sublet your vacation property. You can get a good idea of how much revenue you stand to generate by looking at the listings on airbnb and HomeAway.
Revenue minus expenses is ultimately what you stand to make
Revenue is one thing. Expenses are another. You might be able to make a couple thousand bucks in revenue by renting your 2nd or 3rd home to vacationers, but the cost of maintaining the house remains the same. And as respectful as most travelers are, wear and tear on a house goes up as the time of the lease decreases. Wear and tear on vacation property near ski resorts can get downright ridiculous because people walk in with wet clothes and boots, and they’re almost never very careful after spending the day on the slopes. Keystone rentals are notorious for water damage that must be repaired in the off-season, which costs the lessors more and eats into their profits. Always factor in what it’s going to cost to maintain your home, especially when you’re generating revenue by renting it short term to vacationers.
Aston Reynolds is a writer who lives in Denver, CO. He loves beer, snowboarding, and motorcycle racing, not necessarily in that order.