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How To Increase Rental Revenue From Your Vacation Property
Dated: June 1 2017
A condo or single family home will often be purchased with the assumption that it will generate a significant amount of rental income just because it is located on or across the street from the beach. While most properties located close to the beach do in fact generate a healthy amount of revenue, not all properties are created equal and the amount of revenue can vary widely from one property to the next. Whether you are interested in buying, or already own a vacation rental property, the following list of ideas will help to ensure that you get the most out of your vacation property.
Consider Supply & Demand
The number one rule for strong economics is high demand and low supply; keeping this law in mind when evaluating your rental property will help to guide you in the right direction. If you are looking to purchase a property, you will want to favor those that are in high demand, but that are hard to find on the rental market. This combination of high demand and low supply should result in higher occupancy and rental rates for your property.
For instance, if there are 10,000 “two and three” bedroom condo units available for rent and only 200 “one” bedroom units, you will likely be able to get a higher rate of return on a one bedroom condo due to the lower supply. The demand for the one bedroom unit should be high, especially given the lower price point at which you can offer the unit than your two and three bedroom competition. Conversely, if there are 1,000 “three to five” bedroom single family houses for rent, and only 50 that have more than five bedrooms, you may be able to generate a better rate of return by owning a house with six or more bedrooms. There is often strong demand from large groups wanting to vacation together, so if you own one of the fifty homes that can accommodate larger groups, you should generate a better return than your competition.
Maximize the Use of your Space
Carefully planning the efficient use of your space so that it can comfortably sleep as many people as possible will help to increase your revenue as it will open your property up to a larger pool of potential renters and possibly allow you to charge a higher rental rate. Utilizing bunk beds, sleeper sofas, and Murphy beds can help to maximize the use of your space, but be sure not to overuse the space and make it feel crammed or uncomfortable. Allowing too many people to reside at once can often cause your guests to be unhappy and not return for future visits. In addition, too many people in a small space can result in damage to the property. You need to be sure that your bathroom, kitchen, living, and dining facilities and areas can comfortably accommodate the amount of people you advertise as being able to sleep.
Price your Property Appropriately
Taking the time to do your due diligence and gaining a firm understanding of your competition is of utmost importance. Search online to find similar properties to yours and create a database of what they offer and how much they charge. With this knowledge, you can price your property just under your competition to ensure that you have the best chance of attracting renters, while not pricing it too low and leaving money on the table. If you don’t know what your competition is offering and charging, you are doing no more than guessing when it comes to deciding on an appropriate rental rate.
Advertise for Maximum Exposure
Making sure that your property is getting maximum exposure through various media channels is paramount to increasing your rental revenue. Advertising your property for rent across several websites and social media outlets will help to increase exposure. Paying a little extra money to make sure your property comes up at the top of internet searches can make the difference between average rental income and exceptional income.
Provide an Elevator
If you own a multiple story residence or are looking to purchase one, you may want to consider installing an elevator, or giving preference to home with an elevator over a property that does not have one. Again as a function of supply and demand, the number of homes with an elevator is typically much smaller than those that don’t have one, but they are often highly sought after by renters. The increased rental revenues will typically far exceed the cost of an elevator.
Provide a Pool(s)
Although visitors can enjoy the Gulf of Mexico and back-bay waters, they sometimes prefer to stay at the house or condo and relax in a pool. Having a pool at a single family house can mean the difference in having it rented and it sitting vacant. Once again, supply and demand comes into effect and people will be willing to pay more for a house with a pool. With regards to condos, having several pools will attract potential renters and give them a reason to pay a little extra money. If your condo complex offers an indoor, outdoor, and kiddie pool, you are much more likely to have your unit rented than your competition with only one small outdoor pool.
Manage Your Property Appropriately
A property that is in good condition, clean, and furnished well will not only increase your repeat business, but it will also encourage your guests to take better care of your property. The more repeat business you can generate, the less money and effort you will have to spend finding new business. Having people take care of your unit is of great importance as it will allow you to keep more of the rental revenue you generate, rather than having to spend it on repairs and maintenance.
While there are certainly other considerations when trying to maximize your rental income and rate of return from your vacation property, keeping the above list in mind will put you far ahead of most of your competition. Good luck and please let me know if I may be of any service to you.
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As an Orange Beach homeowner and resident, Lance enjoys living the Gulf Coast lifestyle and is passionate about sharing it with others. He helps his valued clients achieve wealth creation and personal....