What You Need To Know About Vacation Homes
Why Have A Short Term/Vacation Rental?
1. People consider short term/vacation rentals as an investment because the rental profit is higher. (ie comparing net profit of a booked vacation rental vs normal long term rental).
2. You have a place to vacation when it is vacant that is paying for itself!
3. You will have increased equity. You have normal appreciation of an asset that you leveraged through a mortgage.. This historically gives you better return than the stock market. Plus you have the tenants paying down the mortgage.
What Makes a Rental A Vacation Rental or Short Term?
In Florida any rental over 6 months is a long term rental. That is because a state bed tax is due on rentals shorter than this period.
What Is A Normal Stay On A Short Term/Vacation Rental?
You should check with your Realtor for your area.
Our best vacation rentals are oceanfront condos. In these, most stays are 3 day weekends. Then you have a few for a week. And then the rare month stay. In our area, stays longer than that are rare. We find these 2 - 4 months stays are usually for someone coming in for a short term work project. So if you have those in your area then you are in luck!
We do have some popular golf course condos at the beach. These tend to be rented by the month and some for the winter. So it all depends on the location of the property and the current market trends.
You need to consider all the cost, legalities and tasks of a short term rental.
3 Questions You Need to Ask Yourself About Short Term/Vacation Rentals?
1. Does the area allow short term/vacation rentals?
2. Will the property make a good candidate for a short term rental?
3. Do you have the funds and patience to be a short term/vacation rental landlord?
What are the rental restrictions of the property (if any)?
Does your property allow short term rentals?
Single Family Homes
If it is a single family home then you can most likely rent it short term. But you should check your covenants & restrictions of the community.
But if it is a condo then you probably have a problem. The majority of condos I have come across in our area have a rental terms of at least 6 months or more. A few have one month rental rule. And just a handful have no time period rules.
So definitely review the condominium documents to see what there restrictions are. The condo docs or HOA convenants may restrict:
- time period for the rental
- pets for tenants
- amenities tenants are allowed to use
- parking in visitor area and more.
I can't say everything I have seen seems legal. But I have seen some vindictive rules against tenants.
(FYI: You can ask for the Question & Answer sheet and Rules & Restrictions for the condo. It should answer most the questions you have. This can save you from thumbing through 150+ pages of the condo documents.)
Will the property make a good candidate for a short term rental?
Your Property Has To Appeal To Someone Who Is Going On Vacation
In Jacksonville FL metro area the best short term rentals are in nice golf course community or on the waterfront. Usually the beach. So you have to consider your property in the eyes of your "Vacationeer". Is there something nearby that they want to visit? This can be as simple as the beach or bay.
Our vacation rentals are booked year round. But we do get higher inquiries for the February - July time frame. (The locals call these people "Snowbirds"). You will need to change your rates to be lower during the slower season. But you get raise them during peak season and events!
Your Property Should Be Near Popular Events
Events are popular booking times. In our area that is The Players Championship, The Blue Angels Show and popular NFL games. So you can get people interested at other times of the year than just vacation times.
Your Property Should Be Near A "Draw"
Another reason for people to stay at your place is if it is near a "Draw". A "Draw" is something that draws the people to the area. It can be a museum, a golf course, an aquarium, etc. In our area the Mayo Clinic is a great "Draw" for us.
Do you have the funds and patience to be a short term/vacation rental landlord?
Setting up the home for vacationing
Let's think this through.
If you plan to set up for vacation use then it needs to be furnished. Do you have the funds and patience to shop for a whole house full of furniture? If not a decorator can do it for you.
It doesn't end there. You need to not only shop for furniture but also towels, linens and pots, pans, plates & utensils.
Then you need tenants. This means you need someone to:
- Advertise the property
- Follow up on the ad responses
- Send out leases
- Deposit the money
- Check each tenant in
- Review the property for any damage or missing items after they move out
- Return the deposit
- Pay the taxes on the short term rental
You can do this or have a real estate company do it for you.
This is a lot of work. But there is a lot of profit. Are you interested?
The Phyllis Frankel Realty Group specialize in helping our clients invest in real estate. We can point you toward the homes & condos that would work for a vacation property or long term rental. Please contact us to get more information.