Turning your home in to a vacation or short-term rental can be a great way to bring in additional income and with all the booking sights available there are many opportunities. In this article we will discuss things to keep in mind before you make the jump into vacation rentals. Whether you are looking to turn a second home into an income property or want to purchase a home for the purpose of being a rental property you should consider the following things.
- Licensing: The first thing you need to look in to before anything else is licensing. It is very important that you investigate what licensing is needed for vacation and short-term rentals in your area so that you are operating legally. Depending on where your property is located you will need to check with either the city or county for their rules on this. You want to start here because you will likely need to complete inspections and spend time and money to get your home up to code. In the case of Estes Park, you may have to be put on a wait list for a license as many areas have started putting a cap on how many licenses they will allow. Starting in 2023 the County has implemented new regulations to limit the number of rentals in an area, These properties can not be within 500 feet. The Town is quickly following the county with new updated rules.
- Prepare yourself: Are you prepared to have strangers in your home? To have a vacation rental property you need to be ready to let people enjoy your home, guests do not want the owner stopping by unannounced to check in on them. Additionally, you will not be able to put cameras up to monitor your home. Not only is this somethings guests will not approve of as they have a reasonable expectation of privacy, but most booking sights have policies against this. Things will get moved and even broken in your home so it’s important that you remove anything personal, sentimental, and fragile so that you don’t have to worry about what could happen to them. The home will not be put back in the same order as you want it. Things get moved, relocated to how a guest might use them.
- Prepare your home: On that same note of removing personal items is important for guest enjoyment as well, generally guests don’t want to be reminded they are in someone else’s home. We once had a property that kept family photos around the house and every time the house keeping team came in, they would find those pictures tucked away in drawers and cabinets. You will also want to remove personal items and clutter to cut down on cleaning time and costs, even if you plan to clean the home yourself between rentals instead of hiring a professional cleaner. Even though the home is cleaned between rentals, it will need at least one deep clean a year. Cleans after guests is cleaning up after the guests. Windows, carpeting, cabinets, blinds, these all need to be cleaned at least once a year if not more and this will come as an expense to the owner.
- Invest: Be ready to put money into the property. You should treat your rental home as a business, and you will need to invest in it to succeed. Even if you don’t upgrade things you will need to plan on spending money to make money starting with simple things like extra bed sheets and towels. The homes appearance will need to be maintained both inside and out as the home gets used to ensure guests are getting what they expected. Things will come up unexpectedly that you need to be ready for, if the oven doesn’t work or the hot tub starts to leak, they need to be repaired as soon as possible. Guests are expecting those amenity’s and not having them available will result in you having to give out refunds.
Our best renting homes are the ones that homeowners regularly upgrade and invest in to improve the guest’s experience. A benefit to having a higher quality home to rent is you can charge more for that experience.
Purchasing a second home to use as a vacation rental can be a great investment. Whether you plan on the home being an income property long term or are looking to utilize your future retirement home there a few things to keep in mind on your search.
- Educate yourself: Get to know about building codes. If you are purchasing a home that does not already have a vacation rental license, be ready to put in the time and money to bring it up to code. Ideally things like missing building permits should be found when you are going through the home buying process, but things can get missed and will be an issue when you do your inspections.
- Competitors: Investigate how many other vacation rentals are near the home you are looking at. This can be especially important if you are looking at purchasing a condo or town home. If there are many other units in that building or area being used as vacation rentals that is going to restrict how much you can charge per night as the other units are going to be competitive with pricing.
- Know the area: Location to main attractions is another important factor to consider. While some guests may be looking for a home in a quiet neighborhood its more likely they will be looking for a home close to what has drawn them to the area. In Estes Park most people are coming to visit Rocky Mountain National Park however a home that is walking distance to the downtown restaurants or the fairgrounds can also be appealing. In addition to location some other top selling features for short term rentals are hot tubs, air conditioning, and views.
- Set limits: Are you spending more on the home then you will get in return? Don’t overpay for a home, you will be limited to how much you can charge per night based on how many people the home sleeps. An exception for this would be a luxury home but to charge more you must invest in high quality products and updates.
Owning a vacation rental can be a great opportunity for additional income as well as allowing families to create memories and enjoy new experiences. Our property management company operates in Estes Park Colorado, but this information will be helpful for any are