Cabin vacation rentals

[Andrew Briones]

Has anybody had any great luck renting cabins as vacation rentals? I'm looking in an area where there are a few cabins and tonz of Atv/snowmobiling to do. If others rent out their cabin, they do a horrible job at marketing it because I can't find them on the internet for some kind of comp. If I marketed right, seems like it would work out great in my favor. I've ran the pros and cons over and over. I'd love to hear from somebody in Utah but any advice on this would be grateful.

[Steve Dove]

I've been operating two vacation rentals in Northern Michigan for about 7 years now. I am planning to close on a third in a few weeks. It's a seasonal business, with peak months between June and August. My weekly fees are well above the monthly mortgage payments, and they book solid for these three months. The remaining 9 months of the year, I offer buy-one-get-one deals. My guests rent a week at either of my lake houses between September and May, and can return to either of the properties for another week, for only $100. This $100 covers my cleaning fees, and has increased my occupancy income by another 30%. Most people are afraid to give a little to get a return, but this has worked for me. It also places people in the houses during times that would otherwise be vacant. Most of the people that take advantage of this deal are retirees and snowmobilers. I've had the same retired couple back at least six times since implementing this deal just over two years ago. They've also referred friends.

I've also used the lake houses as a bartering tool. I've traded services with contractors that have done work on my own home, for a week at either of the houses during the off season. We enjoy the vacation rental aspect, because we can use these homes when they are vacant. They also provide great tax benefits, if you earn a high income and are subject to passive loss limitations. Income from vacation rentals that are rented out for short periods, such as a week or weekend, is not treated as passive income. The IRS treats this type of real estate as a business. The catch - You have to manage them. The IRS states that you must have "active participation". (http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Passive-Activity-Loss-ATG-Chapter-2-Rental-Losses)

I would personally never use a property mgmt company, as the fees are ridiculous. The overall management of a vacation rental is not that difficult, as long as you establish a strong system. My properties are four hours away, but my cleaners and maintenance people are paid well. They are my eyes and ears, and help me keep the places in pristine condition.

Be sure to factor in utilities, cleaning, landscaping, repairs, internet access, marketing, etc into your operating expenses. VRBO premium membership will put you on vrbo.com, homeaway.com and vacationrentals.com. I've also built simple, clean-looking websites for free using iWeb and they can be hosted for about $100/year. I have them linked to all of the free advertising and tourism sites that I can find as well.

I'd highly recommend doing your homework, but hope that some of this helps you in your decision.