VRBO is it too good to be true?

[Kristi Bass]

VRBO's are they a good way to maximize a properties returns? I have 2 very nice properties under contract. One has a main home, 3k sq ft with a 1 bedroom cottage, a 2 bedroom cottage & an efficiency apt. The other property was a renovated barn that was just featured on the fixer-upper tv show! Both properties are extremely unique but both seem perfect for short term vacation rentals thru Airbnb or VRBO website booking services. Have local friends who are doing this with their home & stay at about 90% occupancy & they are quadrupling what their mortgage expenses are every month. In fact they are looking to move out of the home permanently to keep from living with family pretty much all the time. So in trying to decide if this is a good direction for me to take on these 2 places it if there may be pitfalls I'm unaware of. I have forecasted the numbers & at 25% occupancy (at local comp rates) I cover my NOE. Would love any advise or theories about going this direction.

[Aqeel Salim]

Be very careful when selecting PM companies to manage your VR. We have a property in Maine that we manage from Austin and have been very successful, but a large part of that success was because we are very proactive when we have inquiries. You have to trust that a PM will be as quick to respond as you would and if we are being completely honest, most aren't. Also, many PM companies also keep a certain percentage of every booking, 10-20% is not uncommon, and that is on top of their monthly fee. I'm not saying that PM companies aren't helpful in certain situations but you need to really look at your numbers and make sure that you aren't assuming that your property will always be booked. In my experience 90% occupancy is EXTREMELY high and uncommon. If you break even at 25% you need to pad that a little and expect expenses for upkeep such as linens, toiletries, and wear and tear on your furniture. All that being said, I LOVE my VR and am always looking for another. If they are done correctly they are amazing. If you have any specific questions feel free to message me. Best of luck!