How to manage and list a "flexible" vacation rental space

Question

I am looking to purchase a "flexible" vacation rental home. One I am considering is 3,000 square feet, 5 bedrooms, 5 bathrooms, a large entertainment area and a pool. I am considering sectioning off two of the bedrooms and adding a small second kitchenette to the space so the entire space becomes flexible instead of just a 5 bedroom home. This section of the house also has a separate entrance and pool access. Is anyone doing this now? How do you list your property for rent, e.g., three separate listings, or??? If so, have you run into any regulatory/zoning issues if it is zone for residential use only?

Thanks!

Mike

Thanks!

Mike

Michael Greenberg · Answer

@Valerie Rogers

@Kevin Lefeuvre

Yes, the marketing challenges are by far the biggest unknown at this point.  One of the properties I'm considering could likely sleep +20 people, but that's a total house party and very concerning on many different levels  Honestly the master bedroom is so big it's kind of ridiculous and needs to be reconfigured.  I could easily put (3) CalKings in the room.  Who designs that??  So my thinking is to likely split it into (2) listings, one 2-bedroom and one 3-bedroom with a shared pool.  I might throw an ad out for high season and monthly rentals to see if I could capture a two family stay.  The financial reasons are very strong to be able to market it with this level of flexibility.  As for disturbing the neighbors, I currently have an fine for noise and disturbance of the neighborhood.  I have had one complaint in over 150 stays, so it seems to work (or my guests are quiet).  Still much to consider but insightful input from both of you - thanks!

Mike

Valerie Rogers · Answer

@Kevin Lefeuvre

My reasons are simply market-related. This location is not a big "vacation" destination. The draw is the University nearby. Most of the available STRs are one or two bedroom/1 bathroom bungalows. I'm still learning the market but it seems that people who are coming to the area are mostly families of students attending the University or people taking an online class that need to come to the University for a 1-2 week intensive class, or alumni coming to attend an event or a game. Most of those are not large groups so won't need a full 4 BR/2 BA home. We decided to see if offering the two smaller apartments might work out better than the whole house.

I'd prefer to ONLY offer the whole house as opposed to the apartments: less work, less chance of complaints between the two groups (noise, parking), etc. If I find over time that the whole house is renting better than I expected I may decide to stop offering the smaller options.

We've just listed the property in the past couple of weeks and so far the bookings we have received are:

• 2 whole house bookings (one for 4 nights & one for 2 nights)
• 2 lower apartment bookings (each for 2 nights)
• 0 upper apartment bookings

Maybe the lower apartment will be more popular than the upper one because most people are only coming for a weekend & don't plan on cooking anyway, and it is less expensive than the upstairs apartment.

We'll see....time will tell.

Kevin Lefeuvre · Answer

funny @Michael Greenberg and @Valerie Rogers we are doing similar things.

I am right now shopping for a property and looking for exactly this type. I may get into escrow in one case.I am also somehow doing this in another property, where I was obliged to install a separate furnace because of the thermostat issue Valerie mentioned (and some other technical reasons).

I see 2 big challenges: noise and privacy (that I actually experience now). SFRs are designed for one family not 2 or 3. So if one is above the other you need sound insulation. I have this issue. If side by side, a door is not enough as sound barrier. If you have pool or hot tub, or just the yard, the section which is getting it need to by protected for privacy and it's not always easy.

Zoning can be an issue too especially for insurance. They don't understand what you are doing. In LA I am solving it by having family members main residence in each property so that they are considered owner occupied. This model is obviously not infinitely scalable , but works for now :) Insurance is not fully solved and I am not confortable with my policies right now.

I have considered 3 synced listings but gone with 2 separate listings so far because my market seems to be more profitable in small units. But may try that too. The problem with 3 listing is that any of the 2 small sections will have equal priority to the big one. (as soon as a guest books a smaller one, the big gets blocked, of course, even if by waiting a few days, you would have possibly sold the big unit. Hope it makes sense). If you find a way to give priority to the big booking then I am in, but I don't see. It's even a hard decision to make if it was all manual.Now I am interested to know the reason you guys go that way. Mine is the following: In my market small or inexpensive units are either a condo with HOA (I don't even look at those due to regulations), or in less desirable neighborhoods. By buying a larger house and splitting, I go with a higher standard, while reaching small groups. I like groups of 4, typically a family of 4 tourists in LA. That's my favorite guests target. What are your reasons Valerie, Michael?

Valerie Rogers · Answer

Hi @Michael Greenberg,

Coincidentally, I'm in VA working on getting our newest VR furnished & up and running, and we've decided to market the house similarly.

It is a 4 BR/2 BA home with a split level floor plan. Upstairs are 2 bedrooms, 1 full bathroom, the kitchen/dining area and a living room. There is also a screened porch accessible through a door in the kitchen.

Downstairs are the other 2 bedrooms, 1 full bathroom, laundry room, nice big "rec room" (or living area) and an exterior door.

The driveway is really large so parking for up to 4 cars is not an issue.

At the bottom of the stairs from the entrance to the lower level is a door that we've secured with a double deadbolt, locking the upstairs from the downstairs.

We'll rent the house as a 4 BR/2 BA or as two separate 2 BR/1BA apartments.

The guests who rent the upstairs apartment get to use the kitchen & screened porch, but not the laundry room.

The guests who rent the downstairs apartment get to use the laundry room but not the kitchen or screened porch (so this apartment will rent for less than the upper apartment.) But we have installed a small under-the-counter style refrigerator, microwave & coffee maker (just like a hotel room.)

The biggest obstacle is that the house only has one thermostat, located upstairs. This means that the guests in the downstairs apartment will not be able to adjust the temperature. We've installed a wifi thermostat, so the guests in the lower apartment can contact me and I can adjust the thermostat remotely. The information that I send to guests who rent the upstairs apartment explains the situation and asks for their cooperation (if needed) to find a temperature that works for everyone.

Right now, I've paid for a subscription on VRBO for the whole house. But on Airbnb, I have three listings: one for the whole house, one for the upper apartment and one for the lower apartment. My thinking is that people who use Airbnb are more of a "home sharing" frame of mind than those who use VRBO. Eventually, after I see how the different configurations rent I may decide to pay for additional listings on VRBO for the two apartments, but we'll see.

As for zoning, in my location it is not an issue.

Good luck!

Kevin Lefeuvre · Answer

another option is a duplex. in my area they are less desirable because tenant occupied. If I manage to get one and then rehab it clean and nice, that's the ideal situation. No zoning issue, no sound proofing, etc.

How to manage and list a "flexible" vacation rental space

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