All Forum Posts by: Gerard Lester

I can point you toward markets where list prices and high rental revenue will point to cash flow opportunities, but it will be local realtor relationships who can help make the deals happen. I work with a team who has a significant amount of data and can develop vacation rental projections for just about any home. Connect with me offline if you want to discuss the challenge of finding deals that will produce cash flow as vacation rentals.

Commission structures are all over the board, but will of course be higher than LTR management due to much higher touches and costs on marketing, booking, guest services, property services, etc. Many companies do charge commissions in the teens, but will nickel and dime owners so that the effective commission finally adds up to 30%-40% for all services. My advice is to focus not on the commission number but on your net income. If a property management company can take care of the entire process and deliver the return you're looking for, you'll do well to work with them. If you want to talk about it more offline, let me know.

I would ask to see all reservation level data so that you can understand ancillary expenses. Depending on where this cottage is, you could probably make significantly more income by optimizing rates to approach market value on any given day. I do work for a vacation rental company, but we're not in Hawaii yet. If you do want more information on how adjusting rates can improve your net income, do connect with me offline.

Be careful of calculators that factor only advertised short term rental rates without including actual booked rates. 

Thanks Erica,

I do work for a vacation rental management company and we build systems and deliver services that make vacation rentals easy for guests and owners. We are not in every destination, but do have local teams on the ground in every market where we operate. If you're interested in an offline conversation, I do really enjoy helping owners find the best resources available and helping them create great vacation opportunities for their guests.

Hi Cifton,

I've heard word that the Coachella festival will be moving closer to Indio, so people I've spoken with are very big on that part of the desert for short term rentals. I do have access to income data for vacation rentals in the desert and the company I'm with does manage vacation rentals. If you want to connect offline, let me know.

Hi Shelly,

I'm not a broker but may be able to find an interested buyer for you among the investors I work with. Please do send the pro forma to me.

Always compare what you are getting in return for paying a company an commission. I believe the national average is around 33% of gross rental revenues. There are some companies who offer initial rates in the teens but beware the shock of getting charged for almost every function the company performs. Establish what you believe to be a reasonable return and ask a management company what they project for annual income. 

Insurance brokers will often try to sell a commercial policy for vacation rentals, but it should not be necessary and will usually not cover what you think it should. Ocean front homes will draw a lot more in rental income, but you'll usually need to buy expensive flood insurance. 

Utilities, including wifi and cable tv, are also additional costs that owners don't usually have to cover with long term rentals.

Furnishing--short term/vacation homes should be furnished with a combination of durability and sought after amenities in mind. This can be an investment when starting out as a vacation rental. However, consider that you should spread this cost out over five or more years.

A vacation home doesn't have to be perfect to start renting--you can always fine-tune it over the first year and look to guest reviews for what to add. 

Not only are HOA fees something to keep in mind, but HOA's can also create restrictive rules that limit or forbid short term rentals. Talk to other owner in a condo complex and take the temperature of the HOA. When interviewing property management companies, be wary of low commission percentages that often hide constant nickel and dime-ing for simple services like changing lightbulbs or stocking the home with soap and shampoo. A higher commission often indicates that a PM is able to spend more on advertising and booking at higher rates. Don't be afraid of a higher commission if the PM is able to deliver greater net rental revenue. On the seasonality issue, while anyone can book the high season, effective marketing strategy and variable pricing will be able to book the shoulder seasons effectively. I love talking vacation rentals, so hit me up offline if you want more info.