Owning or investing in vacation rental real estate can be a great way for a property owner or buyer to enjoy a second property while offsetting expenses and allowing others to enjoy the property, too. Whether you are a current owner of a vacation rental property or looking to buy, this time of year requires a strategic game plan for success.
Summer in the Lowcountry is the peak season for vacation rentals with typically more than 65 percent of a property's annual short-term rental revenue coming from the summer rental season. Missing out on bookings can have a big affect on your yearly rental income.
If your property is not fully booked for the summer, here are some strategies that can help drive last-minute reservations and maximize your rental revenue. Adjust your rates so they are slightly below the short-term rental market for comparable properties. Ask your rental manager to do a rate analysis or check rents at owner websites such as www.vrbo.com or www.flipkey.com, ensuring your rates are as competitive as possible. Consider adding a component that adds value to someone making a reservation. A $50 gas card or two complimentary beach cruiser bikes can make all the difference for a renter to choose your property over others. Think about making your property pet friendly. Statistics show people that travel with pets stay longer and spend more on vacations than those that don't. A pet-friendly property can generate as much as 25 percent additional revenue annually. Price for nightly stays. There is a lot of demand from guests who want to stay less than a week. To best price your property for nightly stays, take your weekly rate and divide it by five. This will give you a slighter higher rate for those three or four night stays and will help cover your variable expenses. Make these nightly stays only available within 14 days of arrival as not to displace potential weekly stays. Your vacation rental nights are perishable, so better to get it rented for less than a week than allow it to sit empty.
If you are a serious buyer in search of vacation rental real estate, your objective should be to capitalize on summer's peak rental revenues. To do this, look for a property that meets your needs and currently is a vacation rental with a full summer of bookings. Try to close the sale before the middle of June and work with the current rental manager through the peak season in order maximize your rental revenue.
After the summer season, evaluate your management company's performance and decide whether you want to shop around for a new company that might provide better revenue and care for your property. As always, be sure to work with a Realtor who is experienced with vacation rental properties and their transaction requirements.
Robert Stenhammer has been a resort executive for more than 15 years. He is the president of Hilton Head Accommodations.