5 Things Your Cottage Buyers Need To Know If They Want to Rent

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People buy cottages for many reasons and they have different types of perceptions and expectations. Many buyers are now considering rental as part of their investment plan, so it’s important to be able to present them with appropriate and comprehensive detail so they can make informed decisions on the their cottage purchase.

Having this information to hand will also stand you out from the bulk of your competitors – something we all want to achieve.

Here’s five basic pieces of information that will position you as a cottage rental sales expert. [Read more…]

VRS074 – Selling a Vacation Rental Home with Rick Oster

If you are a reader of this blog and you listen to the podcast, it will not have escaped you that I have listed my two river front cottages for sale. I need to sell them before we begin to build on our Bahamas land, so as you can imagine, I’m quite keen to get a buyer.

The dilemma I face is that I haven’t been able to get anyone to value the cottages as ‘income properties’. Local agents are only interested in ‘comps’ – that is, what comparable properties have sold for in the area, and because we are so rural, commercial appraisers show little interest.

I’ve sort of stuck my finger into the wind and come up with a price that seems right to me, given the value I have put on the potential for income generation. I know what the cottages have made over the past 10 and 3 years respectively and understand the market enough to project the potential for growth.

However, creating a way to explain that to a buyer, who will then no doubt be looking for finance and getting an appraisal, is proving a challenge. [Read more…]

VRS072 – Destination Payoff with Scott McGillivray of Income Property

It’s been a long winter of waiting for Cottage Blogger’s own Mike Bayer, and his wife Andrea. It was back in the fall of 2014 that the popular home renovation show, Income Property, and its dynamic presenter Scott McGillivray worked their magic on their Lake Ontario property, Sea Breeze.

The wait is over and the show featuring Mike, Andrea and their idyllic lakefront cottage will finally be revealed on Thursday April 16th at 9pm on HGTV Canada.

Unfortunately, for those of you in the US will have to wait a few more weeks to see the episode on HGTV, but I am sure that as soon as the air date is scheduled Mike will let you know. Just look out for Season 10 Episode 13. But in the mean time I managed to get a few minutes to talk with Scott McGillivray himself. [Read more…]

5 Waterfront Markets for Profitable Vacation Rentals

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Vacation homes provide owners with the opportunity to lease part-time, unlike traditional rental property investments requiring year-long commitments. Short-term rentals, depending on locale, are generally profitable and convenient. Owners have the option to claim dates for their personal use while charging premiums during peak holidays. Vacation home investors might consider purchasing waterfront properties, but may be hesitant due to the high purchase prices associated with surfside locales. Additionally, coastal cities have higher risk for floods and require increased insurance in risk zones.

The average short-term vacation rental in 2014, according to HomeAway.com, cost $1,520 per week, or $6,090 per month. Vacation homeowners with this pricing model make $27,360 in investment income per year. Many vacation homeowners use these funds to pay off their mortgages, insurance costs, taxes or other homeownership fees.

To determine the most profitable vacation markets to invest in, consider the national vacation rental averages as they relate to median for-sale prices and potential mortgage rates in the following waterfront hotspots. [Read more…]

It’s Time to Buy the Next Vacation Rental Home

time_to_buy_the_next_vacation_rental_homeOver the past 12 years I’ve owned seven vacation homes – at one time we had five on the go – but mostly we have bought and sold as the market has evolved. Currently, I’m managing two – Osprey Cottage (bought in 2005) and Kingfisher Cottage (bought in 2012).

The process of selection has always been the same with new learning applied to every purchase, so with a new project on the go (researching a property in the Bahamas), it’s time to revisit it and to evaluate what has worked, what hasn’t and whether the ‘rinse and repeat’ system is still appropriate. [Read more…]

VRS012 – Buying a Vacation Home with Confidence to Succeed – Erica Muller of The Flamingo Group

 

Orlando based realtor and vacation rental specialist, Erica Muller, is a powerhouse in the Florida real estate market. Her new e-course “Everything you wish you knew about buying a vacation rental home” is a comprehensive and content packed guide for anyone considering buying a property from a distance. [Read more…]

How We’ve Made $30K/Year Renting Our Primary Residence as a Vacation Home

This is the first in a series of guest posts by owners sharing their unique stories. 

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Robert Kiyosaki, author of the Rich Dad, Poor Dad series, created a bit of controversy when he said that a home is not an asset, but a liability. This is because your home doesn’t make you money each year, but actually costs you money. My wife and I found a creative solution to reverse that dichotomy. Since then, we have seen several friends of ours take the leap into doing the same with their own homes. One family travels around the country in an RV with their 5 kids, bringing in over $10,000 a month in the summer renting their home out to groups wanting a large house for family reunions. Now, I’m not going to say this is for everybody, but if you are willing to live a bit of a flexible lifestyle, this could be the perfect opportunity for you.

My wife and I got into real estate at the worst time in the past half century. In 2005, the advice we were given was to buy as expensive of a home as possible because if you wait, houses will be even more expensive. So by 2008, we owned our own house and a rental property that were financially crippling us. We decided to sell the rental property, but we knew it was going to take some time. That’s when we remembered hearing that a couple we knew would rent their small house in Seattle every summer through a vacation rental website, then travel around the world on the money. It seemed worth trying with our rental property while it was on the market.

Setting our rental property up as a vacation rental ended up being one of the best ideas I’ve ever had. Not only did it help us not lose money while waiting for the home to sell, we actually made money! The following summer, I convinced my wife that we should try putting our own house up as a vacation rental for the summer, then use that money to take a vacation of our own. The first summer was the toughest because we didn’t have any good systems in place. But ever since then, we have used the vacation rental income to travel ourselves, pay down our mortgage faster, and use some of the money towards home improvement projects.

At this point, you are either thinking I’m crazy or brilliant. If you are still intrigued, here are a few things that we have worked through that make the process less painful:

1    Find out if this is an option in your area

If you live in Rawlins, Wyoming, it might be that no one is interested in paying a couple thousand dollars for your house for a week. Do a quick search on a vacation rental site like VRBO.com or AirBNB.com. See if there are other homes in your area, what the average price is, and if they have any bookings on their calendar. There is nothing exciting about our house; it is just a typical 4 bedroom suburban home located 30 minutes from Seattle. But as many travelers are looking for affordable places for families and larger groups to stay for weddings, family reunions, business trips, and family vacations, we can consistently expect to rent it out for 6-8 weeks each summer, as well as Thanksgiving and Christmas weeks. Obviously, we can turn down any inquiry we receive, so our goal is to travel for about 4 weeks each summer, as well as either Thanksgiving or Christmas. This brings in about $12,000-$15,000 each year.*

2    Don’t feel the need to negotiate

Vacation Renters are often looking for a bargain. But unless you are desperate for the money, dropping the price can come back to haunt you. In our experience, bargain renters tend to be critical renters. Also, we would rather rent fewer times in a year for the full price than more often for a discounted rate. That may mean turning down some offers. But there are few things more disappointing than renting your home out for a discounted rate, then getting a full-priced inquiry days later for the same time period.

3   Set up your own storage space

We set up our garage as our storage space, locked from the inside of the garage. That way, we don’t have to leave all of our stuff in the house, nor do we have to take it all with us. I installed a clothes-hanger line across one wall, bought storage racks and bins (each labeled with the contents), and now clothes and valuables go in the locked-off garage. Now, we don’t move all of our clothes into the house after renters. We keep just the stuff we will be using for the next couple months into the house, leaving the rest in the garage. We put a refrigerator in the garage, so we just move any food that we don’t want to bring with us into the garage fridge. At this point, getting out of the house is as easy as packing our bags and putting the rest of our personal items in the garage. We even lock off one of the bedrooms unless it’s a particularly large group. This way, we can store a few things there if we are only going to be out of the house for a few days.

4    Pay someone else to clean the house for you

My wife would obsess over having the house perfect for people the first two years we rented it out. It was the most stressful part of the whole process. To remove that pain point, we created a thorough checklist and now use the “non-refundable cleaning fee” to pay someone else to clean the house for us. They make the beds, deep clean every room, and set up flowers and the welcome letter. All we have to do is grab our bags and get out of the house. Since we average between $2,000-$3,000 per week, it is well worth paying a couple hundred dollars to have someone else do the dirty work for you.

5    Add rental insurance to your policy

We have been renting our house out as a vacation rental for over four years now and have yet to have any serious problems. Sometimes we need to get the carpets cleaned or something gets broken. But at over $2,000 each week, there isn’t a lot that their rent wouldn’t cover (not to mention the $250 security deposit we hold against damages). However, depending on your risk tolerance and how often you rent out the house, it is probably worth adding rental insurance to your policy. This costs very little and produces an incredible amount of peace of mind. (note from Editor:  We would always recommend insurance for rental – regular home insurance cover could be voided if a catastrophic event occurred and paying guests were in residence)

6    Make the most out of being gone

We use the “vacation time” to visit new places and see friends that we otherwise might not visit. Because we travel so often, we make sure we travel frugally. But we always make sure to do something extra so that it doesn’t feel like a chore being out of our “castle.” If we stay with friends or family, we provide plenty of fancy groceries and make sure to take them out to a nice dinner. By simply doing a few extra things and not going to the same place each time, it keeps the experience fresh and exciting (in case making money isn’t exciting enough on its own).

I am the first to admit that renting your primary residence as a vacation rental isn’t for everyone. But if you are looking for creative ways to pay for your travels or make some money while visiting family, we have proven for over four years that this can be your solution!

*This year we decided to spend 6 months in San Diego, renting our house out for over $4,000/month while staying at a $1200/mo month-to-month apartment near the beach.

This is a guest post from Colin Jones. Colin has been an unorthodox entrepreneur for nearly ten years, previously co-managing one of the largest card counting teams of the past decade. He
now runs Time To Get Awesome, helping people grow, monetize, and market their online business.

Kingfisher Cottage – from Offer to Fully-Booked in 6 weeks – Part One

kingfisher_waterside_deck Buying another cottage wasn’t on the radar at all. In fact, after five on the go at one time a few years back, I did that ‘never again’ thing, and one by one we sold them until just Osprey Cottage was left. So, for a few years we motored along renting Osprey very successfully until last fall when we realized that we’d nearly reached the limits of income from it. It rented every weekend throughout the winter and early spring, and was maxed out through the rest of spring, summer and fall with weekly rentals. It was our accountant who suggested buying another might be a good way of dealing with some tax issues, and I didn’t need any more encouragement than that. I was off and running.

This series is about how we went from buying the place to having it fully booked for the summer, in 6 weeks. I’ll cover the choice of property; setting criteria; renovation decisions; setting it up for rental; cost management and marketing plans. In the course of buying seven properties in the last ten years the blueprint for doing this hasn’t failed yet, and in fact just gets more cemented as a success strategy.

The Search

The search begins with a decision on motivation to buy; the choice of a property to rent based on the desire for a holiday home for your family may be dramatically different than if it will be primarily an income property that will have some personal use. For investment purposes the key is to remove the emotional element from the search and look at it from a completely objective viewpoint.

I viewed a lot of cottages – there was the one that fit all the interior criteria, but there wasn’t enough privacy from other properties; the delightfully located cute place right on the water without a deck and no way of adding one, and the perfect spot that I fell in love with but the price was above our break even limit. Sticking very closely to the must-haves, and keeping focus on the purpose of the purchase was tough but worth it in the end.

The Propertykingfisher_deck_tub

When I saw the MLS listing for Kingfisher Cottage I was excited. The price was very right and the location perfect which was one of the factors that kept the price low. It’s on a river which is not the most popular choice for  families looking for their dream cottage since most buyers are looking for the big lake view. However, for rental purposes it was ideal with a beautiful outlook on a navigable river – just a kilometer by boat into a lake. Since plans for resale would include all rental history, the location popularity didn’t impact the decision too much. The interior needed some work and some updating but the budget allowed for that and best of all, the selling agent gave the impression any offer would be considered so we low-balled it and it was accepted on the spot.

Key Points

· Do thorough research before starting a search

· Set a budget including all costs relating to setting up for rental

· Forecast conservatively for the first year of rental income

· Be objective and establish criteria based on rental potential not personal preference

· Have a realistic time-frame for potential renovation/upgrades

· Be prepared to lose the property if the criteria/budget can’t be met

Part Two of this series will focus on cost and budgeting. Spending can get out of hand if not planned realistically so it’s important to get the projections as accurate as possible. I’m also testing a new product from www.myvr.com so will be presenting a review of how that goes too.