Sunday, July 08, 2007

Orlando To Be Hit Hard-Good Opportunity For a Vacation Rental Investment

Good article from This guys predicts what markets are to be hit hard in foreclosures. NEW YORK ( -- A tidal wave of foreclosures may be heading toward Florida, if you judge by the number of homeowners looking to get rid of their homes as fast as they can. Duane LeGate, president of House Buyer Network, arranges quick sales for home owners in distress. He claims he can predict where markets will go bad by looking at the traffic on his Web site. "We can tell you what's going to happen nine months from now," he said. His most endangered market right now is Orange County, Florida, home of Disney World.
"Orlando has blown up. There's been a 700 percent increase in traffic of people filling out our forms," he said. "I could put a bull's-eye on Orlando and write the headline for what will be going on in January and February." "There are tax issues that are depressing the market," said Lee, Property taxes jump when houses change hands. "And insurance rates spiked after the hurricane season of a couple of years ago," he said.

Some markets are turning positive, according to LeGate. The number of client contacts from Maricopa County, Arizona - the Phoenix area - dropped this year by about 38 percent. You can catch the rest of this article at

However Orlando is a big place with lots of micro markets. If you can find a deal on a property close to the theme parks I would say you have great investment property. Orlando supports vacation home rentals but does require you to have a certificate of compliance. Nothing beats the volume of travel to Orlando every year. From personal experience I can say nothing beats a vacation home while at the parks. Gotta love the comment about Arizona.

Owing a Rental House: A Good Investment

Here is a great short article that details some of the benefits of owning a rental property. With all the "gloom & doom" about real estate all I can say is I wish I had more money and time to put into my business and pick up additional rental properties.

Here's what Bob Bruss a real estate expert has to say: What is the best investment you ever made? Common stocks? Bonds? A small business? Your house? Other real estate?
Chances are your most profitable investment has been your personal residence. If you have yet to purchase your own home, today's "buyer's market" is an excellent time to do so.
However, if you already own your house, why not take advantage of current market conditions to buy one or more houses as rental investments? Let your tenants buy those houses for you by using their rent payments to pay the mortgage and other can access the rest of the article at the Arizona Real Estate Notebook

Thursday, July 05, 2007

Summer Rentals: It’s Not Too Late-NY TIMES Article

The times recently had an article indicating that its tough going for some in the vacation rnetal biz. Note: “Availability is out there in key destinations where historically it hasn’t been,” said Justin Halloran, a vice president at, which specializes in vacation rentals by owners. He cited such destinations as Cape Cod and Martha’s Vineyard, Traverse City and Petoskey, Mich., and Hawaii, better known as the Big Island, and Maui. As of mid-June, nearly 20 percent of United States vacation rentals listed on the site had yet to be booked for the Fourth of July holiday, while Labor Day was still wide open with more than 70 percent of rental properties showing availability.

We have been blessed with a strong rental season at our Martha's vineyard property although we do have week unrented in July. However we have had more weeks in June, & September over last year. You can catch the times article at:

How To Rent By Owner

One of the great resources I used to start the vacation rental business was a book by Christine Kapinski called how to "rent by owner". Its filled with great advice that really helps to give you a boost when you decide to rent by owner. You get Christine's book at .

Sunday, September 17, 2006

Rental Scams in the Vacation Rental Business

Unfortunately rental scams are on the rise for VR owners and we must be on the look out for these. I recently saw a news program that reported that most of these scammers are from Africa (Somalia & Nigeria) where scores of young people hit these run down internet cafes and start scamming all over the world. The email address will come from the UK to add fake credibility. In addition these are some additional key signs from my point of view that your inquiry may be a scam:

Basic Story goes like this:

•I am traveling with a Church group of 10 people
•I am a soldier coming home from the Iraq war
•I am a soldier based on a navy battleship
•I am a student etc
•I am a Doctor

Once you reply you will then be presented with an opportunity for the scammer to send you a cashiers check for more money than owed, and have you wire transfer them the overage amount.

The catch is that the cashiers check is fake, and it will take your bank some 3-4 days to inform you of this. Of course by this time you have sent your wire transfer to your new found buddy. That’s the scam.

Additional Warning Signs

Usually when these emails hit and they do not have a phone # (#1 warning of someone scamming or building a spam list…but not always the case as some legitimate folks refer email only).

The emails will use broken English (however English is becoming much better over the last year as graduates from the western schools have come back home)

Use of CAPs to grab your attention.

The grammar and English errors are usually very prevalent, but reference the point above.

The scammer may want to rent your property in the very near future (to give you less time to act and confirm) or will want to rent for a very long time frame. Sophisticated scammers will target areas out of season with this offer.

How to Handle Scammers:

First of all trust your instinct as it is usually right.

You do not have to respond. If you think it’s a scam and you respond all you have done is verified an email address that gets on a scammers spam list, and then shared/sold to other scammers.

Inform anyone that deposit checks must clear before any reservation, and that you offer credit cards (every VR owner must consider taking credit cards these days).

Never transfer any money to anybody until any check clears the bank. I don’t care of it’s a VR, a Car, a house etc.

Never accept a payment for more than the greed to amount

NEVER EVER give someone your checking account information as scammers will often time offer to wire in money directly to your checking account. The wire happens…not just in the direction you had imagined.

Report Scams to your advertising and listing sites for your VR

Use the internet to verify company names, phone numbers etc. Most companies have to be registered.

Managing Scam

Only the potential marks (that’s you & me) can combat scammers. Here are some resources to report potential scammers. I found a great site dedicated to stopping Nigerian Scams and have excerpted some of their context (

“If you are contacted by a scammers that offers to send you money ahead of time (known as Advance fee Fraud (419) you contact the US Secret Service at Only No Loss reports are to be sent to this email address. The goal is to document the scammer and create a data base, the USSS does not respond to submissions to this address. United States Citizens and Residents who HAVE suffered a Financial Loss are instructed to contact the nearest Field Office of the United States Secret Service (USSS) by telephone. You may also file a Financial Loss complaint online with the Internet Crime Complaint Center “ [formerly the Internet Fraud Complaint Center (IFCC) ]. This organization is a partnership of the National White Collar Crime Center (NW3C) and the Federal Bureau of Investigation (FBI).

Sunday, June 25, 2006

Marketing Your Vacation Home

Marketing a vacation home rental can seem very difficult to someone not familiar with the industry. Many people think they have to place classified advertisements in papers across the country or that only real estate agents have long lists of people that travel to the area. Perhaps if you bought before the internet these myths would have more truth, but with the internet it has enabled vacation home owners to reach people searching for vacation homes in their specific areas, from all over the world.

The key elements of VR Home Marketing are:

Research your market

Know the demographics of people coming to the state and your region for tourism. Identify from what states and countries send the most visitors to your area. Identify the major destinations people travel to in your state or region. A great source for this information is your states tourism website. From this information you can begin to get a sense of your target audience and demographic. This is important as it will inform you better as to what amenities or features to position within your market messaging. For example if your target demographic is married couples aged 30-45 with children than you better offer high speed internet, and you may even want to consider having some gaming systems in the home. You also know which local and state attractions to point out i.e we’re just 1 hour from Red Rocks state park.

Research your Vacation Rental (VR) competition. What are they priced at, how does this vary by type of home, location etc. Identify what the key amenities are in terms of the minimum and the premium.

Position your VR

When people hear the term “positioning” they think it to be some fancy marketing term. What it really means, in the context of a VR, is how you will position your VR in your market. Will you position it as a luxury property, a low cost/value VR, a family friendly VR etc. Having a sense of this positioning will help you when you message and draft copy to actually market your VR

Price your VR

Pricing will be one of the most important decisions you will make on the marketing your vacation home rental (VR). You will want to ascertain if prices change based on a homes size/bedrms etc, location, and season. You must get a sense of what the going rates are. You can do this through several ways, and I recommend that you use more than one:

i. Contact local real-estate agents and ask them current rental rates for your type of home/property/location

ii. Contact local rental and property management companies and ask for rental information

iii.Research VR web sites and compile a pricing matrix (location, home type (i.e. condo vs. single family), # bedrooms, # baths, Amenities, weekly rate, monthly rate.

iv. Contact local resorts & B&B’s and get a sense for their weekly and nightly rates. Remember these are your competitors. It also helps define your value proposition.

v. Ask other VR owners what they are getting

vi. Compute your pricing mean and median for your area/region and comparable home

Now that you have complied your pricing market information its time to compile your costs. Make a list of all costs associated with your property and tally an annual amount and then divide by 12 & 52 so you get a monthly and weekly cost. Remember to look at:

o Mortgage

o Taxes

o Elec

o Water

o Sewer & trash

o HOA fees

o Pest control

o Landscaping

o HVAC servicing

o Pool servicing

o Maintenance fund: you will also want to allocate some reserve to a maintenance fund usually $300-500/yr but can vary based on the age and condition of you home

Now you will need to set your price. Without getting fancy and trying to identify your desired margins etc the ideal price is where your market competitive and you cover 75-100% of monthly costs with a one week rental in high season. However with recent property appreciation in most areas this is a getting to be a more challenging goal to attain and you may want to look to cover a ½ years worth of expenses during your high season. Keep in mind that you must be market competitive. This doesn’t mean always being the lowest price. You want to really look what the pricing is in your specific area and comparable homes and compare with your amenities. Price too high and people will ignore you; price too low and people will think your VR is a dog unless you are positioning it as a low cost VR. Remember pricing is an inexact science, especially in the VR industry, as our industry is not governed by professional hoteliers but by irrational home owners such as you and me. If people are calling you and telling you your prices are too high take heed…if your not getting any inquires you may need to re look at pricing. You will find a price point at which the property starts too move.

VR Amenities (Equip your VR)

Now that you have your VR you need to think of it as a product. In this context you will need to have a sense of what other competing properties have in the way of amenities and in the context of your positioning strategy. What are the basics (i.e must haves), what are the nice to haves? What are really great things to have? A key thing to consider is high speed internet. This will add $50.00 extra per month. You can charge for this but it’s becoming more of a basic utility these days and is right up there with having a phone. Will you have internet access? What kind of TV will you have? Flat panel TV’s are increasingly see as a luxury item, along with gaming systems. What cooking accessories will you have? Will you have games for a rainy day?

Your amenities are like product features. They support your market positioning, pricing and also enable you to differentiate yourself from other VR owners. Think carefully here and identify key features you want to highlight in your market messaging

Promote your VR

Now its time to get the word out. There are several things you will need to do:

i. Place several listings on larger VR advertising sites. You must list with more than one to get the market reach you will need to drive inquires. These include & Consider regional listing sites to add your advertising efforts. DO NOT SKIMP ON ADVERTISING.

ii. Get a web site. You really need a dedicated website for your property. There are several do it yourself and even dedicated VR web site services that create one for you. This will enable you to supplement your listings with a dedicated web site where you can add more photos, area information, location and proximity, etc. It will also get you more search engine exposure.

iii. Photo’s, Photo’s Photo’s, I can’t stress the importance of photos. Photos sell your property and help to take an element of risk away from the prospective renter who has ever seen your property. Another reason to have your own website so you can really load up on photos.

iv. Free classifieds: Get on and These internet classifieds have free vacation home rental categories. You can use your vacation home listing HTML address or your website (ideally) to drive prospects to from these sites.

v. Send an email to friends and family and support network (housekeeper, landscape etc). Consider offering them discount if they book and also offer them a referral fee/bonus if they get a rental for you.

vi. You may want to consider large university alumni magazines as these have VR listings within their classifieds.

vii. Depending on the size and expense of the property you may want to reach out directly to local city magazines and classifieds and have a real estate agent place a MLS listing. These will be more expensive and most VR’s will not need this level of exposure.

viii.Inform local real estate agents and inform them of your referral bonus (i.e 10-15% of the rental revenue)

We will cover, in more detail, all these areas in later entries to my blog. In the short run you can price, equip, promote, and rent your VR home…and be successful in doing it. In fact I would bet that you will be more successful than having a real estate agent or property management company do it. It’s easier than you think.

Thursday, May 11, 2006

Is A Vacation Home A Good Investment?

So is buying a vacation home a good investment. It really depends on several factors:
What are your investment objectives?

Are you looking for positive cash flow? Appreciation? Or both
As with any real estate investment location, demand & supply are key criteria
What are the rental seasons? Is this a desirable location year round? Winter? Or summer?
What are the tax implications of your vacation home? This depends on your current income and what you can deduct for and how much you will be using your home. WE will look at taxation in future commentary.
What will your costs be? Property management, utility, housecleaning, insect control, cable etc
What will your amenities include? Will you position your home as a high end rental or basic?

There are many criteria to consider before you can decide if it’s a good investment for you. In today’s blog we will look at the projected growth of the Vacation Home Market.

The vacation home market is experience solid growth as baby boomers take hold and begin to drive future momentum into the vacation home market for the next 16-25 years. “Vacation rentals represent a $30 billion slice of the travel industry and have always been an attractive alternative to hotels” - WVR Group CEO Brian Sharples.

Vacation Homes Become a Popular Alternative Lodging Solution. Travel industry analysts have noted a jump in demand for vacation home rentals for several reasons:

Increase in the need for group-friendly settings.

40% percent of Americans bring children on their longest vacation

33% of people travel with either family members or friends.

A Web-savvy world- "The Internet is continuing to change the way people travel. They go online to book homes because it is easy and just as affordable as a hotel room. As a result, the industry is growing at a pace of more than ten percent per year," -Christine Karpinski, referring to the online vacation rental industry.

Vacation Home Owner Demographic Profile (based on the National Association of Realtors study 2005):

Vacation Home owners 55 years old with a total household income of $71,000, have no children with 71% of vacation home buyers have no children and generally buy a detached single family home (83% of purchases). Vacation homes have a median size of 1,290 square feet and a median purchase price of approximately $190,000 and about 14% of these buyers plan on renting their home out.

According to the American Resort Developers Association (ARDA 2004) Older householders and those with higher incomes are also more likely to own a vacation property with 15% of all householders over age 55 having a getaway as opposed to 4.2 percent of householders aged 40 and under.

Vacation Home Owner buyers are different from investment home owner buyers as these buyers tend to be younger (47 years of age), more affluent (mean income of $87K) and do not plan to use their proportions for recreational purposes with only 10% planning to do so. When you’re looking to buy a vacation home you need to decide if you’re buying that home as a true “2nd Home” or a True “Investment Property” or a hybrid of 2nd and Investment Property.

Three-fourths of vacation-home owners purchased for personal use, although one-third also wanted to diversify investments, and 18 percent intended that the home would become a primary residence in retirement. Only 13 percent of vacation owners listed rental income as a reason to buy. The typical owner spends 39 nights per year at their property, and three-quarters do not rent out. Of those who do rent their vacation home, the median number is 12 nights per year.

Two-thirds of investment-home owners purchased their property to generate rental income, and half viewed the property as a way to diversify investments. Eight out of ten spend no time in their property. Not surprisingly, 80 percent rent it out, with 73 percent renting for at least six months per year (NAR 2006)

Vacation Home Market Growth

Based on the ARDA 2004 market study 26.7% percent of American households believe their chances of purchasing a recreational property some time in the next ten years are "about 50-50" or better, and a full 44 percent think they have at least some chance of buying such a property within the same time period. The Concorde Group (2004) projects that 44 percent of all households feel they have a chance of purchasing in half that time - five years.

The real engine of growth in vacation homes are the baby boomers. Baby boomers in their peak earning years are igniting demand for second homes with a a record 445,000 vacation homes were sold in 2003, a 24 percent gain from the 359,000 sold in 2001, according to the National Association of Realtors. “As demand rises, prices for vacation homes probably will increase at a pace more than double the 6.7 percent forecast for the overall residential market in 2004” according to David Lereah, the NAR's chief economist. "It's all demographics," said Lereah. "We're seeing the baby boomers nearing retirement age, and we're seeing real estate play a more prominent role in their investment planning because of their memories of the stock market declines." For the years 1940-1994, inclusive, 202 million Americans were born; about 77% of all Americans now living were born after 1939. During the baby boomer years, 1946-1964 (inclusive), 75.8 million Americans were born. The biggest year of the boom was 1957, when 4.3 million boomers were born. Boomers today represent 28% of the U.S. population but starting in 2005 every b7 seconds a boomer turns 50.

Minorities have become more active in the market, accounting for 11 percent of vacation home purchases between 2003 and 2005 in contrast with 6 percent of purchases in 2002 or earlier. In the investment property segment, minorities accounted for 17 percent of transactions between 2003 and 2005 compared with 11 percent in 2002 or earlier (NAR2006).

An unexpectedly high number of vacation-home owners, 21 percent, own two or more vacation homes. In addition, 34 percent of vacation-home owners report they own two or more investment properties. More than half of investment property owners, 53 percent, own two or more investment homes and 12 percent own two or more vacation homes. Analysis of U.S. Census Bureau data shows there are 6.8 million vacation homes in the United States and 37.4 million investment units in addition to 74.6 million owner-occupied units.

In the next commentary we will look at areas that are becoming popular for vacation home purchases.

Monday, May 01, 2006

Why This Blog?

Why create a blog dedicated to vacation home rentals?

We learned the hard way. In 2003 we bought our first vacation home in Arizona. What helped seal the deal was the fact that the developer had paired with a property management company that had national exposure. They would rent the home and we would get the income. This fact helped propel us beyond our fears of taking on a second home.

What we learned was the property management company was only interested in taking 30% of our revenue and billing us a monthly fee plus all sorts of additional fees: housekeeping, monthly walk through, filters, etc etc. Things like marketing our property, competitively pricing it, and renting it was the furthest thing from their minds. But the scary thing is we kept on with it for another year and a half.

I started to research vacation home rentals on the internet and found an entire community, and industry we're springing up; unleashed by the internet. I researched prices of folks that we're competing against me right next door, and we're under pricing my unit, whose rates we're set by the property management company, by some 35%.

I slowly started to realize that I had to get back in control of my investment. Real Estate can be a wonderful investment if you keep control of it. I had given away my marketing, my pricing, my customer engagement, and my property management completely over to people whose business model objectives we're entirely different from mine.

To date we have increased our revenues some 600% in less than 12 months, our utilization rates have grown 10 fold, and we have a customer base. Things are so good we even purchased another vacation rental property, and created a company under which the units are held. Check out our web site at

The reality still remains that the majority of people who decide to rent their homes do so in ways that do not maximize their return on investment. They use real estate agents, & property management companies. They do not take credit cards or even have a web site. What they fail at most is that they do not see their vacation home rental for what it is: a business.

We hope to share a few things we have learned in the coming months and our experiences as we continue to strive for continued success with our business. We want to receive information from others and build a community that promotes the vacation home rental industry.

Please let me know of any topics that you want to see addressed or any ideas and experiences that you have had in renting your own homes.