Owning a second home is unbelievably expensive. To learn more about common rental expenses check out any of the links below:
- The Real Cost of Owning a Vacation Rental Home
- Decisions to Consider Before Buying a Vacation Rental Home
- If I Could Do It All Over Again Would I Still Buy My Beach Home?
- Spending Money to Help Renters Feel at Home
- Spending More to Retain My Guests
- Owning a Beach Home: Preparing for the Unexpected
We choose to rent our house throughout the summer months as a way to offset the costs of owning a second home. In order to decrease the dent in our pockets its wise to maximize revenue on every rental.
The key to maximizing revenue is an equation that could make your head spin at first, but the kernel is simple mathematics: rent as many weeks as possible charging the highest seasonal rates while simultaneously decreasing commissions, fees and other related expenses. Traditionally, there have been two ways to handle the rental activity and management. So here’s the insider’s perspective.
The first and most beaten path is to hire a “full-service” management company that charges commissions between 20-40% per booking. If your property rents for $2000 per week, you’ll pay the manager $400 to $800 in commissions! This increases the burden to generate more rentals. Spoiler alert below: that simple math I mentioned above doesn’t pencil out for me.
My summer home rents roughly 16 weeks per year between May and September. A 20% commission rate would cost me $6,400 and at 40%, the commissions would tally up to $12,800! Additional fees may be charged for advertising, online listings, emergency services, inspections and maintenance. Suddenly your rental manager becomes a less than ever-faithful partner in your rental business while you’re carrying all of the risk. Needless to say, I exited that relationship.
The alternative path is doing-it-yourself. Skipping the manager and commissions makes sense for some, just realize going in that it’s nearly a full-time job. Getting your property listed on VRBO is the easy part. The day-to-day of managing your property and keeping it rental-ready for the next guest and quickly responding to inquires is stressful enough, let alone managing the rental agreements (if you don’t have one, you need one). Did I mention collecting rental taxes and filing reports? Check with your local municipality because they see home rentals as a growing revenue source.
Are you interested in finding a lower cost solution that provides the same benefits at a fraction of the cost? If so, Vacation Rental Services (VRS) is a new fork in the road worth exploring. VRS provides many of the benefits of a full service rental management company without charging any rental commissions. That’s reason enough to waive goodbye to your rental manager quickly. In lieu of rental commissions you simply pay a fixed monthly fee for the services you need.
VRS rental management includes a full-on website to attract new guests and handle rental inquiries at a fraction of the cost of traditional sources. They can handle other rental related tasks too, such as collecting rental payments, taxes and security deposits, managing your rental calendar and handling and processing rental documents – all online (someone that gets technology).
You can use their online rental calculator to compare the services your management company provides and charges with what you will pay VRS. After visiting their website at http://www.vacation-rental-services.com, you may just find yourself asking one of two questions – “Why am I paying so much?” or “Why am I dealing with the hassles?”