Buying a Vacation Property

We often hear from people who are intrigued by the notion of owning and operating a vacation-rental property but have yet to buy one themselves. If you need help figuring out where and what to buy, we have several books and Web sites to recommend:

Books

Buying a Second Home: Income, Getaway, or Retirement by Craig Venezia (Nolo, 2007). We're big fans of Nolo books, forms, and software. We've always found them to be authoritative, well-researched, and superbly written. This book/CD package by mortgage expert and financial writer Craig Venezia is no exception. Click here for the table of contents, reviews, sample chapter, and a list of the forms and checklists that are included on the CD.

How a Second Home Can Be Your Best Investment by Tom Kelly and John Tuccillo (McGraw-Hill, 2004). In clear, hype-free prose, the authors of this 220-page book explain how to calculate what you can afford for a second home, find the perfect property, and turn the place into a "cash cow" that provides a lifelong source of income. Click here for more information.

The Complete Guide to Second Homes for Vacations, Retirement, and Investment by Gary W. Eldred (Wiley, 2000). Though not quite as current as the first two books listed here, this 280-page guide offers a wealth of practical advice from one of the country's leading experts on real estate investing. Click here for more information.

Web Sites

EscapeHomes (www.escapehomes.com). This site's goal is to become the premier marketplace for buyers and sellers of second homes and resort properties. It's the best place we've encountered for finding detailed descriptions of popular vacation spots. You can also use the site's search feature to locate properties for sale and real-estate agents who specialize in vacation homes. (Note: There's also a large collection of articles posted here, but the quality varies, and the articles are not very well organized.)

RealEstateJournal (www.realestatejournal.com). Click on the "Second Homes" tab for current and archived articles by Wall Street Journal editors, columnists, and freelancers about buying, selling, and owning vacation properties. (Note: You don't have to be a WSJ subscriber to access these articles. Everything posted here is free.)

Getting Started as a Vacation Rental Owner

There are countless books on how to be a successful landlord or property manager. But until October 2003 when we published the first edition of our book/CD package, there was absolutely nothing designed specifically for vacation-rental owners. Now there are several. These are the ones we recommend:

How to Make Your Vacation Property Work for You: The Quick and Easy Guide to Advertising, Renting, Managing, and Making Money from Your Second Home by Alfred and Emily Glossbrenner (FireCrystal, 2005). This is the second edition of our 300-page book/CD package. Designed as a complete "seminar-in-a-box," it shows you how to create listings that really sell on the leading vacation-rental advertising sites. It also includes tips and techniques for managing your property, a CD with sample forms and checklists that you can customize as you see fit, and a variety of money-saving offers. The package also includes our Key Features 2008 Update on what we consider to be the "must-have" sites for your online advertising program. For more details, reader reviews, and ordering information, visit our Web site: www.fullybookedrentals.com.

How to Rent Vacation Properties by Owner, Second Edition, by Christine Karpinski (Kinney Pollack, 2007). This book by the Director of HomeAway's Owner Community goes a long way toward demystifying the whole notion of do-it-yourself vacation rentals. If you're not quite sure you're cut out to be a vacation-rental owner, reading this inexpensive guide is a low-cost way to find out. Much of the new material is also available on the HomeAway site, but if you don't have the first edition, get this one, which is available for less than $18 on Amazon. Click here for more information.

Advertising Your Vacation Rental Property

The secret to spreading the word about your vacation-rental property is to create effective listings on several of the leading vacation-rental advertising sites. We recommend that you start with three or four sites, but you may need several more if your property is in a highly competitive area, or if your objective is to book your property year-round rather than just during a few weeks in high season.

Here's our "short list" of sites that you should consider when you're just starting out, presented in priority order. These are sites that have a strong track record in generating bookings, regardless of where the property is located:

1. VRBO (www.vrbo.com)
2. HomeAway (www.homeaway.com)
3. VacationRentals (www.vacationrentals.com)
4. VacationHomes (www.vacationhomes.com)
5. PerfectPlaces (www.perfectplaces.com)
6. FindVacationRentals (www.findvacationrentals.com)
7. VRConnection (www.vrconnection.com)

Note: If you list your property with HomeAway, your listing information will automatically be added to CyberRentals, GreatRentals, and A1Vacations, three well-established, top-quality vacation-rental advertising sites that were bought by HomeAway in 2005. VRBO and VacationRentals are also owned by HomeAway. But they were bought more recently and are still operating as separate brands, rather than being incorporated into the HomeAway Network.   

We also have a few region-specific and special-interest sites to recommend:

WeNeedaVacation (www.weneedavacation.com). For properties on Cape Cod, Martha's Vineyard, and Nantucket, we'd alter our "short list" slightly to include this site as one of the top five. Owned and operated by Jeff and Joan Talmadge, who founded WeNeedaVacation 10 years ago, this is a must-have site for property owners with Massachusetts "Cape and Island" vacation rentals. It's also a good choice for Florida property owners, now that WeNeedaVacation has a Sunshine State office headed up by Kathy Jones.    

GulfCoastRentals (www.gulfcoastrentals.com). If your property is in Florida or anywhere along the Gulf Coast, you'll want to consider this regional site operated by Dave Williams. It gets consistently high marks from vacation-rental owners in these areas.

Holiday-Rentals (www.holiday-rentals.co.uk). This is a good choice for properties located in Europe or in vacation destinations that are especially popular with European travelers. Based in the UK, Holiday-Rentals is owned by HomeAway, the same company that owns and operates the leading U.S.-based vacation-rental sites (VRBO, VacationRentals, CyberRentals, GreatRentals, and A1Vacations).

Local Visitors Bureaus. The quality varies, but if there's a good visitors bureau for your area that includes an online listing as a member benefit, it's well worth considering. To find out what's available, check TourismBureaus (www.tourismbureaus.com). Or do a Google search for "visitors bureaus" (plural and in quotes), along with the name of your state, province, county, or city—whatever seems most appropriate for the place where your vacation property is located.

PetFriendlyTravel (www.petfriendlytravel.com). Some 69 million U.S. households have pets, and the vast majority of them wouldn't think of leaving Fido or Fluffy behind when they go on vacation. This is the best of several Web sites that specialize in listings for pet-friendly vacation rentals.

GreatFamilyRentals (www.greatfamilyrentals.com). This is a relatively new but very impressive, state-of-the-art site with a special focus on vacation properties for families traveling with children. In keeping with their "kid-friendly" mission, they've also created an annotated guide to recommended books and other resources for family travelers and vacation-rental owners who host them.    

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Note: We cover the topic of regional and special-interest sites in more detail in our Vacation Rental Secrets & Sources CD in an article entitled "Fine-Tuning Your Advertising Program." Click here for more information.  

Do You Have a Site to Recommend? We're constantly monitoring the "state of play" in the vacation-rental business—searching the Net, interviewing site owners and service providers, and reading a variety of print and online publications. But one of our best sources of information on what's good, what's bad, what works, and what doesn't—especially when it comes to vacation-rental advertising sites—is other property owners. If you have a site to recommend, one that has worked especially well for you, please let us know. And be sure to tell us where your property is located. To send us your recommendations, click here. 

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Making Your Listings Stand Out from the Competition

The objective for your online vacation-rental listings is to make prospective renters fall in love with your property. You want your text description and photos to be so good that they create what we call the "Wow Effect"—as in, "Wow, that's where I want to spend my next vacation! Let's call the owners and book it now, before the best weeks are all taken."

If the listings you've created for your property aren't producing this reaction and you're not getting all the bookings you need, here are some places you can turn to for help:

• How to Make Your Vacation Property Work for You!: The Quick & Easy Guide to Advertising, Renting, Managing, and Making Money from Your Second Home. Call it a shameless plug, but the fact is, our "seminar-in-a-box" covers the subject of how to create effective vacation-rental listings—listings that really sell your property—more thoroughly than any other book on the market. But don't just take our word for it. Click here for reader reviews and comments at our Web site. For more reviews, click here to visit our Amazon catalog page.
  
  We also do private consulting and "listing makeovers" for vacation-rental owners. For details about our Bookings Booster Phone Consultations, click here or call us at 215-736-1213.
  
  
• Plumley Drafting (www.plumleydrafting.com). Maybe what your listing needs to stand out from the competition is a professionally drawn floor plan. Our favorite source is Kathleen Plumley, who specializes in floor plans for vacation-rental properties. She'll give you the file in JPG format, so that you can upload it to your vacation-rental listings, just as you would an extra photo of your property.
  
  
• Photo Albums and Slideshows. Many vacation-rental advertising sites charge extra for displaying more than three or four photos of your property. And they typically limit you to a maximum of 12 photos. But using an online photo-sharing site like Flickr, Snapfish, Kodak EasyShare Gallery, or Shutterfly, you can get around this limit—for free!

Just go to one of these sites, create an online album with dozens of pictures, and make the album available for public viewing by setting the "sharing permissions" to "public." Then open the album and copy and paste the album link into an e-mail message. Send the message to the Help or Technical Support address for each site where you list your property, asking that they add it to your listing. (Most of the leading vacation-rental advertising sites allow links of this sort. VacationRentals.com is one exception.)

To see a linked online photo album in action, go to our listing (#7951) on VRBO, scroll all the way down the page, and click on the link for "More Photos of our Bucks County Cottage" (right after the Rates section). Pretty neat! 

Note: For more examples and step-by-step instructions for creating a photo album for your vacation-rental property, see the article entitled "Creating and Using an Online Photo Album" on our Vacation Rental Secrets & Sources CD.  

• Virtual Tours. Another surprisingly affordable option to consider—one that's used a lot these days by real estate agents for showcasing their high-end homes—is a 360-degree virtual tour of the property. Created from still photos that are then "stitched together" using special software, a four- or five-scene virtual tour will probably cost about $100 to $275, depending on how much of the work you do yourself. Once your virtual tour has been created and uploaded to a hosting site, you can link to it from your vacation-rental listing at any site that allows links.
  
  To view sample tours and service options, visit these sites:

CirclePix—Full-service virtual tours created from photos taken by professional photographers.

HomeTour360—Full-service and do-it-yourself options.

TheFull360VacationRentals—Full-service virtual tours and still photos taken by professional photographers, plus hosting on a vacation-rental advertising site devoted to vacation properties with virtual tours.

Creating a Web Site for Your Vacation Rental Property

Many vacation-rental owners with multiple properties or with homes in highly competitive markets—like Maui, Orlando, Aspen, and Cape Cod—supplement their listings on the leading advertising sites by creating personal Web sites for their properties. If you decide to go this route, here are some options and resources to consider.

Note: You'll find more on this important topic, including our picks of vacation-rental Web sites you can visit and use for inspiration in designing your own site, on our Vacation Rental Secrets & Sources CD. Click here for details.    

• Use a Web Authoring Program. For do-it-yourselfers, our preferred tool for creating Web pages is Macromedia's Dreamweaver. (The Toolkit CD that comes with our book/CD package includes a trial version.) If you're comfortable with Microsoft Word, you can learn Dreamweaver pretty quickly. In fact, you can create your Web site in Word and then import it into Dreamweaver to clean up the code before uploading it to your hosting service.
  
  
• Build Your Site with a Template. For those who need more handholding, there are products like GoDaddy's WebSite Tonight that provide step-by-step instructions and templates for single- and multi-page Web sites, along with reasonably priced hosting services. Be forewarned, though, that building a Web site you'll be proud of, even with a template, is likely to take more than an evening's worth of effort.

Here are several sites to consider if you want to try the template approach:

GoDaddy's WebSite Tonight
www.godaddy.com

Network Solutions' Do-It-Yourself Web Site www.networksolutions.com

Register.com's Do-It-Myself Web Site
www.register.com

SitePro Plus
www.siteproplus.com

• Professional Web Designers. We've saved the best option for last! For a one-time fee (ranging from about $400-$500 for a freelancer to around $2,500 for a big company like Blizzard Internet Marketing), you can hire a professional Web designer to create a site for you. Not a lot of money in the grand scheme of things, and the final product will be something you can proudly show to prospective renters.
  
  Here are several companies whose work we know and admire:

Aloha Vacation Rental (www.alohavacationrental.com)
Blizzard Internet Marketing (www.blizzardinternet.com)
Calico Communications (www.calico-com.com)
Relevant Arts (www.relevantarts.com)
TK's Web Services (www.tksvacationrental.com)
Web Design by Robin (www.web-design-by-robin.com)
Websites Hawaii (www.websiteshawaii.com)

Managing Your Vacation Rental Property

So far, we've talked mostly about resources for advertising vacation rentals. But what about all the management chores?

Many homeowners cringe at the thought of "firing" their property managers and taking over responsibility for handling the myriad details associated with vacation rentals—setting rental policies and rates, responding to inquiries, arranging for cleaning and routine maintenance, confirming reservations, preparing rental agreements, getting keys to their guests, collecting and paying sales tax, and refunding damage deposits.

On the other hand, they're also not crazy about forking over 20 to 40 percent or more of their rental revenue for property-management services.

The good news is that it really is possible to handle these things yourself if you follow our advice:

Tip #1. Don't reinvent the wheel. You can save yourself a lot of time, effort, and aggravation—not to mention embarrassing "newbie" mistakes—if you buy one or both of the books described above in "Getting Started as a Vacation Rental Owner." Naturally, we hope you'll buy ours, which you can do right here at our Web site by clicking here. But for just a few dollars more, you can also get Christine Karpinski's latest book from Amazon.com.

Tip #2. Offer an online availability calendar. Prospective renters like to see immediately whether the dates they want are available. You'll increase bookings and minimize the time you spend sending out "Sorry we're already booked that week" messages by using an availability calendar like the one offered free through HomeAway Connect (formerly Rentors.org).

The neat thing about the HomeAway Connect calendar is that you can use it on all the sponsor sites (VRBO, HomeAway, A1Vacations, CyberRentals, and GreatRentals) and a number of other sites as well. That means that whenever you take a reservation for your property, you can update one calendar and the changes will appear in your listings at all those sites—a real timesaver!

Tip #3. Get approved to accept credit cards. Your renters will appreciate the convenience associated with paying by credit card. But you'll also find that accepting credit cards makes your life much easier. Instead of waiting for rental deposit checks to arrive by mail (and then waiting even longer to make sure they clear the bank), you can process payments immediately and see the funds in your checking account within just a few days.

HomeAway Connect (formerly Rentors.org) offers a Credit Card Merchant Account Program specifically designed for vacation-rental owners. Another good choice, with very competitive rates and top-notch customer service reps who know the vacation-rental business, is eCom Merchant Solutions (888-277-3332).  

Tip #4. Establish relationships with a good CPA and real estate lawyer. They can help to ensure that you're in compliance with tax laws and the various rules and regulations governing vacation rentals, which vary from one state to the next. You'll almost certainly be required to collect and pay sales tax to one or more jurisdictions (city, county, and/or state). Ask your lawyer, or visit HotSpot Tax Services (www.HotspotTax.com) and read about their tax-filing service. It gets high marks from vacation-rental owners.

Tip #5. Consider using a PC-based or online booking and rental management tool. There are several software packages and Web-based services designed to help vacation-rental owners manage the booking process, and a number of others are in the works. Of the ones available now, these four consistently get excellent reviews from property owners:

Vacation Rental Management Software
Vacation Rent Pro (www.vacationrentpro.com)

Web-Based Rental Management Services
VRConnection Rental Management (www.vrconnection.com)
RentalBot Property Management (www.rentalbot.com)
iVacationOnline Reservation System (www.ivacationonline.com)

Insuring your Vacation Rental Property

Vacation-rental property insurance is a niche market. So don't be surprised if your family insurance agent isn't thoroughly familiar with this "product." But don't let that stop you. If you own a second home that you rent to others, you absolutely must have adequate and appropriate insurance.

Take personal liability coverage, for example. The homeowner policy for your primary residence almost certainly includes liability coverage. But the upper limit—typically around $300,000—may not be enough when you're renting your second home to vacationers. That's why many owners boost their liability coverage by getting an umbrella policy (also called excess liability coverage). This will give you an added layer of protection—$1 million to $5 million—should a renter be injured on your property and decide to sue. The cost will probably be about $200 to $300 a year.

In addition to liability insurance, you'll need coverage for the structure itself as well as the contents of your rental property. Depending on the location, you may also need to consider coverage for "perils" like floods and earthquakes that aren't covered in the typical homeowner policy.

You probably don't need coverage for additional living expenses, a standard provision in most homeowner policies to pay for temporary housing while repairs are being made to a damaged home. But you may want to ask your agent about business interruption insurance, which would reimburse you for lost rental income if your property has to be taken off the market for some period of time.

Here are some other important tips about buying and saving money on vacation-rental property insurance:

Start with your family insurance agent. As the Wall Street Journal notes, "Most primary-home policies include some coverage for a second home." Your primary insurer may charge you a lower rate for the new policy because you're already a client. SmartMoney.com reports that "By insuring your second home with the same company, you should be able to save 5 to 10 percent. Also, be sure to ask about the industry's relatively new "package policies" that "handle two or three homes, a couple of cars, umbrella liability coverage, and even a boat in one document."

Get two or three quotes. Ask the real estate agent who sold you your second home to recommend an insurance agent familiar with the needs of vacation-rental owners where your property is located. You might also contact one or more of the companies listed here, all of which have gotten favorable reviews from vacation-property owners we know:

AAA (www.aaa.com)
Allstate (www.allstate.com)
Cascade Risk Placement (www.cascaderisk.com)
Chubb Group (www.chubb.com)
James Wolf Insurance (www.jameswolf.com)
Nationwide Insurance (www.nationwide.com)
State Farm Insurance (www.statefarm.com)

Help the agent assess your property's risk exposure. That's insurance industry jargon for "What's the likelihood that we'll have to pay up?" The more you can do to reduce an insurer's perceived risk exposure, the lower your premiums will be. So, how many weeks will you be renting to vacationers? How many weeks will you or a friend or family member be staying there? It may be counterintuitive, but insurance companies generally like to see your property occupied for as much of the year as possible. Why? Because an occupied property is less likely to be vandalized or burglarized, and a human being on site can stop or prevent damage from fire, frozen pipes, and other "perils."

Ask about discounts. If your property is equipped with an alarm system that detects fire, excessive water in the basement, and intruders, you might save as much as 20 percent. Proximity to fire hydrants or a stream, lake, or other water source accessible to the local fire department might result in savings of up to 25 percent. Deadbolts on all the doors are another premium-reducing feature, as are storm shutters and roof reinforcements for properties in coastal areas. And if your second home is in a gated community, you can expect a 10 percent discount.

Avoid small claims. We have three suggestions here: 1) Put fragile and irreplaceable items out of harm's way in your owners' closet. 2) Give your guests an incentive to treat your place gently by collecting a damage deposit of several hundred dollars. Check other vacation-rental listings to see what's customary for properties like yours and set your damage deposit accordingly. 3) Most homeowner policies carry a $500 deductible. By boosting it to $1,000, you can save as much as 25 percent on your annual premiums.