No doubt about it, vacation (short-term) rental bookings are slowing. It’s time to hire a property manager now. Why? because no one is watching over your property when it’s empty. What happens when your insurance company wants to know about vacancies and who is managing the empty property?
Bad people know that the vacation rental market is undergoing a major change. They can enter your vacation rental and wipe you out. The pipes can freeze and flood your property. A storm or hurricane can pass through, how would you know the chairs are not down the street?
It’s always a good time to hire a property manager but it’s more important when there are no guests there. Short-term rentals should have a rental property manager in the local area. Property owners who have been managing their property from three states away are risking everything.
It’s one thing when the occupancy rate is high enough to rely on the cleaner to report issues to you but no rental income means no cleaner.
Tech based property managers
It seems that there is no end to free money. Investors are pitched by a start-up that can manage vacation rentals from 10 states away. There is no replacement for an onsight, local property manager, and many who have tried these services change.
How can a person working from home or an office tower spot a water leak in your house outside? How about when the police are called to settle guest issues? Not to mention that many communities are moving to a requirement for local property managers. Read this article on our ChristiesGulfBeachRentals.com site about this topic.
Take some steps if your property is not producing enough income
Short-term rentals are not producing enough income for many these days and that means taking some steps to protect your investment. A property management company can rent your property on a long or short-term basis. Vacation homes are good properties for people who will be staying longer, perhaps on a full-year lease.
Long-term rentals are still in demand in many areas with lots of short-term rental properties. As a real estate broker, I am seeing many short-term rental properties coming to the market for sale as fully furnished. Many people bought a second home during COVID and then turned it into a vacation rental to cover the cost.
You need to hire a property rental management company if you want peace of mind that your property is being taken care of and maintenance issues are addressed, Gulf Coast Property Management including Christie’s Gulf Beach Rentals is accepting more properties to manage due to the slowing rental business. during the slow season and more often when properties are booked. Rental management companies should be visiting the properties at least once each month
Odors tend to accumulate
Odors tend to accumulate when a property is not rented for a long time. The property needs to be aired out and in some cases, the hot water flushed to avoid that sulfur smell. The local property manager can make sure that before a storm anything that can fly away is tied down, chairs are stored, etc. After a storm, they will visit and be sure there is no damage.
A good case in point was during the last hurricane on the Mississippi Gulf Coast a couple of years ago. Gulf Coast Property managers visited all rental properties and assessed damages. Several properties required some work to repair minor damage. This work was ordered by the managers and supervised. The owners were out of state.
Your property is susceptible to things
Vacation rental properties are susceptible to many things including but not limited to the:
- Insect infestation includes wasps, roaches, ants,, etc.
- Water leaks and damage from frozen pipes
- Wind damage from strong winds or hurricanes
- Theft, break-ins
- Landscaping, mowing the lawn cutting weeds
- Insurance inspections
- Damage from other properties
- Flooding
- Homeless moving in
- Utility company disconnecting due to unpaid bills
- Trees or branches falling on the house
The above is just a start and the longer that property goes without guests the more potential issues can be found. Your property management team can help to prevent some of the above and mitigate for other items. Generally, rental property management fees for short-term rentals are a percent of the total revenue. What happens when a property management company is responsible and they are not earning any income?
Agreements usually require owners to pay a minimum fee in any month where there is no revenue. Christies charges $50 for such months. Fortunately, there are not many and they are usually in the off-season.
Management fees are a small price to pay
It’s a small price to pay rental companies to put eyes on your property on a frequent basis when you are several states away. The short-term rental industry is in transition as I mentioned above. If you own vacation rental property it’s time to understand that vacancy rates of 2020 and 2021 are not likely to return in the near future.
If that monthly rent income was critical to your ability to retain the property and you are not getting enough, it’s time to do something else.
There is no question that the vacation rental industry will correct itself as people settle into higher inflation and arrange finances to take vacations. Market demand will increase and the number of rental owners will decrease. Short-term vacation rentals are suffering from an oversupply of properties and a reduced number of potential guests.
More rental properties are being sold
There are of course two ways to correct the situation. More rental homes must come to the for-sale market as single-family primary homes and the economy must improve to stimulate more demand.
Owners who have been reducing their nightly rates are not seeing a pick-up in rentals. As I mentioned, it’s not the cost per-se since the vacation properties represent a portion of a vacation budget.
Lowering the price does not fix the issue. You can improve your advertising which may bring more to your property and do a few other things to improve the guest experience. In the end, you will probably not see that extra income you need. The bottom line is that it will take time to right the situation.
Real estate investors need the assistance of a vacation property manager to make sure that among other things property maintenance is occurring as needed. Don’t get excited when you see a sizable increase for spring break or during the high season.
A good short vacation rental season does not mean a turnaround
This does not mean that the economy and situation are making a turnaround. Similar properties will experience the same activity at the same time. A good example is Mardi Gras on the Mississippi Gulf Coast. With a fairly dead winter in 2022-2023, all of Christies properties are fully booked for Mardi Gras in mid-February. In fact, friends of mine who own many properties are trying to find accommodations for people who are overbooked. Every property seems to be filled at the same time.
This is not a sign of a turnaround. I fully expect that there will be some big blips on the radar where you may think things have turned around. They will absolutely but this is not the time yet.
Vacation rental properties that are doing the best are ones that have been on the market for several years and have lots of direct bookings. Repeat guests accumulate after years of experience and contribute to keeping income higher. A property with 20+ good ratings will more than likely be rented before one with two or three particularly now when there are so many choices.
A great way to improve the situation for your property is to hire a property manager who has their own website. Their websites help to advertise what a great vacation rental property you have. Their sites can offer additional revenue services that are not available on the third-party sites such rental of bicycles etc.
Using social media can help
Christies Gulf Beach Rentals for example uses its website to advertise free vacation rental insurance when booking direct on the website. Properties are also pushed out to Facebook and other social media.
There is a small benefit from lower occupancy. You will have time to make repairs and upgrades without trying to squeeze them into the calendar during a busy season. Slower seasons are when you can do this work.
Consider that many people who have been working on vacation rental properties need work due to the number that has been sold as permanent residences. A good independent contractor can be found more easily now than during the previous year when bookings were stronger.
Maintenance when it is slow
Your property manager can help find people to work on your property. The best time to complete work is before peak season. Your rental manager may cost a few dollars but protecting your property and insure the right person is watching over your passive income investment is the correct thing to do.
In Mississippi where Christies is located, the state requires that property management companies have a connection with a licensed real estate broker. This requirement helps to ensure good customer service as people can complain to the real estate commission if there are unresolved issues.
Full-service vacation rental management
As an example of the services that a full-service investment property manager can do for you, the following is offered by ChristiesGulfBeachRentals.com:
- Full-service vacation rental management including cleaning managing guest communication
- Schedule and hire contractors for repairs and maintenance
- Meet with the city and obtain a permit when required
- Respond if there is an incident e.g. party
- Make sure the trash is taken out and brought back in
- Provide a full guest book loaded with tips and rules
- Set up a new vacation rental from ordering furniture to decorating
- Removal of furniture for storage
- Offer a short-term rental for a long-term rental including finding a tenant
- Coordinate with Logan-Anderson Gulf Coastal Realtors to sell your property
- Locate through LAGCR a suitable vacation rental property
- Communicate with prospective renters through drip emails
- Offer a full-service booking site (website) for booking and looking up restaurants etc.
- More
Of course, some of the items listed above are offered for fees that vary with the request. Typically Christies charges a 15% fee (of the gross revenue after the cleaning fee) to manage the property. The cleaning fee goes to Christies to cover the cleaning expenses which are paid directly by the guests.
As you can see, Christies does it all. If your property is located in different states, the property manager you locate should be able to do much of what is listed above.
You have options for your vacation rental
You do have options regarding your property. If you can afford to maintain your mortgage payment, utilities, and the property management fee during the slow time, by all means, retain your property for rental purposes and visit on occasion.
The value of your property will increase over time compensating you in part for a shortfall in rental revenue. A word of advice. Don’t let relatives and friends use your property without charge. There is a cost to maintain your property including the following:
- Mortgage Payment
- Property taxes
- Property insurance
- Flood Insurance
- Electric utility
- Gas utility
- Water Utility
- Landscaping
- Wear and tear on everything from flooring to sheets
- Cleaning cost
- Maintenance
- Use of funds to acquire e.g. downpayment
- Property management fee
- Loss of income if someone else could have rented it
Christies encourages friends to rent
If a friend or relative wants to use your property and we strongly encourage this. Have them contact the property manager to make reservations. The way Christies handles this is to provide the property owner with a discount code and the friend goes to the website to book.
The discount code may be for any percent of the gross but does not apply to the cleaning fee which must be paid. This way if your cousin wants to use it at a 50% discount they can. As I mentioned above, it’s a great idea to put your property on Facebook and other social media so that people who know you will rent it. Even offer them a 10% discount.
Check back at ChristiesGulfBeachRentals.com and GulfCoastPM.Com for more articles on this topic. If you own property on the Mississippi Gulf Coast please contact us, we would love to work with you. Thanks for coming to our website.