When Your ‘Flip’ Flops: 5 Tips for Offering Your Investment Property as a ‘Vacation Rental’

 Print Article

By Alfred and Emily Glossbrenner

RISMEDIA, Nov. 10, 2008-You remember the news stories: People buying condos in Florida, Nevada, California, and other hot markets and “flipping” them for a fat profit before even a single spade of earth had been turned. Then everything went crazy, and hundreds of thousands of investors were stuck with new bricks-and-mortar properties that no one would buy.

Fortunately, for many, there’s a very palatable alternative: offering those properties as vacation rentals or “VRs.”

As hard as it is to believe, there may be a silver lining to the current turmoil. First, people will always take vacations. But now they’re more likely to stay on U.S. soil. Second, with their full kitchens, washer/dryer laundry rooms, swimming pools, and other amenities, vacation rentals not only offer much more space than a hotel, they are much more economical. There’s no need to ever take the family out for an expensive restaurant meal, for example.

And there’s more good news. General awareness of the vacation-rental lodging option is growing. The leading Internet VR advertising sites were set up around 1995. Ten years later, in 2005, venture capitalists raised over $200 million to buy them all up. They established a company called HomeAway, and began a major campaign to promote public awareness of the vacation-rental option.

So, how can you catch this wave and ride it to pay your mortgage and expenses while you wait for the real estate market to come back, as it always does?

Here are five tips to get you started:

Study the competition. Two of the best places to do this are HomeAway (www.homeaway.com) and VRBO (www.vrbo.com). Look at listings for VRs in your area to get an idea of what they offer and how much they charge.

Take lots of great photos of your property. Note: No people in the pix, please! Make it easy for your prospective renters to visualize themselves in the scene. And be sure to “dress the set” the way professional photographers do, with an arrangement of colorful flowers on the coffee table, or a dining table set up for a family dinner.

List your property on the leading VR advertising sites. For starters, we recommend HomeAway and VRBO, because they’re the most popular and get the most Web traffic. Total cost: less than $600 a year.

Run your VR like a business. Build a team of reliable cleaning and service people, collect and pay local and state sales tax, get set up to accept credit cards, maintain an online availability calendar, and always respond quickly to inquiries from prospective renters.

Remember: You’re in the hospitality business. Think of yourself as a host and your prospective renters as guests. With this mindset, you’re sure to be successful as a vacation-rental owner.

This is unquestionably a sound strategy for holding on until the real estate market turns. But you may get hooked on the financials. And with prices currently depressed, you might find yourself buying additional properties. You might just be trembling on the cusp of building yourself a mini-real-estate empire! (We know people who have done exactly that.)

About the Authors: Alfred and Emily Glossbrenner are experienced vacation-rental owners and the authors of How to Make Your Vacation Property Work for You! They also own and operate FullyBookedRentals (www.fullybookedrentals.com), a membership website devoted to helping other vacation-rental owners advertise, rent, and manage their properties effectively and profitably.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.