By Joanne Cleaver
RISMEDIA, May 30, 2008-Anybody who stays at Kevin Wozniak’s house on the shores of Lake Tichigan has a sweeping view of whatever’s happening on the water.
Those views of sunsets and fireworks are a big draw for renters, and Wozniak needs plenty of them: He has been trying to sell the house for nearly two years and counts on rental income to keep up with the mortgage, maintenance and utilities.
The house was occupied for 80% of last summer, and Wozniak has his fingers crossed that this summer’s rent receipts will continue to keep him afloat. “We’re squeaking by,” he said.
Wozniak never intended to own a vacation house; the demands of his growing family led him and his wife to build a new house, and they put the lake house on the market just as it soured.
Highly leveraged second-home owners are especially vulnerable in this seemingly intractable housing slump. They need rental income to cover the carrying costs of the house, but if their house isn’t in a convenient location close to a big city, the owners may have difficulties attracting enough vacationers, as high gas prices and general economic worries trim vacation plans.
Investment analyst Dennis Gartman, publisher of The Gartman Letter, predicted in April that overleveraged second-home owners would start to run into trouble this summer if their cash flow slowed because of fewer renters. Banks didn’t care about eroding home values as long as the owners could cover their carrying costs with rent, but if rental income comes up short, there might be a wave of vacation-home foreclosures, he speculated.
This year’s vacations are likely to be shorter and closer to home, according to a national survey conducted by Ipsos Public Affairs for Access America, a travel insurance company.
It found that of the 33% of Americans who intend to take vacations, 48% are scaling back their plans, often by staying closer to home and taking shorter trips.
Teri Chamlin of Morton Grove, Wis., reports that bookings are slow for her Lake Delton house _ the slowest in the four years she has owned it.
“Prices haven’t gone up, but now we’re advertising a gas allowance,” she said. People are asking about half-weeks, too. She asks $2,700 to $3,200 a week for the house, which sleeps 10.
The pattern of rental interest is mixed, according to HomeAway.com (www.homeaway.com), an Austin, Texas, company that rents vacation homes through a number of websites.
This year, HomeAway lists 200 rentals in Wisconsin, 32% more than last year at this point. Those rentals have generated 69% more inquiries. As a rule of thumb, every 10 inquiries translates to one booking.
Lake Geneva, a traditional destination for Chicagoans, is also an easy drive. Homeway lists 54% more properties there this year, and 160% more inquiries.
For Wisconsin Dells, properties are up 93% and inquiries 182%. And for Door County, properties are up 27% and inquiries 25%.
The increase in owners looking for income from their houses is as much about the slow housing market as it is about the ease of finding renters through online booking sites, says Justin Halloran, vice president of HomeAway.com. The service charges homeowners a $299 annual fee.
High gas prices will only help Walworth County and other close-in destinations, says Sharon Clark, director of Keefe Resort Rentals, a Lake Geneva-based service that represents 70 properties.
So far, demand is “up slightly” from last year at this point, reports Clark. Keefe takes 30% of the rental income for its fee. Rentals on Geneva Lake itself are always scarce and pricey-up to $35,000 a month. For other Walworth lakes, lakefront houses rent for $7,000 a week, while a two-bedroom family condo with access to lake amenities goes for $1,400.
The houses that Keefe represents are investor properties, and rental agreements aren’t threatened by shaky owner finances, she adds.
Wozniak has added a deposit-return clause to his contract to placate renters worried that the Lake Tichigan house will sell before they get their week in it. He’d gladly return deposits if the $389,000 house suddenly sold.
In the meantime, weeks are filling fast. “One renter said that they usually go to the Dells, but this house is half the distance and half the gas,” he said.
Renters: Make Sure Things Are Clear
Renters are always concerned that the house they’re getting isn’t as nice as the house they saw online. Problems can multiply from there, especially if a homeowner’s finances are stretched thin and he’s skimping on maintenance.
Here’s how to keep an owner’s problems from ruining your vacation:
– Get a written contract. Don’t rely just on an e-mail confirmation that you’re booked for that week.
– Ask specifically about amenities that are important to you: baby-proofing, linens, in-house laundry facilities, off-street parking.
– Guarantee that those amenities are part of the deal by adding them to the contract.
– If you can, visit the house before signing the contract.
– Ask what’s included in terms like “fully equipped kitchen.” To one person, that may mean a microwave and plastic plates; to another, it may mean enough gear to cook and serve a three-course meal.
– Ask how and when the unit is cleaned, and if it’s cleaned by professionals. If you want maid service, ask for the name of the housekeeping company and arrange for its staff to come by during your visit.
– Your deposit is vulnerable if a homeowner is having financial problems. Some reservation services, such as HomeAway.com, offer free insurance that will reimburse you for a ripped-off deposit.
© 2008, Milwaukee Journal Sentinel.
Distributed by McClatchy-Tribune Information Services.