Santa Barbara Property Rental Market, Scenario 3:You own investment property in Santa Barbara and live elsewhere. You might visit Santa Barbara once a year or for the winter or summer. Your property management company is charging 10%, but they are not getting enough rent money after maintenance and their fees to cover your mortgage payment. They may be getting enough to cover your expenses. You are not there to see that the property is being well maintained. With Vacation Rentals, the hospitality industry demands that properties be thoroughly cleaned, maintained, and fully functioning prior to your guests’ arrival. With vacation rentals your guest fees surpass monthly rent, even though you pay higher marketing and booking fees (20-25%) and incur some value-added expenses; you will be ahead in the following ways:
Vacationing guests are happy guests and take better care of property.
The hospitality industry does not operate under lease law.
Homes are thoroughly cleaned before and after each guest.
Everything must function at all times, homes are well maintained by necessity.
Guest are short term, and potential damages are limited.
Damages can be deducted from credit card if necessary.
No smoking, and no pets rules can be instituted.
Security locks are installed, and security is changed before and after each guest.
Property is inspected thoroughly several times each month.
Book your property for yourself, friends, or family and you don’t even have to clean it when you leave-just pay the cleaning fee..
Vacation Rental Math:CASE STUDY, Colorado: As a desirable vacation rental, your property rents for $695 a week in the Colorado market and is 75% full. (In this soft market, you normally lease for about $795 a month, with the house standing empty 6 -8 weeks a year.) Your vacation rental monthly income at $695 a week is now $2780 a month. You’ll pay out of that $278 a month in additional expenses. Your net income is now $2502 a month. Figuring in the weeks it might stand empty (75% of the time) you are now at $1876 a month. Taking a 25% commission from that amount nets you a monthly incomes of $1407. Annual income will be $16,884.00 . . . in a soft market! But wait . . . what if the following year the commission was reduced to 22.5%, but your home was 80% full? Your rental income is now $18,008 the second year. Did you follow that? This is your rental property in a soft market. And this includes 20% vacancy!These are real figures in Colorado. We have done this for 3 homes, for 3 years in different price ranges and various locations. For a ballpark idea, multiply the income roughly 3 times for Santa Barbara Properties. Better yet, call me for a Vacation Rental Analysis (VRA) appointment to get a better idea what is possible for your property. Or you may e-mail for an information sheet.Santa Barbara Property TransformationCreating a marketing plan for transforming a property into a vacation rental includes adding value, and marketing it to a specific market in smaller increments. You will market it in by-the-week units, rather than wholesaling a 1-year lease, as in traditional property rentals. It’s like buying a case of Cokes at Costco, where each 12-ounce can costs only $.25. But if you buy through a vending machine the price will be a dollar (added convenience value); or if you buy the same Coke at a San Diego Chargers Football game it will be $3!Transforming Santa Barbara Real Estate into vacation rentals involves imagination, creativity, resourcefulness, marketing strategy, and expertise. It may involve furnishing and decorating, creating a reservations contract, operating a reservations line, accepting credit cards, marketing properties online, maintaining websites and listings, even internationally. There are cleaning crews and maintenance crews to manage. Ideally, this process should be started in December to January as marketing for the best summer booking opportunities start in January!Your Santa Barbara property will be marketed to a unique market segment–the hospitality industry, to include those who are vacationing, relocating, visiting friends and family, are involved in competitive athletes, waiting for a home to be built or bought, or professionals on business trips. A good VRA (Vacation Rentals Analysis) will give you an idea of what is involved and what, if any, potential your property may have as a vacation rental.