If you are considering buying an investment cabin and have decided to put it on a rental program, the next decision you have to make is whether you want it to be a Vacation Rental by Owner cabin.
You might be wondering, why would cabin owners choose to go to all the trouble of renting the cabin out themselves? It’s a great question, and one that we are often asked. Potential buyers wonder aloud, “Does anyone succeed at Vacation Rental by Owner?”
The short answer: sometimes our cabin owners are incredibly successful at “Vacation Rental by Owner” (VRBO), but other times it is a dismal failure.
Vacation Rental by Owner is certainly not for everyone, but for the select few who bring it all together it is a fantastic opportunity to garner a huge portion of the rental proceeds. There just isn’t a better way to benefit financially from the ownership of a rental cabin. You collect 100 percent of the proceeds, which means no paying a rental company to advertise, manage, book, coordinate with the guests, arrange the cleaning, maintain the cabin, collect the rental revenue, change the locks, or collect when a cabin owner damages or steals items. However, you must be ready to administrate those tasks yourself. Of course, there are costs associated with these tasks even with Vacation Rental by Owner, but compare that to the rental company splits, which are commonly 40 percent to the rental company and 60 percent to the owner. So as the owner, you can spend quite a bit on management help and still come out pretty far ahead as long as that cost stays below 40 percent of the gross income.
Here is what we have observed with Vacation Rental by Owner cabins.
1) Those who succeed have a certain attitude and personality. The key is to see your cabin as an investment, a way to increase your income. Those who aren’t successful see their cabin as their personal second home: their furniture is being scratched, their beds are being slept in, their couches have people they don’t know curled up on them eating popcorn (or worse, chocolate sundaes). If you heart sinks when you think about someone getting into “your” bathtub, VRBO probably isn’t for you. If on the other hand you love company and struggle to meet a stranger, or if you can’t find the lint in your own home for all your children’s and friends’ suitcases, then you probably can handle the relaxed approach necessary for successful “VRBOing.” The winning attitude here is “laid-back, business focused, proactive, positive, and quick to respond.”
2) Successful rental owners don’t mind answering the phone or emailing multiple times during the day. In order to book your cabin you need to be accessible at all times. When renters are online looking for a vacation spot, they have questions. They want to know if you are near such and such place, and will usually move on to another cabin if you don’t respond with less than a day. Many times minutes matter!
3) Successful VRBO cabins have owners who love and care for them as though it they were living there themselves. These cabins aren’t just a business as the successful Vacation Rental by Owner will attest. VRBO’ers want vacationers to love, love, love their stay in the Smokies and they see their cabin as a big part of the adventure. So, they go the extra mile. They wash the windows. They have linens that are high end. Their décor is fresh and whimsical with sparks of creativity sparks seen everywhere. They stay in their own cabin when it’s not being rented, and pay attention to the details while they’re there. These cabins don’t have a corner chair that is missing a light to read by. You won’t find a missing shelf in the bathroom for traveling toiletries. There are pans in the kitchen for cooking brownies, a colander for draining spaghetti. The renter knows these extra touches are because someone cares and it shows! So those renters not only come back but they also leave great remarks online, and thus, the Vacation Rental by Owner cabin owners are successful.
4) They manage their income from the cabin as they would in any other business. Successful VRBO’ers don’t overspend on items that will not generate more “rental bookings.” Having a high end luxurious cabin doesn’t mean spending money on European imported antiques, art or fine china. Heaven knows the Smoky Mountain cabin vacationer is looking for Smoky Mountain downhome amenities like bubbling hot tubs, a view of the sunset behind the mountain in a distance, a swing to curl up on, and a rock fire pit to roast marshmallows and make smores from their childhood. Take your cue from Dollywood theme park, where vacationers remember “Pappa’s Place” and celebrate their roots.
Also remember, the items required to be successful at Vacation Rental by Owner include:
- Strong Marketing of the Cabin
- Responsive Communication with Potential Renters
- A good accounting system, billing, collecting
- Managing a good maintenance and cleaning crew or individuals
- Keeping your cabin outfitted and decorated
- Troubleshooting problems your guests maybe having
That’s all for today. Last month, I discussed some common questions we are asked about renting cabins versus keeping them for personal use, so be sure to check that out if you missed it (or just want a refresher on the subject!).