Look at your weekly rates (Based on Christine Karpinski's "17 Week Rule"):
Determine exactly how many weeks you can realistically rent out the property. First on a weekly basis, and then with a combination of weekly summer rental and monthly winter rental. Be aware that discounting weeks you might initially consider as "out-of-season" in favor of a winter rental could actually be causing you to lose money. A clever and creative promotion could extend your rental window and draw enough weekly revenue around select holidays to avoid the need of a winter rental (less wear and tear and, in essence, less upkeep and repair costs).
Once you have a number of weeks, divide that into the sum of your monthly mortgage including expenses multiplied by twelve. This will equal the amount to aim at charging per week on average in order to break even.
Example 1: No winter rental - 15 weeks (10 summer weeks, Thanksgiving Week, Valentine's Day Week, Memorial Day Week, and Labor Day Week) and total monthly expenses of $2458.00
$2458 X 12=$29,496.00 divided by 15 weeks = $1966.40 (average weekly rent to break even)
Example 2: With winter rental - 10 summer weeks plus 8 months of winter rental and total monthly expenses still $2458.00
$2458.00 X 12=$29,496 divided by 48 weeks (full year minus four weeks for owner/maintenance) = $614.50
Seems much easier to maintain the smaller weekly rate, but there's a caveat. The winter rental market for your area may only support an $1100 per month rental charge, and suddenly you are averaging only $275.00 per week. Let's say that is the case, and for 38 weeks out of the year you have earned a total of $10,450.00 (monthly rent of $1100 multiplied by 38 weeks or eight months). So the remaining 10 weeks of summer rental need to be rented for $1904.00 per week.
$29,496.00-$10,450.00=$19,046.00 divided by 10 weeks=$1904.60
When you have no winter rental tenant, the property is free for owner getaways, and who knows... someone might just refer their business traveler friend who needs to hole up in your town for a couple of weeks in February. That's two weeks of income above and beyond your formulated weekly rate, which - if you've set your rate correctly - is pure profit.
Have a targeted marketing plan and budget
Owning a vacation rental home is a business and every business should have a detailed marketing plan - a document which details where the business will get business, and ultimately, get paid. When you know exactly who wants to rent your property and where to find them, you to set up a steady stream of tenant prospects waiting for your property to become available to them.
The best business is repeat business
As mentioned above, you never know when someone may call and say, "I'm a friend of so-and-so and she said your vacation rental is just the best and..."
Repeat guests had a positive and memorable enough experience to want to stay in your property again. Besides the higher chance of referrals and the free advertising, repeat renters require less maintenance and you already know what to expect from one another. Get feedback, particularly when something has changed, to stay up-to-date on your guest's needs and satisfaction.
There are other ways to maximize revenue through occupancy and retention. Please comment on your ideas for maximizing return on investment in vacation rentals.
Anita_Rumow
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