Why vacation/extended stay rental versus long term rental?
It always depends on the property, the owners use and economics. We manage both types of property and always try to make recommendations to owners and the best solution for their property.
If you have property value investment that justifies the current market rent rates in your area it may best suited for long term rental. A good rule of thumb is if your property can generate enough long term rent after expenses to pay for the property over ten years it may be a better long term rental. A typical management fee for long term rental is 10% of gross rent.
If it’s a higher valued property you typically cannot generate enough long term rental demand to justify the investment. You may want to consider vacation and extended stay rental. Location is the most important consideration to determine if the property is suitable for vacation and extended stay rental. Typically properties that are located on lake are bested suited for vacation rental and properties located close to large business centers are best for extended stay rental. Again the revenue generated by vacation and extended stay after expenses should generate enough rent to pay for the property over ten years. A typical management fee for long term rental is 25% of gross rent.
Many vacation home owners purchased their property for personal use but are also interested in defraying some expenses through partial vacation rental. This scenario can work but it is important that the owner understands that if they want to use their property a lot during the peak season (May – September), they will collect a lot less rent.
Extended stay rental makes a lot of sense when the property is located close to large business districts. The property can be rented for weeks, months and years depending on the client needs. It usually is individual clients and corporate clients that rent the property. Individual clients typically rent for weeks and months versus corporate clients rent for years. Individual clients pay a higher rent premium but the property has lower occupancy versus corporate clients have higher occupancy but lower rent.
The key advantage to both vacation and extended stay rental is that the property has regular inspection and maintenance. This ensures the property is always in good condition. This disadvantage is that it requires an upfront investment in setup and furnishing the property and ongoing marketing and reservation management.
The key advantage for long term rental is predictable rent. The disadvantages are that the property cannot be used by the owner, the maintenance is only based on the renters request and inspection frequency is regulated by state law.
Will my cottage make a good vacation rental cabin?
It depends. Size, location, and amenities are very important when deciding whether or not your cabin will make a good vacation rental. Try to imagine yourself renting a cabin for your yearly vacation and what would appeal to you. We are happy to preview your property and offer our expert advice on if your cabin would make a good vacation rental. If your cabin isn’t quite ready for rental we can make suggestions on ways to make your property more appealing to vacationers.
How much will my cottage rent for?
This is probably the most common question we get and it’s also the hardest question to answer initially without previewing your property. There are many factors that go into determine the rate structure. We are happy to visit your property to recommend pricing suggestions and options. You may also want to look for comparable homes on our website as a way to determine a similar property and pricing structure.
How many weeks can I expect my cottage to book throughout the year?
The Twin Cities offers many things to do during all seasons of the year. Visitors come to the area to shop, attend a sporting event, concert or theater production, see family and friends, etc. Many visitors prefer to stay in a furnished home vs. a hotel. You can expect year round reservations. It may take a couple years to establish a good repeat clientele’ for your cottage at which point, with a high occupancy %, we would likely increase your rates. The busiest travel and vacation months in the twin cities are usually from May through October.
If I rent out my cottage, can I still use it?
Of course! Most of our cottage owners will use their cottage only when it is not booked during the year. We are happy to work with you on a schedule that works well for you and also maximizes revenue and occupancy when you are not using your property.
Are renters hard on the cabins?
We strive to find a qualified customer base that will treat your cabin with care and respect just as if it were their own cottage. The majority of our guests are families in search of the same privacy and amenities that appeal to you the owner. You should expect normal wear and tear over the years; damage of any type is extremely rare, however, we charge guests a damage and security deposit upfront just in case.