I’ve been musing on the growth in the vacation rental industry over the past few years after coming across an article in an online travel magazine written in 2010.  The article addressed an issue known as SNAD that describes rental properties that are ‘significantly not as described’ and says it is a debunked myth, because research shows such occurrences are rare.  That is good to know because only two years earlier I wrote a blog post highlighting SNAD as a concerning challenge facing the industry.  It seems that the honesty shown by the majority of owners is being rewarded by trust and confidence by the traveling public.

Honesty cuts both ways

You can look at this from both perspectives.  Guests want owners to be honest in their listing descriptions and photographs.  They anticipate what they will find in reality will match the expectations raised by the advertising and there will be no unpleasant surprises created by non-disclosure.  It makes sense that owners won’t misrepresent their property  – with so many avenues open for guests to publish reviews, the risk that omissions will create negative feedback is usually enough to ensure open and honest representation.

On the other hand, owners want their guests to reciprocate with upfront information on their rental group; to be truthful about how many people will be there and to respect any restrictions imposed, such as pet or no-party policies.  They trust their guests will be who they say they are, look after the property and leave it in an undamaged and presentable condition, which should not be too much to expect.

A relationship of trust and confidence

Renting a vacation home is very different from booking a room in a hotel from a faceless organization.  It mostly involves a relationship between owner and guest that depends on sincere and open communication.  I’ve rented out seven of my own properties over the past decade and rented scores of vacation homes during that time, and can vouch for the process.  Where there’s been discussion with the owner or rental guest, questions asked and answered, and problems resolved, the experience has generally been first class.

The Tourism-Review article suggested several homework activities guests should do prior to parting with money – this was one I liked.

Give the property manager or homeowner a call. Ask a ton of questions. If they do not give you the warm and fuzzies…then keep looking. There are plenty out there who will.

As an owner I like to give my potential guests a good feeling – call it ‘warm and fuzzies’ if you will, and if I get the same buzz back, I’m pretty confident the relationship will work.  That’s been successful for me – I hope it is for you too.

Back in the spring I got the bug to buy another vacation home.  The current one, Osprey Cottage, has fulfilled its potential as far as occupancy is concerned and there is not much more we can do to create more income from renting it out.  We seem to be doing just about everything right so the time seemed perfect to repeat the process.  I documented the steps of buying the new place which will  be the topic of a new eBook coming out early next year but here are some of the topics addressed:

Set the purchase criteria

I’m often asked what makes for a great vacation rental property, and my response is invariably the same.  Do the research and see what is working for others, then apply the same to the purchase criteria.  Osprey Cottage has been a stellar property; our guests love it and many have stayed there on multiple occasions, so there seemed little reason to divert from the model.  My criteria for the new place was identical:

- Good clear water for swimming
- Minimum 3 bedrooms and 2 bathrooms
- Less than 2.5 hours from source of primary demographic
- Necessary renovation must fit budget
- Accessible year round (we are in an area where many properties close up for winter
- Good to excellent privacy

Assign a budget and stick to it

This is very important as it’s easy to over-reach and over-spend.  We’ve bought seven rental properties and know better than to underestimate the overall spend that includes the purchase price, closing costs set-up expenses, together with an emergency fund.  Have a cash flow forecast for at least the first year and be realistic with rental projections.  It will take some time to build a following.

Don’t do anything that doesn’t sell more chickens

Many years ago we were fortunate to have an investor help out with our first vacation rental purchase.  His greatest piece of advice that has never left me was ‘If it doesn’t sell more chickens, don’t put it in the hen house’.  It didn’t take me long to appreciate the value of that advice and we now evaluate every potential purchase, from the smallest to the largest, on this basis.  It’s saved us a lot of money.

Your past guests can be your new market

The primary reason we bought Kingfisher Cottage was because Osprey Cottage was always full.  And….we were turning people away who had read the wonderful reviews and wanted to stay there.  One of the first marketing activities we did was to create a standard paragraph to attach to the end of every email response that told our past guests we’d bought a new place and they would love it just as much as Osprey Cottage.  It worked as four out of our first five guest groups had already stayed at Osprey.

We know we have another success story on our hands and it’s in part because we did the homework, ruled out any potential properties that didn’t meet the criteria, and stuck to the budget.

Do you have a vacation property or more than one? What have you learned?