To maximize your income, you’ll need to rent during the entire summer, but that may not be practical if you have family who want to spend some time at your property. At times you may need to be strict with family and friends who may see your cottage as an inexpensive way to vacation, particularly if they have used it in this way in the past. Let everyone know that you are renting in a more professional manner, but that you may have late availability weeks or weekends that they can use. If you have minor jobs that need doing, you could save a little on property management by asking your nonpaying guests to do these tasks. Alternatively, have your nonpaying guests, family, or friends leave a gift for the cottage. Why not keep a list of items that may need replacing from time to time and ask nonpayers to choose from the list and take the replacement item with them to the cottage. Include things such as new pillows, towels, books and games, additions to the fishing tackle box, etc. Guests will appreciate knowing their gift is needed, and you will save on some of these expenses.
Jim Holland’s Clear Lake cottage was a haven to many of his work friends, and he was happy for them to use the property when he wasn’t spending time there himself. Once he started to rent seriously, he decided that he would offer time at the cottage if it hadn’t been booked by the previous week. He left a “job jar” with a list of tasks that needed doing in a prominent position by the beer fridge (figuring this was the first place his guests would go!) with a note attached asking for at least one job to be done in return for the use of the cottage. From the notes of thanks in the guest book, everyone enjoyed the opportunity to give a little back.
Before deciding to rent your cottage in the winter season, give serious thought to what could possibly go wrong. For example, you will need someone to check the property very regularly when it is not occupied to make sure that the residual heating is working and pipes have not frozen. Offering winter rentals means ensuring you can guarantee a continuous supply of water, maintaining the heat throughout the season, and having snow removal organized so your guests can access the property without difficulty. These costs could be significant; however, if you are able to rent during Christmas and New Year’s weeks, along with some rentals during January to March, winter rental could bring valuable income. However, if you are spending all your time troubleshooting winter problems for your guests, or worrying about what may happen, then maybe winter rentals are not such a good idea.
Having decided on the weeks you want to rent, you’ll need to decide on your charging strategy. This is covered in the next chapter, What Is My Recreational Property Worth?
4
What Is My Recreational Property Worth?
I recently asked a real estate friend how appraisers arrive at a figure for property valuation. After getting a short explanation of the principles of appraisal, I realized that setting a rate for a vacation rental week is not dissimilar.
What you will charge on a weekly basis for your property should be largely determined by what the market will bear, and this will depend on a number of criteria. Location (regional as well as physical), facilities offered, size, and ambience all play an important part, and it is well worthwhile spending time looking at comparable properties before making a decision. Regardless of whether you decide to go it alone and do your own marketing and advertising, or if you choose to use a rental agency, have a realistic idea of what rental fee you are expecting before you start planning. Doing the research now will pay dividends in the future as it will be a daunting task to make changes to your rental rates once you start advertising.
First of all, look at the websites of rental agencies servicing your area, then check local advertising sites. Finally, check out the larger sites where your potential competitors might advertise.
One way of setting a price is to decide whether you want to go the Wal-Mart route — high volume/low price — or the Chanel route — low volume/high price. However, setting rental rates is not an exact science; we will discuss different factors that will influence your pricing in this chapter.
High-season rates are generally applicable from mid-June to early September, and for Christmas, New Year’s, and the Spring break. Long weekends in the low-season period will generally attract higher rates. The rest of the year can be set at one rate, although if you are near a ski area, you might want to have an additional high-season or mid-season rate that covers the January to March period. Your location may dictate your seasons, so take a look at what your competitors are using for their low/mid/high-season dates.
Location
Look for similar-sized recreational properties in your rental area. If your property is in a much-sought-after location, it may fetch a premium price. If it is a relatively short drive from a major city, rental rates can also be higher than in a more distant location. If your property has a unique selling point that may appeal to a particular section of the market, that could justify a higher price. For example, people looking for a peaceful, relaxing break will pay a premium if your vacation home is located on or near a no-motor lake. In locations that feature winter sports, properties that offer ski-in/out facilities will command a higher rate than those where additional driving is involved. In very popular tourist areas, vacation homes are more sought after than in quieter, less well-known locations.
If your property is located on good waterfront, this will clearly benefit your bookings in the summer months. However, if you are on or near a river offering canoe routes, you might expect additional bookings in spring and fall. Many European visitors, or those with young children, may prefer a swimming pool to open water, so if your property has a pool instead of (or even in addition to) waterfront, this could have a considerable impact on the potential rental value. Chapter 9, Marketing Your Vacation Home, will show just how you can boost your off-season income through reaching special interest groups with targeted packages and deals.
Interestingly, one Canadian rental agency infers on its website that cottages on rivers are virtually unrentable. However, as an owner of a riverside cottage myself, this is certainly not my experience. Indeed, visitors from the UK are happy to be near any water, despite the fact that no part of the UK is more than 112 kilometers from the sea! It is the fact that it can take three hours to get there (on a good day!) that prevents them from traveling, so water-based vacations of any type are what they are seeking. They don’t bring boats so don’t need marina or docking facilities, and, in general, demand less in terms of location than the home-grown Canadian market. So if you do have a charming riverside property, just find a more enlightened agency or adjust your marketing to target the guests who would find your home to be the right one for them.
Size
Most rental agencies would agree that larger properties tend to book up first for the high season and command higher prices. Many families or groups of friends like to vacation together, so a large vacation home sleeping ten people or more offers a more attractive and economical prospect than independently renting smaller properties. However, the market for smaller properties grows off-season when there are fewer families taking vacations. Rental guests in fall, winter, and spring will tend to be couples, either on their own, or two to three couples renting together. Whereas a large property sleeping eight to ten may achieve a high rent in the summer, it may remain largely empty in low season as the target audience at this time of year is unwilling to pay the price. A smaller, perhaps two-bedroom property, while yielding lower rents in high season, is more likely to rent additional weeks throughout the year. It’s also worthwhile considering this if you are planning a renovation. Adding a sleeping cabin to offer additional summer sleeping space may be more cost-effective than spending a lot of money on additional bedrooms in the main residence.