Renting your second home on a weekend or weekly basis is commonly referred to as "vacation rental". Offering your property as a vacation rental is a way to generate income when you are not using your property. The amount of income you receive depends on a number of factors, most of which the owner can control. While a vacation rental is typically considered a rental for tax purposes, there are significant differences between a vacation rental and a "permanent" or "long term" rental. Many people purchase vacation rentals when exchanging property using the IRS code 1031 (1031 tax-deferred exchange).
This general information is provided to assist in answering questions regarding vacation rentals. No liability is assumed. If you are considering renting your property, you should research the topic further including an interview with a professional vacation rental company. The tax implications are important and should be understood. Consult your tax advisor prior to renting your property. As with any investment, there are risks and liabilities involved. Consult your attorney and insurance professional prior to renting your property. Income varies with each property and owner, and is not guaranteed.
How much income may I expect?
Contact Shaver Lake Vacation Rentals for an updated income printout. This will show you the gross income numbers from a sampling of our rental units. Keep in mind that there are expenses involved. You will want to crunch the numbers for potential income and typical expenses before making a decision to rent.
Factors affecting income
Condition: a popular rental is well maintained inside and out and clean enough for a mother to feel comfortable letting her infant crawl around on the floor.
Features: large decks, quality B-B-Q's, mattresses, television, VCR, microwave, appliances and furnishings. The kitchen should be equipped with a full set of dishes, pots, pans, utensils and kitchen appliances adequate for the number of guests the property will accommodate.
Availability: The bulk of the income is generated in July/August, Christmas/New Year's and on weekends from January through March. If an owner takes all the prime rental periods, little is left for rent paying guests and the income will reflect this.
Location: Some areas rent better than others. If you haven't purchased property yet, we will show you where the most requested areas are. We have rentals in nearly all areas. Some will rent better than others because of their proximity to the lake, ski area, etc.
Price: the lower the price, the more the property will rent. The key is to start at a price that will help build a clientele’ more quickly for your property. Our philosophy: start on the low end of your competitive range and work up as your property's popularity increases. It takes about two years for a property to develop a repeat clientele’.
Size: the more people your property can sleep, the more income you can earn. It isn't just about beds though. A big sleeper must also have the kitchen and dining area to fit a large group and enough living room area to allow them to lounge and relax.
Is there a restriction on how much I can use the property each year?
Yes. Check with your tax advisor to be sure you comply with IRS regulations. Ask how many days you are allowed to stay in the property while performing maintenance. Most owners perform some form of maintenance each time they visit the property so your records reflect this.
What about damage from renters?
Many people find it surprising that renters do not damage vacation rental units very often. Most renters are families and intend to rent again. Some renters leave the property as clean as it was when they arrived. On the other hand, there will always be the small percentage of renters who leave the place very dirty and possibly damage some of the furnishings. For this reason, our company collects a damage waiver fee prior to occupancy. Our company inspects each unit after occupancy to verify that no damage has occurred. Keep in mind that our renters are typically only staying for a few days and most of their activities are outdoors. The horror stories you hear about renters are usually based on long-term rental situations. Our company does not offer long- term rentals.
Who does the cleaning after a renter leaves?
We have our own housekeeping staff that cleans each unit after the rental guests depart. The guest pays for the cleaning service as a part of the rental fee. If the unit has been vacant for some time, it is often necessary for the cleaning service to do a "miniclean" at the owner's expense. This will definitely occur after the unit sits unrented through the off-season. The cleaning service is also available to our owners at a discounted rate. We strongly encourage our owners to take advantage of our cleaning service. We ask owners to require that their personal guests pay for a cleaning service to insure consistency and to be certain the property will be ready for the next guest. There is nothing worse than having a paying rental guest arrive to a dirty unit after an owner or their guest was last occupying it.
Each fall and spring, rental units should be deep cleaned. This keeps the property in tip-top rental condition through the rental seasons.
How do I insure that there is time reserved for my personal use?
You may want to plan ahead more than you are accustomed to. We will reserve any time you want by calling the office or using our website. Our company takes reservations up to one year in advance. Our owners like this because we can start filling an owners' calendar with reservations sooner. This means more owner income is confirmed sooner. Some vacation rental companies aren't set up to take reservations a year ahead of time. We feel it allows our owners to make more money which is why we're here.
What expenses are involved?
The largest expense is the vacation rental management fee. Our fee is 25% of the gross rent collected. Other typical expenses include taxes, utilities, telephone, HOA dues, cable, firewood, repairs and deep cleaning. It is highly recommended that your property is equipped with high speed internet, telephone and cable/satellite TV. Our rental guests request both regularly.
What kind of accounting and documentation can I expect?
You will receive an end-of-the-month statement detailing the previous month’s activities, broken down by each guest stay and the income attributed to that stay. Additionally, you will receive copies of invoices for any additional items paid on your behalf (emergency plumbing repairs, routine maintenance, etc.) Last but not least, you will receive a check for your net proceeds!
What happens if a problem occurs while a renter is in the property?
The renter calls our office. We have a 24-hour emergency contact system for after-hour emergencies, lost keys, etc. We have skilled handymen and established relationships with local vendors and contractors to help with urgent situations. The owner is called if there is a major issue.
How do you find renters for my property?
Our best source of prospective rentals guest is our long established client list. We have approximately 150 rental properties in the Shaver Lake/Huntington Lake area. Many of our guests refer their friends to us. We also publish a color rental guide twice annually, which highlights each property in color along with prices and property features. Very soon our new Internet marketing strategy will launch. This will place our properties on the largest travel and lodging websites on the internet. Some of these sites offer real time online booking (for a fee) while others will promote our website and phone number. Our newly redesigned website (shaverlake.com) allowed detailed searches real time with ease. Prospective guests can view numerous photos of each rental inside and out, review the details (bed sizes, etc.) on each property’s “feature sheet”, check its availability and book the reservation. All from their computer at home or wherever!
There are a lot of vacation rentals in the area. Is there room for mine?
There is always room for a well maintained, well-furnished, reasonably priced vacation rental in our area. Each year, rental units sell or for some other reason come off the market, and new units take their place. If you are determined to succeed in vacation rental and you have realistic expectations, you will. We can help you determine what reasonable expectations are for you and your property.
Is there special insurance I should carry if I rent?
Check with your insurance professional. You should have a rental owner’s policy with its special coverage and probably more liability coverage than you have now. Our agreement requires $300,000 minimum liability coverage.
What should I do to prepare my property for vacation rental?
For peace of mind, take home family heirlooms and fragile items. If you'll be heartbroken if it breaks or disappears, take it home.
Be sure you have enough dishes, silverware, pots/pans, seating, pillows and blankets, etc. for the number of people designated to stay in your unit. Do a safety check. Railings, deck boards, banisters, cracked or broken glass and any other unsafe situation should be repaired or corrected . Non-slip tape on stair edges make wooden steps safer. Every sleeping floor must have operating smoke detectors. Wiring should all be safe and in proper junction boxes; no taped splices, uncovered wall plugs or unsafe extension cords. A fire extinguisher on each floor is a good idea. Anything that makes your property safer reduces your liability and increases the guests comfort level. A win-win situation. Make sure the heating system is adequate to keep those who aren't accustomed to the cold, comfortable in your property. Comfortable guests return. Take out unnecessary furniture that is crowding the main living area. Open floor space is important for those having family gatherings or kids sleeping on the floor.
Clean your property thoroughly, including the carpets, to start fresh. Then do it again every year.
Suggestion: hang some family pictures on the wall. We believe that guests take better care of, and enjoy a rental more when they feel like they are staying in someone's home.
Should I plan on reinvesting a portion of my rental income into the property?
Yes! It is wise to plan on reinvesting right from the start. There is no doubt that your property will show wear sooner than if you didn't rent. This makes sense because it is getting used more. You are also getting compensated well for this additional use. Plan on reinvesting in flooring, mattresses, dishes, pots, pans, and furniture. Not all at once, but over time. It's not too painful if you plan for it, and its usually a tax write-off. Plus, you get to enjoy the nicer furnishings yourself. Let your renters pay for your upgrades! Remember that renters are a lot like you. They like nice things and they return to places that make them feel comfortable.
Our terms and conditions
We spell out the rules to a guest right from the start. Guests acknowledge and agree to the terms and conditions at the time they make the reservation.
