You’re planning your vacation, looking for the perfect place to stay. You prefer branded hotels. You are one of millions who assume that only a hotel can provide the consistent quality, comfort, amenities and easy booking you require.
But two trends are making privately owned rental homes the lodging of choice for many vacationers: stunning new homes and Internet tools that make it easy to identify-before booking-exactly what a rental home has to offer.
The Emergence of Vacation Homes. Thirty years ago, the typical vacation home was a small salt-box or 2 room cabin. This began to change in the early 1990s, which ushered in a period of prosperity, low interest rates, tax incentives, and double digit appreciation. Today, second homes generate a $17-$25 billion slice of the leisure travel market.
The Appeal of Rental Homes. Rental income makes second homes affordable. They offer great value to renters because rents are effectively “subsidized” by homeowners.
The Internet Has Eliminated Guesswork in Finding a Good Rental Home. We’ve all heard stories about vacationers who arrived at their destination only to find that their home:
Didn’t exist or was occupied by someone else ;
Was dirty, smelly, or infested;
Had malfunctioning heat, air, hot tub or appliances;
Was horribly located or inaccessible because of weather (hurricane or blizzard).
These concerns needn’t be a problem today, thanks to the Internet. Apart from offering pictures and floor plans, the Internet’s biggest value lies in consumer ratings that help confirm that a management company is reliable and that a home has pleased past renters.
Hotel or Rental Home?
Hotels can provide branded quality, daily cleaning, good location, security, restaurants, shopping, and spas. But for less money per guest, a small group can rent an upscale, well located rental home that offers more privacy and includes a theatre room, gourmet kitchen, game room, or even a spa package.
Who Prefers Hotels? Some vacationers will always prefer hotels for their daily housekeeping and on-premises security guards. But a surprising number stay in hotels because they simply don’t know about vacation rental homes.
Who Prefers Rental Homes? Vacationers who want privacy, space for children to play, and lower rents. Rental homes can also be the best option for longer vacations or large family get-togethers because full kitchens eliminate the expense of eating out.
Rental Managers can:
o Return advance rental payments when a hurricane keeps renters away;
o Keep keys out of hands of criminals;
o Provide faster repairs when air, heat or major appliances break;
o Make professional repairs
(One rent-by-owner book urges, “give the renters a chance to fix the problems on their own.”);
o Bring keys when renters get locked out;
o Handle unexpected pests or rodents;
o Send a cleaner over when bathrooms or kitchens are not cleaned properly;
o Replace small appliances that break;
o Provide sanitized towels and sheets;
o Keep children safe by:
– regularly inspecting pool locks, pool door alarms, fire extinguishers, fire alarms, carbon monoxide alarms, stair and outside lighting;
– removing or securing chemicals commonly used for cleaning or repairs, such as bleach, disinfectant, liquid drain opener, soap, paint supplies and hot tub or pool cleaners;
o Respond to emergency calls;
o Provide information on local attractions.
Rental Homes Offer the Only Luxury Accommodations in Many Markets. Resort markets such as North Carolina’s Outer Banks have many luxury homes for rent, but no four-star hotels. Why? Hotels require high year-round occupancy rates that can only be achieved with long rental seasons.
Vacation Rental Homes Are a Better Value. Hotels need to make a profit from lodging, and set rents accordingly. Owners of vacation homes expect to lose money, and can lower rents to whatever the market will bear.
Differences Are Fading. In key markets, some rental mangers are attracting raves from writers who review hotels. Orlando’s All Star Vacation Homes works with developers to produce hi-end homes that compare favorably to hotels in terms of location (are all within 3 miles of Disney World), security, packages (free rental cars), and service.
Management Companies vs. Rent-By-Owner
Neither managers nor rent-by-owners (“RBOs”) can lay claim to the best homes. Your decision to use one or the other should be made on other grounds.
Different Products. Web searches frequently return 2 similar vacation homes, located next door to each other-one managed and one RBO. Similarities notwithstanding, these are different products. A homeowner who rents through a local management company is paying a middleman to be on site and handle problems. A RBO tries to handle problems himself, which is difficult when he lives hundreds of miles from his rental property. The side bar lists the unique benefits that managers bring renters.
Do You Want to Pay By Credit Card? Do you want to free up cash for shopping and entertainment? Management companies can take credit cards for lodging. Individual homeowners cannot. (Some RBOs allow renters to pay through Ebay’s PayPal – which takes credit cards.) Rent-by-owners may require a $300-$1000 cash damage deposit. Management companies may handle damages through credit cards, or allow you to pay a nonrefundable $30-$50 “damage waiver” fee in lieu of a damage deposit.
Can You Get Your Money Back? Renters must pay in advance. Will you get a prompt refund if the home becomes unusable due to a hurricane, flood or fire? Homeowners don’t escrow your money. Many rental managers do.
Are Rent-By-Owner Homes Cheaper? Not necessarily. Rent-by-owners who bypass a management company sometimes pass on the savings in the form of reduced rents. More commonly, they pocket the savings, charging the same rents as managed homes.
Do Things to Go Wrong? Some RBO advocates argue that plugged toilets, broken air conditioners and lost keys are rare occurrences. Maybe. Somewhere. But resorts have harsh environments. A rental manager with 500 homes can bill 8000 work orders a year. That’s 16 problems per home spread over 20 weeks of rentals.
Can RBOs Solve Problems as Well as Managers? Managers are local, most RBOs are not. When air conditioning units start to fail during a heat wave, to whom is a frenzied repairman most likely to respond-a management company that provides most of his business, or a homeowner 300 miles away? When a cleaner is sick, who is most likely to have quick access to a back-up cleaner?
Should You Rent from a Management Company or Directly From the Owner? Be aware of the differences, and decide what you need. Is price your primary concern? Do you know the homeowner? Are your travel companions finicky? Will your vacation be ruined if —
· You arrive to a dirty home (cleaner got sick), or
· The a/c or hot tub can’t be repaired before your departure date?
Ask yourself how important it is that any problems are corrected quickly. Do you expect to be moved to another home if the pipes break? Do you care whether the service people who enter the home are bonded?
If you are not concerned about potential problems and you can definitely save money, go rent-by-owner. If you need assurances, go with a management company.