5 Tips: Make Your Vacation Home Pay For Itself

Let’s say the vacation home you recently purchased is a real show-stopper.

Amazing views of the mountains are reflected in the tranquil lake below. Beautiful fireplaces, heated floors, and vaulted ceilings – it’s everything you’ve ever dreamed of. Now, how are you going to afford the mortgage, on top of your primary residence?

Here are five tips to make your vacation home pay for itself:

1. Make That Mortgage Disappear

In reality, your cottage is a second home – a vacation spot. You will use it a couple of weeks out of the year. The rest of the time you will be paying a mortgage on a place you don’t use…or will you? Smart investors know the secret to owning a great cottage is making it pay for itself. By renting out your vacation home, you can offset or completely pay off that extra mortgage, and will still be able to enjoy it – it’s a win-win situation.

2. All About Location

If you are going to rent out your home, make sure it’s in a place where people will want to visit. Mountains, beaches and lakes are always hot spots. Try to pick a year-round location for optimal rental times. Ski resorts often have great summer trails for hiking, villages to shop in and great local restaurants. This makes them a year-round destination.

3. Accommodate Bigger Groups

Next, maximize your space. A small cottage can find extra room for guests in the form of a Murphy bed or sofa bed. Bedrooms can have bunk beds or even two full beds if the space allows. The more room you have for guests, the more money you can charge.

Keep this in mind for outdoor space as well. If you have a porch, add a dining table and chairs, or choose to put in a hot tub. In the warmer months, the porch is an especially important outdoor area and shouldn’t be forgotten about.

4. Add Entertainment Value

Pool tables, game rooms, hot tubs and pools are all drawing cards for potential guests. Make your cottage stand out with these amenities.

5. List Your Property Safely

If you’re considering renting your cottage or second property, be sure to check out listing options that safely market your home such as AirBNB or  CanadaStays, which can connect you with millions of travelers by listing your property on their online marketplace, and with a secure payment platform that ensures payments are easily and safely managed.

Other questions to ask yourself

Why Do You Want It?

So … are you looking at a vacation rental because:

#1: You want to buy a vacation house, and you’d like the emotional satisfaction of having the house pay for itself?

#2: You see a huge demand for short-term rentals, coupled with low rental supply and reasonable home purchase prices?

If your answer is number one, forget it. If your answer is number two, rock on! Awesome! Now we’ve got something to work with!

The next logical question is: After accounting for vacancies and management, which will take a HUGE chunk out of your bottom line, will you make more money on this property as a short-term/weekly rental, or as a long-term (traditional one-year-lease) rental?

Renting out a vacation home is one step away from running a hotel.

Your customers expect things that normal tenants would never ask a landlord for: clean towels, rolls of toilet paper, organized kitchenware. You’ll spend a lot more time responding to customer requests, cleaning during the “turnover” period, and scheduling check-ins and check-outs.

People will contact you to ask about availability, amenities, location, pet policy and other questions. A fraction of those people will decide to reserve the home, which means you’ll need to take a deposit and send them reservation paperwork. You’ll need to schedule the cleaning crew. You’ll also need to provide furnishings: couches, beds, tables.

The customers will call you at midnight to say their GPS can’t find the location, or the key isn’t at the designated spot, or to ask how to operate the thermostat. They’ll write reviews saying the wireless internet is too slow or that the floorboards creak. You’re also likely to endure higher vacancy rates. And in the rental world, nothing is more expensive than vacancy.

You can hire property managers to handle the day-to-day hassles, but they’ll charge a LOT more than “normal” property managers. Many will ask for 50 percent of your income, and that rate is reasonable, since they handle so much more turnover and so many more responsibilities.

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