The vacation home industry is growing by leaps and bounds and was one of the most popular choice of accommodations for families traveling to Disney World and other Florida areas in 2009. With the popularity of vacation homes and consumer awareness growing it’s starting to become a bit more competitive to market vacation rentals online than it used to be. VRBO, a popular vacation rental by owner site, is currently dominating the world of direct owner bookings and though there are management companies advertising on the site most of what’s available is listed directly by the owners.
One of the trends I’m noticing with owners is that many think that if they cut the middle man out (management company) they can market their home at a discounted rate and still receive a larger portion of that money. This works for many owners who utilize their vacation home rental as a full time business but what about the other owners who don’t want to make marketing and renting their vacation home a full time job and are dependent upon a property management company renting out their property? These steeply discounted rates that owners are offering on VRBO are in direct competition with what your management company is trying to rent your vacation home for. Any prospective renter who understands the internet is able to log on and check to see what rentals are going for in your neighborhood and will see these discounted rates being offered by owners. If your management company is any good at securing retail bookings than they will be aware of this fact up front and know how to up-sell the renter on the benefits of working with a management company over booking directly with the owner (as will owners do the same). I personally, do not have a preference as to which one is better but there are specific facts about both that should be brought to the renters attention before they make a decision.
Pros of Booking Directly With The Vacation Homeowner
- Homeowner will give a better rate. Since the middle man is being cut out the homeowner can afford to offer a steeply discounted rate to the renter.
- Homeowner can be more accommodating. Since you are dealing directly with the owner you can ask specific questions about the property that a reservationist at a management company may not be able to answer in as much detail for you such the closest local Italian restaurant or the best view of the Disney fireworks in town.
Cons of Booking Directly With The Vacation Homeowner
- Time difference and emergencies. If the homeowner lives in another country and there is an emergency that requires immediate assistance than it is possible that you could be waiting for a response back for several hours as many homeowners do not have a full time on call maintenance staff to deal with these issues.
- No quality assurance. Some homeowners that manage their own vacation rental properties rely solely on a cleaning crew to maintain their home between guests which means there is more risk of the home not being cleaned to your standards when you arrive. If you complain to the owner they cannot move you to a new property as most of the time they only own one.
The Best of Both Worlds?
There are renters out there who will just always feel more comfortable renting a property that they know is being professionally managed. With that being said, owners can still cash in on their own bookings while utilizing the assistance of a rental manager. Many owners will list their properties for rent by owner and secure the booking themselves but have the management company handle the rental aspect of it and pay them a small owner booking fee. This is a win-win for both the owner and the renter as the renter gets a peace of mind knowing that if something goes wrong with the property they will be accommodated immediately and the owner get their chunk on the booking revenue while doing a quarter of the work that a self managing owner would do.
What is your take on self-managing vacation homeowners offering competitive rates to undercut rental manager bookings?
So you want to purchase a holiday villa here in the states and your plan is to buy it and rent it out to short term renters while your not using it. You have it all figured out, your estate agent has got you all excited about how you’re going to receive a cash flow on the property and it will pay for itself.
I hate to be the one to tell you this but they lied to you. It’s one of the biggest myths you are going to hear when you come to Florida to buy a vacation home. Realtors and management companies often tell you this because they want to make the sale and they think it’s what you want to hear. It may be what you want to hear but it’s simply not usually true.
When you turn your property over to a management company to be rented out you can expect that rental income to only offset your expenses and reduce your payment but certainly not bring you in an income. With all the related expenses to management and owning a home it’s just simply not possible unless you pay all cash for the property and do not hold a mortgage. The reason being is that the average booking on a villa is about 20 weeks per year. After you pay out taxes, management fees and cleaning fees there just simply isn’t much money left. With bookings being down due to the economy it’s just not enough cash to cover all the expenses.
You should strongly consider your financial situation before you buy based on the full load of home expenses just in case. Beware of any agents or management companies that tell you any different, they are just trying to get you to buy.