Should You Consider Renting Out Your Property Short Term?

Should You Consider Renting Out Your Property Short Term?

It’s not for everyone.

Renting out your home is not for everyone.

Over the years we’ve been asked hundreds of times what are the challenges of entering a property into the short term rental market. So many property owners dream of owning a property in some romantic destination such as the Caribbean. They have dreams of spending time in the warm sunshine and swimming in crystal clear waters.

The Dreams of Living in the Caribbean

It usually begins with them going on a vacation and falling in love with the feeling the Caribbean provides. Some take the next step and talk to a real estate agent to discuss the possibility of making a purchase. The first hurdle is the “sticker shock” of the purchase price. If that does not scare them the discussion then elevates to the operating costs. Seeing how the property will be a secondary home, they will not be there to look after it. Therefore, a Property Manager will need to be hired. Add all this up with the utility costs, electricity and water, can put it out of many people’s price points.

Real Estate Agencies push for Short-Term Rentals

The real estate brokers do not want to lose a potential sale so they suggest the property be entered into the short term rental inventory to help offset the operating costs. This is where it gets messy. Managing expectations is a delicate balance. If the property is already in the short term villa market it would be wise to get the historical rental revenue. Here are some things to keep in mind before purchasing a vacation home:

1. Obtain a list of the villas currently available in the destination.

This can be done by researching property management companies on the island or using Travel Websites like HomeAway, Airbnb, or vacation rental agencies like Wimco, Sibarth Villa Rentals, St. Barth Properties, and St. Martin Sotheby’s International Realty.

2. How many bedrooms do I want?

Focus your attention on the category by the number of bedrooms. It is important to evaluate the competition in terms of pricing, features, and amenities. Create a spreadsheet with columns with headings such as high season price, low season price, holiday price, pool size, fitness equipment, etc. Then sort the villas from highest to lowest in price. This will provide you with an objective review of where the property you’re considering purchasing fits in.

3. What size vacation rentals do the best?

The average number of bedrooms that generate the largest percentage of bookings is 2 bedrooms. Three-bedroom villas are the next highest. Four bedrooms and above are far more challenging to rent except during the holidays.

4. How many weeks a year will my villa be rented?

A top-performing villa will rent about 25-28 weeks per year. A good villa will be fortunate to rent 15-16 weeks per year. A vast majority of them are lucky to generate 6-10 weeks. It would be wise to calculate what the average price per week is for the category your considering buying and multiply it by the range of 6-28 weeks. This will tell you the worst and best scenario. Now compare this to the estimated operating cost.

5. What are some additional costs I can expect?

It is also important to know that appliances such as refrigerators have a shelf life of about 1/3 of what you’re used to. This is because of the harsh conditions of the salt. This will translate you will be replacing appliances far more frequently than you expected. This is one area you don’t want to overlook. The last thing you want is to have appliances that break down when guests are at the property. Many property owners love the idea to install very high-end appliances. This may very well be a problem down the road. Getting spare parts can often take weeks if not months. Also finding a qualified service technician could be impossible. Check to see what brand appliances the locals are using.

6. Is fresh water easily available in the Caribbean?

Water is a very important resource. The Caribbean Villas often have no access to public water. If they do the water is generally very expensive. The common way to get water access is to collect it and store it in cistern tanks. Make sure you’re aware of how large the cistern tank is and where it is located. Guests love rain shower heads, but these showerheads require far more water than standard showerheads. Be prepared as the guests have a habit of taking long and frequent showers. This will put a strain on the cistern tank.

7. What size beds should I have?

Ideally, the bedrooms will be of equal size and similar furnishings. Ensuite bathrooms are a must. Kingsize beds are the size of choice, Villas are often rented by couples, who pay equally. If the bedrooms are designed with parity in mind it will make the villa far more rental friendly. It will also prevent ugly pillow talk when one couple feels short-changed. Invest in high-quality mattresses and bed linens and towels. The last thing you want is for the guests to not get a good night's sleep or see tired-looking sheets and towels.

8. What kind of deck furniture should I buy?

High-quality deck furniture is a must. Stay away from plastic furniture. Try to have enough furniture to accommodate the entire number of guests.

9. Are bathroom amenities important to guests?

Bathrooms are critical. Guests prefer double sinks with plenty of counter space. Nice showers….tubs are not important. Plenty of fresh towels, hairdryers, and great lighting around the mirror. Outdoor showers are a huge plus.

10. Guests love the Caribbean Beaches…will they want a pool?

Guests all love seeing fantastic pools. The bigger the better. Infinity edge pools with views looking to the west are in high demand. Ease of access to the pools is very important. Stairs are a must. Stay away from ladder access. Install a pool alarm to protect the guests and small children.

11. Gas or charcoal grills?

Gas grills are standard, but make sure you have spare propane tanks. Guests hate it when they’re cooking on the grill and the propane runs out. This is often overlooked by property management.

12. Easy to use Entertainment Systems

Entertainment systems are in high demand. Large flat-screen televisions and music systems that have speakers both inside and outside are important. Remember that your clients may not be as tech-savvy as you are. Provide step-by-step instructions. The more detailed the better.

13. Safes are a must-have item in all villas

For safety concerns have individual safes in the closets of each bedroom. It’s not enough to just have a single safe. Each bedroom will need one. You don’t want to assume the couples traveling together feel comfortable sharing.

14. Cooking Utensils in the Kitchen

A great supply of cooking utensils is required. Imagine cooking beautiful steaks on the grill for the entire group. Now imagine going to the kitchen and only having butter knives.

15. Glassware and Plastic Cups

Dinner and glassware should be well-stocked. Purchase plenty of extra plates and glasses that are the same. Be prepared to have broken items. If you purchase extra that is the same it will allow everything to match at the table. People won’t notice if everything matches, but they will absolutely see if they don’t. Plastic cups should be included in the inventory as the guests should not be drinking out of glass around the pool.

16. Purchase an Ice Maker

Separate ice makers should be included as guests will go through lots of ice. Having an ice maker will make a world of difference. It will also leave more room in the freezer.

17. Always have a backup Generator

A backup generator is highly recommended as power outages are quite common in the Caribbean. If the power goes out, so does the AC…the TV…and the internet. All of that mixed with the refrigerator and wine cooler turning off, you will have some very angry guests.

So…is owning a vacation rental for you?

It’s the little details that will mean the world to your guests. You want a home you are proud to share. And one that pays for itself! In order to be successful in the vacation rental market, it will be all about the details.

Don’t have the time or energy to do all the research? Contact us and hire us to do it for you!