In this episode of Next Act Ninjas, Rachael Van Pelt empowers you to invest in a vacation property that doubles as a short-term rental (STR). Imagine having a go-to spot for family vacations while generating rental income when you’re not using it! Rachael shares the experience of turning her own vacation property into an STR as well as helping clients purchase and set up their own retreats. From selecting the right location to navigating financing and managing rentals, she offers insider tips and personal experiences. Learn about the importance of choosing a popular tourist destination, understanding local regulations, and leveraging property management software for seamless operations. Discover the joy of creating lasting family memories and financial gains with a well-maintained STR. Whether you're considering a cozy mountain cabin or a beachfront condo, Rachael's insights will guide you through every step of the investment process. Ready to boost both fun and finances? Tune in now. And don't forget to share this episode with anyone who might find it helpful.
Chapters
00:00 Introduction: Investing in a Vacation Property for Short-Term Rentals
02:55 Choosing the Right Location for a Successful Vacation Property Investment
04:41 Determining Whether the investment Property make Financial Sense
05:43 Navigating Local Regulations for Short-Term Rentals
06:39 Managing Your Vacation Property: Self-Management vs. Property Management Companies
09:53 Maximizing Income: Creating a Welcoming Environment and Providing Exceptional Guest Experiences
12:38 Tailoring the Property to Family Needs: Creating Lasting Memories and Attracting Guests
Welcome back to Next Act Ninjas, the #1 podcast for mastering your lifestyle longevity. I'm your host, Rachael Van Pelt, and today I want to talk about investing in a property that you can use for family vacations and list as a short-term rental (or STR), boosting both fun and finances for you and your family.
As a Realtor, my specialty is helping people buy their dream vacation property in the beautiful mountains of Colorado. And what I especially love is helping them set up their property after the fact to rent when they're not using it. In fact, I just had another successful close on a mountain property this week, and I'm currently helping my buyers get ready to list it as an STR in the next few weeks. I'm so excited to do that. It's so fun to not just negotiate a dream purchase, but to ensure my clients get the most out of that investment for many years to come.
Because why combine fun and finances? I mean, it's great if you have the luxury to let that vacation property sit unoccupied, but why not generate some rental income to cover the cost of that property or even generate positive cash flow? Just imagine having a go-to spot for your family vacations, a place that feels like home, but at the same time is a source of income when you're not using it. It's exactly why STRs have become so popular in recent years. They can be a great investment. And of course, platforms like Airbnb and VRBO, they've made it easier than ever to manage.
Over the past eight years, I have stayed at a number of Airbnbs around the world with my husband and kids. I'm sure you have as well. We've seen the good, the bad, and the downright amazing. The idea of owning such a property not only excited me as a traveler, but also as a Realtor and an investor. That's why my husband and I purchased our own vacation property and turned it into an STR a few years ago. It's a great investment. I highly recommend it.
But choosing the right location is critical. If you're thinking about buying a vacation property that you have the option to rent, be sure to consider things like, is it a popular tourist destination? How close is it to a major airport? Is it easy to access? Does it have year-round appeal? For instance, mountain retreats like the ones here in Colorado offer activities every season. Skiing in the winter, leaf-peeping in the fall, hiking and biking in the summer, you name it. But urban centers and beach towns, they're great options as well. Just depends on what appeals most to you and your family and potential renters.
So when selecting a location, think about the type of experience you want. What do you want to offer? Is it a cozy mountain cabin with a fireplace and hot tub that's perfect for a winter getaway? Or maybe it's a beachfront condo with stunning ocean views that has easy access to water sports. The type of property and its amenities can significantly impact how attractive it is to renters, how easy it is to book. But don't discount the hidden-gems either. While, those well-known tourist destinations do have their appeal, sometimes lesser known areas can offer a unique charm and potentially be more affordable for you as an investor, as well as your guests. For example, a smaller mountain town in Colorado that isn't famous like Aspen or Vail, but still offers great skiing and outdoor activities, that can attract renters who are looking for a quieter experience and a more affordable vacation.
Once you've narrowed down where you want to buy, then you want to consider finances. Just like any property, your investment's going to require a down payment, paying property taxes, insurance, ongoing maintenance, and so forth. And unless you're paying cash, you're going to need to explore financing options. Securing a mortgage for a vacation property, it's different from your primary residence. Vacation home loans typically have stricter requirements. They have higher interest rates, and you might need a larger down payment. And they're going to scrutinize more closely your credit score and debt-to-income ratio. So it's important to shop around and work with a lender who specializes in vacation property financing.
But once you know you qualify for a loan, then it's time to estimate potential income to ensure that the investment makes financial sense. When helping clients, I always spend a lot of time analyzing the average daily rental rates (or ADRs) for an area and crunching the numbers because every location is different. For that matter, not every county even allows short-term rentals. You have to take into consideration the local regulations. Different areas have different zoning laws and regulations for STRs. Many places have set limits on the number of permits that are available and some have long waiting lists. Some don't even allow non-residents to do STRs at all or they make you wait for a few years before you can apply. Just make sure you understand the local laws, obtain any necessary licenses or permits. This can save you a lot of trouble down the line.
It's also important to stay up to date on those local regulations as they can change. For example, some cities have implemented new rules over the years on STRs, including limits on the number of days you can rent out that property each year, or they require you to register it as a business, that sort of thing. So joining a local STR association or online forum that addresses these things can help you stay informed over time.
Now, if you're not able to do a short-term rental, then maybe a medium-term rental is the only option. That's where you rent anywhere from 30 days to nine months at a time. Anything longer than that's really considered a long-term rental. Regardless, you'll want to know before you buy what your rental options are and what average rental rates should be. So you can estimate your income potential.
Budgeting and planning are key. Make sure to factor in all your costs and potential income streams. From my experience, from listing on Airbnb and VRBO, it's incredibly important to keep a close eye on your expenses and income so you can maximize that investment.
One area that can be very costly is management fees. Whether you decide to self-manage or hire a property management company can make a huge difference. Property management companies, can handle everything from booking guests to communicating with guests to maintaining the property, but they do come at a cost. Self-managing gives you much more control. It saves you a lot of money, but it does require much more time and effort on your part.
Now the good news is self-management has never been easier. There are a lot of wonderful platforms and tools that can help you automate your workflow from bookings to emailing guests to scheduling cleaning and so forth. Once you have it all set up, continued management is very straightforward. But you do need to decide whether you have the time and the temperament to do it yourself.
I'll touch briefly on the tools and platforms that can make that easier for you. There are several property management software options, things like Hospitable, Lodgify, Guesty, and they're all designed to specifically for short-term rentals, and they help you manage bookings, automate communication, integrate across multiple platforms like Airbnb and VRBO. These tools can save you a lot of time and provide a seamless experience for your guests.
For example, my husband and I use Hospitable. That coordinates our listings on Airbnb, VRBO, as well as a direct booking website that we've set. And this software, it syncs those calendars across platforms and protects against double bookings. That way we don't have someone on VRBO and Airbnb accidentally booking the same dates. And it also automates our communication with guests. We wrote all of our key emails once, then we set it and forget it. Emails such as our booking confirmation, the ones we send out with house rules and driving directions and key code instructions, thank yous after people stay, and so forth. You do still need to respond to direct messages from your guests, but now they even have AI analytic tools that can detect frequently asked questions and prepare a quick response for you that you can then send.
Even better, Hospitable integrates with Turno, which is a platform for cleaning services. So every time somebody books, our cleaners get the notice and they can accept the job or decline it. If they accept, it goes on their calendar. If they decline, it goes to our backup cleaner. It's pretty seamless.
And we found that having a well-maintained property as well as excellent guest communication makes all the difference in the world. Happy guests lead to great reviews, and great reviews attract more guests. It's a positive feedback cycle.
Now, whether you self-manage or hire a management company, you're going to want to create a welcoming and comfortable environment for your guests. Think about those little touches that can make a guest's stay much more memorable. Maybe it's a welcome basket with local treats. Maybe it's detailed guides on local attractions and activities. Maybe it's thoughtful amenities like high-quality linens and toiletries. These things can go a long way. I know from our travels that these small details can really turn a good stay into a great one. Again, happy guests leave great reviews, don't they? They attract more guests.
Providing exceptional guest experience is key, but you're also going to want to showcase your property so that it stands out on rental platforms. Use high-quality photos, write compelling descriptions, highlight unique features of your property. Use seasonal pricing adjustment, seasonal pricing strategies that can maximize your income. For example, higher rates during peak season and special promotions during off-peak times. Those things can keep your property booked year-round. There are easy to use platforms that can do that dynamic pricing for you.
If you're so inclined, you can even do more advanced marketing, like leveraging social media and creating a dedicated website for your property to increase visibility. Share beautiful photos, guest testimonials. Share local attractions that attract more guests. You might even consider collaborating with a local business for cross promotion, such as a local tour operator who might refer their clients to your property. You can do the same for them. I haven't done this myself, but I've seen others use these strategies effectively to boost their bookings.
The level of attention you devote to this really just depends on how much you're willing to treat this like a business and maximize income versus how much you think of it as just a family vacation home that you rent out occasionally. If you do think of it as an investment that you want to maximize, you're going to want to schedule your family vacations well in advance, block out the dates on the calendar so they don't get booked by other guests. You'll probably want to go during off-peak times. This way you can enjoy that property without significantly impacting your rental income.
But maybe it's not just about the income for you, is it? You know, one of the biggest joys of owning a vacation home is creating lasting memories with you and your family. If you want to make the most of your family time, make sure you tailor the property to your family needs, not just the renter experience. If your family loves outdoor activities, ensure the property's near hiking trails, skiing, a lake for water sports, whatever. For a more relaxed atmosphere, create cozy spaces throughout the property, a place for movie nights, board games, reading, whatever. Setting up family-friendly amenities, such as a game room with a pool table or video games, outdoor spaces like a fire pit for s'mores, baby gear like a crib and a high chair, all of these things can make your family gatherings much more enjoyable, while at the same time, those amenities are going to attract families to book with you.
Maybe you can even convince your family to help in the upkeep of the property. That can teach responsibility and foster a sense of ownership amongst your family. When you do stay, make sure you connect with the local community, participate in events, visit farmer's markets, support local businesses, that sort of thing. That's going to make your vacation property feel like a second home. It's going to provide a much richer experience for your family. It's also going to allow you to be a better host because you'll be able to tell your guests what they can do in the area that's a lot of fun.
Bottom line, investing in a vacation property is a hugely rewarding venture that's going to yield both memories and wealth for you and your family. But be sure to do your research upfront and plan effectively, manage your property well. It is a lifestyle investment after all.
If you're thinking about buying a vacation property that you can STR, let's chat. I'd love to help you find the perfect spot that works for your family and is a smart investment. And you don't have to be looking to invest here in Colorado. My brokerage, EXP Realty, has experts all over the country and around the world. So I can help you crunch the numbers and connect you with local experts wherever you're thinking to invest.
Thank you for joining me today on Next Act Ninjas. Don't forget to subscribe, leave a review, and share this episode with anyone who might find it helpful. Until next time, live well, love more, age less, my friends.