Yes you can cut the expenses associated with owning a vacation home, without driving away renters. HomeAway.com’s Christine Karpinski explains how to put your seaside cottage or rustic mountain cabin on a budget.
“You don’t have to make major changes to cut costs in your rental property this year,” says Karpinski, director of Owner Community for HomeAway.com and author of How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment (Kinney Pollack Press, 2007, ISBN: 0-9748249-9-2, $26.00). “While the prospect of ‘cutting back’ may seem overwhelming, you’ll find that a few small, simple, conscious changes can make a huge difference to your bottom line.”
Ready to take the beach-house-budget (or cabin-cash-crunch) challenge? Read on for Christine’s tips on how to cut your vacation home expenses in 2009.
Get it all down on paper. Before you cut costs, you need a complete picture of where you’re spending your money in the first place. In other words, close yourself up in your office with a cup of hot tea and create your vacation home budget. Once you have all of your current expenses laid out in front of you, you can begin to put a cost-cutting strategy in place.
Make your 2009 shopping list (and check it twice). When you sit down to create your budget, make a list of all of the items you think you may need to purchase for your vacation rental in the next year. Include new amenities that you’d like to add to make your home more marketable—A hot tub for the deck? An espresso machine? Internet service?—as well as replacement items for those already in your home that may become worn, lost, or broken in the coming year.
Think about refinancing. Bad news for the economy could actually be good news for individual homeowners with solid credit. Specifically, low mortgage interest rates make refinancing a viable option for many homeowners. Pay close attention to the finance market in the coming weeks and months, suggests Karpinski, and pull all of your documentation together so that you can act quickly once you find a favorable rate.
Cut out the middleman and rent by owner. If you currently use a property management company or a booking agency, you are most likely cutting into your annual profits and paying unnecessary fees. Might you rent out your vacation home yourself? Figure out what you are paying each year for these services and weigh it against the amount of your own time and energy it will take to run your property. It will require some commitment on your part, but the extra money can make it worth doing.
“It might be helpful to think of this as a second job,” explains Karpinski. “It will likely mean more work for you, but you could potentially increase your in-pocket revenue by anywhere from 25-150 percent depending on your current commission agreement.”
Don’t be afraid to buy generic. Stocking up on convenience products like dishwashing and laundry detergent, glass cleaner, disinfecting wipes, and hand soap pays for itself in guest satisfaction. They won’t have to run out and buy their own—and they’ll see that you really do have their comfort at heart. Best of all (for your wallet), they won’t care a bit if you provide the less expensive store or no-name brands.
Don’t let your empty house run up the bills. In the summer and winter months it can be expensive to heat and cool your home.
Leave a note for your guests reminding them to turn down the thermostats before they depart. Have your housekeeper double-check behind guests after each stay. And if your home is sitting unoccupied for more than a few days, ask him or her to unplug all of your appliances and electronics (just make sure the refrigerator is empty first!).
Karpinski also suggests making inexpensive modifications to your home to make it more energy efficient. Small steps, like caulking and installing weather-strip around doors and windows and switching light bulbs to energy-efficient models, can add up to big savings.
Embrace your inner do-it-yourselfer. As with any home, your vacation rental property will need periodic updating and maintenance. It can be tempting to hire out the handy work, but doing so will cost you. When it’s time for home improvement projects such as painting walls, laying tile, and installing crown molding—or for your home’s quarterly “deep cleaning”—roll up your sleeves and get to work! Far from being dreaded tasks, some of these projects can be fun learning experiences (especially if you get the whole family involved).
Don’t hesitate to negotiate. Call your telephone provider and ask about bundling services for a cheaper rate. Ask your power company about paying a consistent rate throughout the year instead of paying a premium in certain months. Check with your insurance provider to see if a lower rate is available. In other words, don’t just meekly accept the prices you have been paying all along. Ask and you may well receive.
Stock up at home. As a vacation homeowner, you are probably well aware that the cost of living in vacation destinations tends to be higher than in the rest of the country. Consequently, household items like linens, towels, dishes, and BBQ grills tend to cost more as well. Take advantage of the lower prices and (likely) better selection of your primary home market when making purchases for your rental property. It’s easier to catch sales and bargains at home as well.
Plan your own vacation home visits for the off-peak season. If you want to maximize the amount of potential revenue you can make in 2009, consider booking your personal stays in your home during the shoulder or off-season. While you may enjoy visiting your vacation home at the height of summer (if you have a beach cottage) or ski season (if you own a mountain chalet), you may be taking up a week that you likely would have booked otherwise.
If these cost-cutting measures seem like a lot of hassle—and if owning a vacation home at all is starting to feel like a bad idea in today’s economy—try not to get discouraged, says Karpinski.
“The fact that the U.S. economy has hit a rough patch doesn’t detract from the benefits of owning a vacation home,” she says. “Real estate has always been, and will continue to be, a great long-term investment. And if you’re doing everything right, rental-wise, your property will not only pay for itself but may actually be a welcome source of additional income. So make your plan and put it into action—and get ready to thrive in 2009.” •