With over 1,400 vacation rentals in Angel Fire and 600 in Red River, the vacation rental market has slowly become very saturated.
The advent of online booking platforms has given rise to the vacation rental boom and everyone wants a piece of it. Many homes are performing well but many more are not. All of the high performing properties have these things in common:
1) Great location
2) High quality property
3) Exceptional management
If you already own a property, you can't change the location but you can improve the quality and the management if you feel your property is underperforming. In our area a 60% and above occupancy rate is considered good, if you are below 50% some intervention may be in order.
Improving quality is going to cost money and on average the cost for a smaller house will be around $25 to $30 per sf for a complete remodel, flooring, paint, appliances etc.., so for an 1,100 sf house you should expect to pay around $27,000 for the remodel. However with proper management this upgrade will pay for itself in about 3 years and have a lifespan of around 15 years. When potential renters are searching for a vacation home, photos and or video is all they have available to them in order to make their decision, so to get their attention, the house needs to be in excellent condition with modern amenities and appearance.
The next variable is management. Poor management will automatically result in poor performance. I have seen homeowners and property management companies both do phenomenal jobs at management with outstanding results, however, I have also seen pathetic results from both of the aforementioned management scenarios. Property management is a complicated business with a tremendous amount of moving parts including maintenance, housekeeping, marketing, advertising, customer relations, and more, all of which need to be perfectly choreographed in order to succeed. There is no getting around the fact that property management is not an easy job, it takes a lot of time and dedication.
Once you have quality and management under control you need to think about pricing. This is an area that many managers don't pay enough attention to. Every night that your house is vacant is money that can never be recovered, so getting it booked is paramount. The online booking platforms such as VRBO use algorithms to sort and show properties to potential customers, these algorithms take into account many variables including pricing. Believe it or not, sometimes adjusting your price slightly upward can actually move your property higher in the suggested list. Adjusting pricing is a mixture of art and science, a good property manager with the assistance of pricing software can make a huge difference in occupancy rates. What you absolutely do not want to do is to set the price and walk away. Pricing adjustments need to be done on a monthly if not weekly basis.
Additional tips on getting your property rented. The most searched term for amenities is "pet friendly" with 40% of potential renters looking for a home that will welcome their furry family member, followed by "internet" then "hot tub/pool". if you don't currently offer any of these options, you may want to consider it.
Questions about the vacation rental business?
Rob Swan
Qualifying Broker, Swan Realty
575-613-4243