On websites like Air BnB or VRBO, owners of real estate can rent a room, apartment, or house for a few days to an out of towner. Lindsay Defrates column suggests that the recent decision to permit homes in subdivisions to engage in VRBO is a negative development for the community because it takes away longer term rental opportunities from working class citizens.
I disagree, because significant employment comes from property management and property maintenance, and the VRBOs support this dimension of the local economy. Vacation rental home owners are simply trying to make the most of their housing investment. Home-ownership comes with many expenses related to property maintenance, and local companies are usually employed to provide these.
Second, it is not very easy to turn one’s vacation home into a rental. Doing so incurs many, many expenses. From extra insurance, to a cleaning bill every time a home turns over. Time online curating and promoting the post, and using online schedulers and merchant accounts. Having a VRBO is running a business, a small business directed at making the most of a housing investment. The owner has to either do all of the activities of a property management firm or has to employ one, and these, in turn are local companies employing people.
There is another perspective from the traveller’s set of considerations. As a traveller passing through, these are attractive options. They lack the sterility and generic quality of hotels, but they are not as expensive as trying to be part owner of a fractional.
The history of VRBOs is both old and new. Its old, because owning vacation homes is old. What is new, is the homeowner’s easy access to the tools required to schedule, maintain and get their home rented from afar. The popular websites democratize the marketing scheme. Finally, staying in one is a more quaint alternative to buying a fractional and more fascinating than staying at a hotel or motel.
This industry is similar to Uber in that it seems like it could be an economic boon to the common man. If you have a car, (of course meeting certain criteria), you can make money giving people rides. If you have a home, make money off of it by sharing it. Hence the sharing economy. Capitalize on your private property, albeit with less commitment/effort/start up cost than a business owner, and still make your stuff pay for itself.
The sharing economy’s attractiveness is compelling because it plays exactly into the ethos that Defrates column is promoting, which is that the money the consumer spends directly helps a community member and the community. (That these homes are profitable enough to be maintained well is in everyone’s interest).
The sharing economy plays into our desire to connect with each other and keep money in town. But it is not the only or most obvious choice for a property owner.
The start up costs for the sharing economy include getting your place into hotel condition. Perfectly cleaned sheets, valuables locked up, clean fridge, and not too much clutter are definitely in order. Getting your side hustle on in the sharing economy, it really is like starting your own business or most efforts in life—You get out what you put in. It is great that Air BnB or VRBO are allowed because it is a way to make your property work for you…but you have basically started a business and now you have all of the same headaches as a property manager. Instead of renters, you have guests.
We have all heard about the nightmares that can ensue if the wrong renters are chosen, and the wrong guests in an AirBnB can wreak havok too. Destructive guests can cause you to spend all your earnings on cleaning up after them. If you lower the price enough to be very competitive, you have to worry about getting enough days per month to compensate for those lonely Tuesdays when no one new is in town.
The business that has begun is one of property manager but instead of reviewing applicants for a year lease, the pace of review has quickened. You have to schedule multiple guests per month, so you have to answer the age old question of should I have a 3 night minimum stay? In a regular renter situation, the cost of the process is borne by the renter’s application fee, and occurs once or twice a year.
In the vacation rental example the owner has to spend time (and time is money) on advertising the vacation rental and scheduling guests, or pay another firm to do so. To really stand out, you’ll need to pay for a pro photographer and maybe a marketer to give you tips on managing your listing. And whomever you hire for cleaning, ought to have their own business insurance as well, so its best not too go too unreliable and cheap on that front, either.
The largest headache of all could be arguments with your neighbors in case guests are loud, unruly or rude. Is there a price that quantifies the value of great relationships among neighbors, nope, there’s not.
Vacation Rentals vs. Fractionals
What has this done to the movement of fractionals on the market? You know, time shares. Some travelers could decide that instead of investing in a fractional, they will just stay at AirBnBs so they get a different vacation experience each time.
Well, I’ve known some over 50s and they like things to be the same each time, so perhaps fractionals still have their draw. The best thing about fractionals is that they are managed to fine vacation standards all year.
Why AirB&B and not a long term rental situation
I wonder how many of the homes on AirBandB and VRBO are also for sale? It could be a way homeowners could compensate for their house not selling quickly enough.
My eyebrow raises in some cases because if the place is unappealing to a long term renter it would be unappealing for the same reason for a short term renter. Whatever quality of the home is making it unrentable, is probably the item that is going to cause the bad reviews on the vacation rental sites.
This is true with one large exception if the factor is space. Its hard to live in tiny rooms but its easy to vacation in them.
Enjoy the new sharing economy, just make sure to consider the costs of insurance, marketing and scheduling guests, and cleaning, so you know your return on investment per weekend– and decide if a long term renter or vacation rental is the best way to go for your home.
Decrying the use of available housing as vacation rentals, instead of long term rentals, is an attempt to dictate how someone should handle their second home investment. Since VRBO home owners employ local property management and property maintenance companies, the economy they produce is local and employs locals. Depressing the market for second home owners is not a great idea for the local economy either.
Do teachers need affordable housing? Absolutely. That is why Cheryl Chandler, owner/broker of Cheryl&Co in Rifle, Colorado has supported and implemented the heroes program. Qualifying heroes include Firefighters, Law Enforcement, Military (Active, Reserve & Veterans), Healthcare Professionals, EMS, and Teachers. This program is a giving back from the lender and the real estate agents as a gift for their closing. They can use for down payment or other expenses. This program can be part of the solution for teacher participation in the real estate market.
Glenwood Springs is an amazing community heroes, property owners, property managers, and home maintenance laborers all love to serve– and travellers love to enjoy.