Many people with second holiday homes obviously consider renting them when they are not in use by the owner, family or friends. This way they can cover some of the costs involved in maintaining the property and make an additional income. I thought the information I collected below would be valuable to those considering renting their holiday homes, as it is well worth taking into account the experiences of those people who have trod this path before.
Equipping Your Property
When you first venture into the holiday property business, it can be tempting to try and limit your initial set-up costs by providing the bare minimum of furniture and equipment. But the advice I have collected from seasoned holiday property owners is...don't try and cut corners! Furnish and equip your property as well as you can possibly afford.
Obviously you're worried about getting a good return on your investment. The fear that some holidaymakers from hell will wreak havoc with your possessions might deter you from equipping your holiday home to a high standard.
Those who've been in the business for years have found that most holidaymakers take greater care with furniture and other more personal items if they can see these are things which the owner obviously cares about...it's human nature.
Generally speaking people prefer - and expect - their holiday accommodation to be superior to their own homes. They are more likely to look after your property if they feel you have taken a lot of trouble to make them feel welcome and comfortable.
Ensuring all the beds are comfortable is an absolute must. A lack of sleep is enough is ruin anyone's holiday. One owner advises: " Sleep in every bed in the place! I had several complaints about a bed during my first year of renting out - and when I next visited my property I realised the complaints were entirely justified."
Bear in mind that many holidaymakers regard certain items - such as a microwave oven, satellite TV and tumble drier - as essential in a holiday property, even though they might not have them at home.
If you store personal things in the property which are not for the use of your tenants, it's not a good idea to keep them in a locked cupboard...it just makes people curious and they may try to wrench the door open! Many owners find a polite notice, asking tenants not to use particular items, works better. Generally, holidaymakers will respect the owner's wishes. A better solution, if possible, is to store personal items with friends during lets.
It's advisable to have removable and washable covers (or throw-overs) on your three-piece suite - especially if your property is one of the hotter areas of Spain.
As one property owner pointed out: "People come in from the beach or terrace and sit down covered in suntan oil. It took me ages to figure out why my suite was filthy every time I visited."
The same owner continued: "You'd be amazed at what tenants can do. I've had pictures stolen, frying pans apparently used as hammers, the kitchen workbench (solid wood) used as a chopping board. One of my friends had her portable barbecue lit inside the lounge, leaving a very black ceiling!"
This owner's motto is: Be prepared for the worst...even though it doesn't normally happen. In seven years of holiday letting, the vast majority of her experiences have been positive!
Using Letting Agencies
Weigh up the pros and cons of using a letting agency to handle your bookings. The advantage of handing responsibility over to an agency is that they generally deal with all the practicalities for you - from the booking enquiries and money transactions to the cleaning and maintenance of the property.
This is ideal for owners who don't have the time - or inclination - to deal directly with customers themselves.
The main drawback of using agencies is that they charge a substantial commission for their services, so reducing your profits - sometimes by as much as 25-50%.
Some agencies will guarantee a fixed income for certain types of property in high season (e.g a villa with private pool in a Mediterranean coastal resort in July/August).
Make sure you know exactly what price the agency plans to charge clients - and what commission they plan to take. Dissatisfied clients who feel they've been overcharged by greedy agents are more likely to cause problems in your property.
Also check exactly what services the agency provides. Some provide different levels of service, depending on how much you're prepared to pay and on whether you have a local manager handling certain aspects of your property letting for you.
Ask whether the agency inspects the property before and after each let and does this include a full inventory inspection? Do they check tenants into your property and explain how the various major appliances work? Will they organise running repairs and maintenance and provide written reports? Are their staff on 24-hour call-out in case of emergencies?
Make sure you know exactly what you're getting for your money - because the cheapest agent isn't always the best or most reliable. Talk to fellow property owners in the area to see if they can recommend a good agency - or if they can advise you which companies to avoid.
Decide whether you want the same agency to look after your property, swimming pool and garden. Many owners prefer to employ a different pool maintenance company and/or gardener so there's someone else keeping an eye on the place in their absence.
If the agency isn't doing its job, the gardener might be able to tip you off...and vice versa!
Appointing a Property Manager
If you decide against using an official agency - and you don't live locally - it's vital to appoint a property manager. You need a responsible and reliable person who lives within easy distance of your holiday home. You can normally find someone willing to do this for a fraction of a high street agent's fees.
Their duties should include a weekly check of the property, arranging for a thorough clean before and after each group of visitors, handing over and collecting keys and generally sorting out problems.
Consider paying your local manager to do extra duties, such as shopping, gardening, writing welcome cards etc. Many property owners find this worthwhile because it enables them to check up on the visitors - both to see that all is well from their point of view (and that all's well with your property!)
Keep in close contact with your manager who must never hand over your house keys until given the go-ahead by you.
Many owners have run into difficulties after appointing friends as caretakers...complaints from dissatisfied tenants can lead to friction between owner and erstwhile friend! Keep your property letting as businesslike as possible.
Cleaning
NEVER under-estimate the importance of this vital aspect of holiday letting. Wastepaper bins that haven't been emptied, sweet wrappers lurking in a far corner under the kids' bunk beds and greasy cookers all add up to an odious start to anyone's holiday.
It's essential to have good, reliable cleaners going into the property between lets - many owners send them in for a mid-week clean as well. Besides going down well with your visitors, it gives you an excuse to keep an eye on things.
Don't expect your property to be in pristine condition after the letting period. There'll always be visitors who leave a mess behind them, break things, trample your plants etc. It's all part and parcel of the business.
If you keep a record of names, addresses and phone numbers, you can turn down any "undesirables" if they ever reapply. Gradually you should be able to build up a loyal band of good customers who come back to you year after year
Handling Enquiries
If you're not using an agent, make the most of the fact that you're dealing directly with potential clients and use their letters and/or phone calls as a means of identifying any possible "bad apples". A phone conversation will tell you a lot about a person if you handle it well...you may decide this is not the kind of person you want in your property!
Don't ignore any rental enquiries - even if your property is fully booked.
Thank the enquirer for showing an interest. Use the opportunity to get them even more interested in your property and suggest they book well in advance next year.
It's a good idea to jot down their name and contact details in a "potential and actual clients book" and follow up with a Christmas card reminder - ideally enclosing a good colour photo of your property.
Spam and Scamming Enquiries
As the Internet as grown so has it attracted the bad elements in life, with criminals looking to exploit people. Many scammers and crooks have entered the arena. Beware particularly if you receive your enquiries by email because they can often be sophisticated scams. There has been a spate of these scams in recent years and those originating from Nigeria have been very prominent. If you are in any doubt about enquiries like this then report them to the company you may be using to advertise your property with, who may well be aware of these scams from other users experience.
Also you may consider contacting the police to seek advice. Normally these scammers make seemingly unreal propositions like sending you a cheque in advance for a significant sum and asking you to pay them the balance. Of course the cheque will not clear. Do not take any chances, always consult if you are in any doubt and make sure your contract terms are complied with and you have received all the monies due to you before you consider handing over the keys! You may also consider asking for proof of Identity before you commit to any financial negotiation if you are unsure of the motives of your enquirer. Do not under any circumstances provide details of the location of your property, address etc. until you are perfectly sure who you are dealing with.
Booking Deposit
Insist on a booking deposit - normally of 20-25% of the full rental fee. The remainder should be payable six to eight weeks prior to the date of the holiday. If anyone backs out, this gives you time to try to secure a replacement booking. For bookings made less than two months before the date of occupancy, ask for full payment immediately. If a potential client objects - treat that as a warning bell. This is probably NOT the kind of person you want anyway.
Never confirm a booking until the deposit is in the bank....however genuine the prospective customer seems to be. You may lose the chance of a back-up booking. Make sure cheques have cleared before sending out the keys, exact address etc.
You need to beware of that rare but dangerous breed of holidaymaker who pays his deposit but not the remainder of the booking fee.
Insist on receiving the full amount before keys are handed over...after all, people expect to pay the full amount up front when they book a holiday through a travel agent.
Breakages Deposit
Holidaymakers expect to be charged a refundable deposit - often another 25% - to cover breakages and damage. Some property owners don't charge a deposit - preferring to trust their guests to report any breakages and to pay for replacements.
This can be risky - but it goes down well with clients and avoids the administrative problem of refunding deposits.
One owner told us: "I've got the oddest collection of mugs because people have broken things and bought replacements."
A good letting agency will ensure that anything broken is replaced - with matching items! - between lets. If you're using your own property manager make sure he/she does the same.
Handling Your Finances
A letting agent will take away the headaches of handling booking deposits, confirmation fees, deductions for breakages and deposit refunds. You'll need to think about how you're going to handle all this if you're not using an agent.
Most property owners aren't in a position to accept credit card payments. Many holidaymakers prefer to use cheques rather than electronic bank transfers but some property owners have found foreign cheques can take several weeks to clear - then they have to pay hefty bank charges for currency conversion.
On the subject of finance....it's unadvisable to try and avoid declaring your rental income to the tax authorities. If you're advertising effectively, and especially if you're inviting rental enquirers to contact you directly, that means the taxman could end up on the other end of your phone as well as potential clients!
Insurance
Tell your insurance company what you're doing. Many insurers impose restrictions and increased premiums when properties are let. Consider taking out extra contents insurance to cover accidental damage when the amount claimed exceeds your returnable deposit.
Some owners take out legal expense insurance to cover disputes with tenants. You might also want to consider extra insurance to cover loss of rental income in the event of damage to your property.
Take the time to compile a really thorough inventory - room by room and cupboard by cupboard. Take photographs of each room, wall, cupboard etc so if there's a fire, theft or some other problem you have an indisputable record of all your possessions for insurance purposes.
Your property manager should check after each visit that your important possessions (TV, microwave, pictures etc) are still in place.
Keeping the Customer Satisfied
Send your guests some useful information - e.g maps, car hire phone numbers etc - a week or so before they arrive. All this shows you care about them - it makes them feel good, puts them in the mood to like and enjoy the property and hopefully will entice them back next year. Successful owners find a few small personal "touches" - a chilled bottle of white wine in the fridge, a fruit bowl and a welcome card with the guests' names - can make all the difference.
Many owners provide a "welcome pack" of groceries - particularly appreciated by holidaymakers arriving after the shops have closed. Obviously this goes down well with your clients. But, as one owner discovered, some people are never happy. "I got complaints from people who wanted butter when I'd provided margarine - or they wanted brown bread when I'd left white. One woman even sent me a list of what she wanted in advance - it was enough to feed a family for a week.
I gave up my welcome pack after that!" Don't forget to follow up your guests after their holiday. Send them a letter expressing your hope that they enjoyed their stay and ask for suggestions for improvements. Make sure you keep all addresses and phone numbers for future reference.
Send your guests - and those who've made booking enquiries - an occasional email newsletter. Give them some interesting snippets about local fiestas, the wonderful restaurants you've visited, the wines you've sampled, the local haunts you've discovered. Entice them with some "tasters" and local colour which will draw them to visit - and revisit - your holiday home. Don't ever treat potential or actual clients solely as a source of income. To win them over - and win them back - you have to show an interest in them, make them feel special and pamper them.
Keeping a House Book
Compile a house book with practical information and instructions e.g how to work the heaters or fans, where to turn water on, where to put rubbish etc. Your guests will also appreciate information about good local restaurants and places to visit, phone numbers and addresses of local doctors, dentists, hospitals, police and fire etc.
Some meticulous owners even go so far as to leave details of the kind of birds and other wildlife which can be seen in the garden and surrounding area.
Legal Issues
If you plan to let your holiday property through an agency, make sure you have a legal contract in place which clearly spells out the exact responsibilities of both parties. Any reputable agent should already have a standard contract covering issues such as:
* Method/timing of payments to you as the owner * Commission rates charged by the agent * Responsibility for maintenance/repairs * Responsibility for accidental damage * Customer support - before, during and sometimes after the letting period * Handling of late cancellations
If you're in any doubt whatsoever about the contents of an agency's proforma contract, pay a lawyer to cast a professional eye over it for you before you sign - yes, it's more expense but it could save you a fortune in the long term! If you plan to handle bookings yourself, it's just as important to have a legal contract in place between you and each visiting party. The contract should set out the terms and conditions upon which you are letting the property. An individual member of the visiting party should sign the contract which should state that he/she is signing on behalf of all fellow guests. The contract should cover issues such as:
* Method/timing of payments * Booking and damage deposits * Late cancellation payments (as percentage of the total rental fee) * Detailed itemisation of services/facilities included in the cost. For example: * Pool/garden maintenance * Heating/lighting/water costs * Local taxes * Bed linen/towels * Maid service * Cots/high chairs * Welcome pack of essential items * 24-hour access to a local property agent * Party size - reserve the right to restrict visitor numbers * Change over day times - when visitors are expected to arrive and leave
Don't forget to attach an inventory of your property's contents to the contract. The contract should state that the visiting party accepts responsibility for ensuring that all items remain in place and in tact. Your guests ahould accept responsibility for replacing missing or damaged items.
Whatever the terms of your contract, be prepared to refund a percentage of the rental fee without question if you receive justified complaints from your guests. Besides being an ethical issue, this makes sound business sense if you want repeat bookings and an untarnished reputation!
Setting a Rental Tariff
You want to make money out of your holiday property but at the same time you obviously want to set a reasonable rental tariff which will attract those all important booking enquiries.
Getting the Price Right!
A little bit of market research will go a long way here. It won't take you much time and effort and it'll be worth it in terms of the number of bookings you'll secure if you get the price right.
Look in local agents' windows to check out the rental prices of comparable properties in your area. Scan the classified ads in newspapers and magazines and look at holiday properties on-line to see how they're presented and what prices they're fetching. Compare the prices of our wide range of properties before making your decision on price.
Bear in mind that Internet holiday hunters expect to pay less when they book a holiday property direct from the owner than they would if booking through a holiday agent. So you need to have an idea of what the agents are charging and what level of commission is built into their prices.
Some high street agents have been known to charge more than 50% commission on each booking - so that leaves you with plenty of scope to under cut them when you advertise on the Internet.
The prices you decide to charge will need to reflect a variety of factors including:
* location - coastal/inland/top tourist spot
* size of the property/number of beds
* proximity to local beaches
* availability of a swimming pool (private or communal)
* transport links - proximity to an airport with charter flights
* general standard of the property and its facilities
* availability of a garden
* local attractions
Vary your rental prices according to high, low and mid-season. You'll be able to charge a higher price over Christmas, New Year and Easter.
"Test the water" at one price level then, if you feel you've pitched your prices either too high or too low you simply change them.
Of course not everybody has the time to manage their own rentals - there is a considerable amount of work involved - the best solution here is to hire Property Management Company that would take care of all the finer points of the business. Advertising, dealing with customer enquiries and bookings, and managing the rentals and changeover cleans, giving you peace of mind that your property is well cared for. All you have to do then is sit back and receive the income from your rentals!
Many of the most successful property management companies can take bookings for most months of the year, not just in high season. If they find themselves with a last-minute gap in their rental season, for example, they make use of a late availability service.
Conclusion
I trust the information provided here genuinely helps you to make informed decisions and to avoid potential pitfalls in the process of renting your holiday home.
Advertising Your Property on the Internet
Many people have turned to the Internet to promote their properties, get enquiries and bookings. This is a very affordable marketing option and provides a large marketplace to attract clients.
If you are interested advertising your holiday rental property on the Internet, Then do consider the service offered by Villarama at villarama.com villarama.com where you can see how the service works.
To advertise click the "advertise" button or contact Jackie by E-mail at jackie at villarama.com to make an advertising enquiry.
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