How many weeks a year should I rent my property?
Running a successful business as a vacation rental host involves making the right choices. One of the determining factors between success or failure as a rental host is to accurately gauge when and how often to rent your property. How many weeks will you have to rent your property per year to hit your goals?
Identifying Your Goals
To answer that question, the first thing you have to determine is how many weeks in a year you would like to use your rental home for yourself or for family members or friends. That will give you a good starting point.
Next, think about your motivation for becoming a vacation rental host. Do you consider vacation rental hosting as a business or as a hobby? Are you just doing it for a bit of extra income? Do you intend to pay your mortgage with rental income? Do you intend to make a healthy profit?
Whether your goal is to make a little money or a lot, it makes sense to at least ensure that your vacation rental hosting will not end up costing you money. How can you do that?
Assessing Your Costs
It is important to consider your total costs, not just the big expenses like mortgage payments or homeowners insurance. Here are the bare minimum costs you are likely to incur as a vacation rental host:
- Monthly mortgage payment
- Property taxes
- Homeowner’s Association fees, if applicable
- Insurance (homeowners’ and liability)
- Maintenance and repair costs
- Cleaning fee, if you hire a service (or cost of supplies if you do not)
- Laundry fee
- Listing site fees
- Advertising and marketing fees
You may find that you incur other costs as well. It is wise to keep a careful record of all expenses for the first year or so, in order to have a clear picture of typical monthly expenses.
Assessing the Market
A reasonable next step is to look at how often other properties in your area are being booked as well as when peak season is for your location. If you live in an area where rentals are always in high demand, your task of determining how many weeks to offer your property is easier because you will not need to adjust your figures for seasonal pricing.
However, even if your rental is in an area that does have peak season and slow seasons, you can adjust your calculations based on the general booking patterns you find for other properties similar to yours in the same area.
Finding Your Sweet Spot
Christine Karpinski, vacation rental host expert, provides the following formula that she claims works whether your vacation rental costs $60,000 or $5 million:
“Strive for the 17-week “sweet spot” by renting your property for a minimum of 17 weeks each year. If your property’s monthly mortgage payment (including principal, interest, taxes and insurance) is less than or equal to one peak season weekly rental, and you rent approximately 17 weeks per year, you will break even on the cost of your property.”
How does that actually work? Generally, peak rental season lasts approximately 12 weeks per year. If you rent your property every week during peak season, and your rental fee is greater than your mortgage payment, you will have covered your mortgage expenses with just those 12 weeks. An additional five weeks is usually sufficient to cover your other expenses such as utilities, insurance, maintenance, and so on.
Of course, there is nothing to stop you from renting for even more weeks and reaping a good profit from your vacation rental. There is one note of caution, however. The more weeks you rent your property, the more wear and tear there will be. So, it is important to weigh that into your decision regarding additional rental weeks.
Getting Paid as a Vacation Rental Host
Once you have decided how often to make your home available for vacationers, you will want to ensure that you have an easy way to accept rental payments. Payoneer is an excellent resource for vacation rental hosts because it is a truly global payment processing solution. Take a look at our solution for rental hosts today!