Over the last two months we’ve been focused on helping homeowners understand the vacation rental process. Mainly, how to get started with this endeavor. Although vacation rentals have their benefits, we understand that listing your Phoenix home as a long-term rental can be intriguing.
An annual tenant gives you a steady income that pays the bills consistently. It’s easy to view this as the safe bet since vacation properties are so competitive. Not everyone can afford to wait and see if their property gets rented and the unknown can be hard to navigate. But, before you go all in, we wanted to help you understand some of the known elements of a long-term rental.
Is the Risk Worth the Commitment?
No matter what revenue stream you pursue, both options have their fair share of risks. In each scenario, you’re giving someone access to your home with minimal input on what goes on inside. At the same time, your ability to frequently inspect the home and perform deep cleans is invaluable.
Committing for the Long Haul.
With long-term rentals, you’re access and control over upkeep is limited. The best you’re going to get is an inspection every 6 months. Typically, a yearly inspection is more common. In other words, you’re essentially placing the responsibility on your tenant. During this time, you have to respect their commitment to you and trust they’ll uphold their end of the bargain. This is a large risk in itself.
Even when routine inspections are available, the renter’s belongings can obscure your ability to locate damage. Because of this, repairs and maintenance with tenants can be tricky. Sometimes, tenants will not tell you about problems, thus leaving them to become bigger and more costly repairs in the future.
RaeAnne Knight, part owner of Maid 2B Clean, understands what irresponsible tenants can do to the value of a home. She believes keeping your home well-maintained while the Phoenix real estate market rises is a smart decision. After experiencing a few evictions, she’s seen how costly minimal inspections can be.
“Tenants have the right to ‘peaceful enjoyment’, which means, you as the owner can not just show up to inspect the property.” That can be frustrating for homeowners who are renting for the first time. Even if you suspected something was wrong, RaeAnne reminds us that “You have to give proper notice (48 hrs) to the tenant” before arriving on-site.
Short Term Peace of Mind.
Although these “rules” still apply for vacation properties, you don’t have to wait long to check things out. This type of rental gives you full access almost weekly. Moreover, you’re able to thoroughly clean the property in between rentals. Vacation rental platforms also allow you to fully assess and rate how each tenant maintained the premises. Even if you suspect something is wrong, worry can be eliminated in a matter of days. This lessens the risk because it’s easier to address problems soon after they occur.
Timeliness also is a factor. There are laws in Arizona regarding the timeframe you have to make certain repairs once you are made aware of them – regardless if the tenant has paid rent or not. This is a lot easier to manage when you’re not scrambling to fix things and relist your property as a long-term rental. This presents a huge peace of mind for homeowners.
Since your margins are higher for vacation rentals, you’re not forced to re-rent your home once the tenant leaves. If you plan out vacation rental dates, you should have plenty of time to adhere to state laws while pursuing the tenant for damage. If you need to address damage or other concerns, this gives you additional time to do so. It’s also a lot easier to pinpoint the responsible party. When you’re diligent in between rentals, final walkthroughs tend to be a breeze. Especially when tenants aren’t burrowing in for a year or two.
Understanding Rental Management Responsibilities
Although we touched on a lot of the managerial duties for vacation rentals in previous articles, RaeAnne provided some additional insight on the topic. “I previously worked in the hotel industry for 12+ years, and understand that vacation rentals are similar to a ‘mini-hotel’ stay – Thus, needing to be aware of every detail, down to the smallest.”
In other words, you can literally set boundaries and fees for everything. “With vacation rentals, you can lay down more ground rules than you can for a regular rental home.” Giving tenants a roadmap sets a clear picture of expectations and empowers them to self govern their responsibilities for the short period of time they’re in Phoenix.
With long-term rentals, there is a certain sense of “gray area.” Since the tenant is basically paying your mortgage (and then some), they tend to subconsciously believe the home belongs to them. They’re going to naturally look for the most affordable way to fix issues that arise. Even if you lay out clear ground rules, it doesn’t mean they’ll choose your best interest over theirs.
Things can become even more tricky when you’re leaning on an outside agency to help you manage the property. If you live out of state, you’re required to pay a local management company to oversee the rental. Keep in mind, this is going to dig into your monthly rate by about 10-15%. Aside from trusting them to take care about your home, you also have to count on them to do their job. That’s two layers of “room for error.”
Put Your Vacation Rental on Auto-Pilot
You can manage a vacation rental from anywhere in the world and have the cleaning company here as your eyes and ears. Moreover, instead of paying for a costly deep clean every year, you’re able to invest in more affordable maintenance measures. This is where our rental experience comes in handy for homeowners renting for the first time.
RaeAnne wants to leave you with that thought as we close out this topic. “We do more than “clean” your house. We look for, and inform you, of possible repairs/maintenance needs.” Having an added layer of protection allows you to experience a peace of mind throughout your investment.
Weigh Your Options Before Deciding How to Rent
Is there a greater risk in trusting someone to maintain your house for a year? Is it too risky to wait for someone to book your house as a vacation rental? It’s inevitably your decision. Run through every scenario and see what similar homeowners in your neighborhood have to say. Doing your homework on both possibilities before deciding will help you in the longrun and prepare you for the worst.
One last tip: If you do decide to go with a long-term lease, make sure you invest heavily in the application process. Doing so will decrease the risk of long-term damage by finding a trustworthy and responsible renter to maintain your home.
No matter what choice you make, let us know if we can be of any assistance during move out day. Your home was Maid 2B Clean!
Tune in next month for more insight on the eviction process.