When clients come to town to purchase a vacation rental condo, one of the things they ask for most are the occupancy rates and income figures of the current owner. I hesitate of advise people that the current owner’s occupancy rates and income figures are of little use because nobody believes me; but that has been my experience over the years. Problem is, it seems only natural that one of the things you would check if you were buying a vacation rental, is the previous owners rental records. I mean, what else do you have to investigate? Problem is, you don’t know the level of competence of the previous owner or their property management company. You don’t know if the previous owner was even motivated to keep the unit full. You don’t know how much time the owners spent in the unit themselves or let friends stay in it for free. If you base an assumption of what you will make, based on what the present owner is making, you could investigate yourself out of what could be a very good opportunity. I’ll give you an example. I built a two bedroom unit for my daughter in the above-ground basement of my house. After she moved out, I wanted to list it for vacation rental with a company in town. I called about half a dozen, and they all refused to take it because it wasn’t by the ocean. They all said I would never keep it rented. I took their word for it and didn’t even try. About a year went by during which time the company Vacation Rental By Owner (VRBO) stated up; I think it was 1993 or ’94. I contacted them and talked to the owner; a guy named Chris (that’s how small it was at first!). I sent him some photos and some copy and he set me up with a page on VRBO. Within two months we were booked solid for the rest of the year. The point is, other people’s opinions and/or occupancy figures are worse than useless because they give you a false idea of the unit’s real potential. To maximize the potential you need to treat the unit like a business and be very pro-active and very hands on with the management. My little unit below my house ( www.konacountryroad.com) is proof positive that you can keep anything rented in this town if the price is right and it’s marketed properly. So much of the success of a vacation rental depends on the complex itself the unit’s proximity to the water and the ocean view; not what the previous owner has done. Bear in mind that I would not steer a client to any complex that wasn’t popular with vacation renters. And I believe I have a pretty good feel for what those complexes are after having been in the vacation rental business myself since 1987 (on Oahu for two years) and in the real estate business selling condos on the Big Island since 1990.
Once I have plugged you into one of the better vacation rental complexes in town, keeping it full depends entirely on how pro-actively you manage the unit. First thing is to choose a good vacation rental management company. If you get a bad one you would have a lower occupancy rate than if you had a good company. A lot also depends on how much personal effort you are willing to put into keeping the property rented. If you use one of the companies that allows unlimited owner blackout dates (no commission on owner supplied tenants), and sign up with a few of the best vacation rental by owner websites, you could generate a much higher occupancy rate than the present owner who just relies on their management company. You will just need to spend 15 minutes to an hour a day managing emails from these websites and coordinating your bookings with your management company’s. When you are ready, I can tell you which companies got high marks from my previous clients and which companies either have unlimited owner black-out dates or discounted rates when tenants are supplied by the owner. After the sale I will be here to advise you on how to sign up for vacation rental by owner websites, set up your own website and basically market your new condo to achieve its maximum potential.