Four key factors to consider when investing in vacation rental property

A few years ago (OK maybe more than a few), buying a vacation rental property seemed like a dream to many. Mortgage rates were high, properties were expensive, and available inventory in prime locations was relatively small.

But this isn’t a few years ago. Today, making your dream of owning vacation rental property is within reach, thanks to more vacation properties for sale, dropping prices and lower interest rates.  If you’re in the market to become a new landlord of a short-term rental, the key is to find the perfect property to make those dreams come true. Here’s what you want to keep in mind:

1 Location, location, location. Everyone envisions a gorgeous villa on the beach with spectacular views of the ocean. While oceanfront vacation rentals are among the most lucrative, there are plenty of other locations that can bring in rental revenue year-round. Think about what attractions are around you, think outside the box. Are there excellent shopping opportunities like huge outlet centers that draw crowds from out of town. Are you near a large college with a huge following of fans that are perpetually in need of a place to stay for games, graduation and other special events?  What about great golf courses or nearby amusement parks? The more attractions that are within an easy drive of your rental property, the better chance you have of keeping the place booked.

2

 Your budget. Be realistic about how much you want to spend on a vacation rental property, including what you’ll need to spend to furnish the place for your guests.

3.The size of property you need. How many people/couples/families are you hoping will be using the property at any given time?  Though not necessary, having a bathroom for each bedroom is ideal.

4Your future plans. How often do you plan to stay at the property? Do you hope to move there one day? If so, you want to select a place that suits your needs as well, though that should be secondary if your plans don’t include moving in for several years. You never know what might change by then. 

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Save social media for marketing

Businesses of all kinds are using social media, mostly as a marketing and public relations tool. Facebook pages, Twitter feeds, LinkedIn profiles and Pinterest accounts are quickly becoming must-haves in many industries. Interacting with consumers, gaining followers, promoting products and services … it all can be done online for free through social media sites.

But some businesses are finding another use for social media: Background checks. It’s a tempting practice, the ease with which you can look up a potential employee or tenant on Facebook to see what kind of person you’re about to hire – or accept as a tenant. But is it a good idea?

We think it’s a risky endeavor for a few reasons. First of all, there are privacy concerns associated with using people’s personal information and photos to make a judgment about their potential as a tenant. In fact, Fair Housing laws are in place to keep such discrimination at bay.

Second, it’s too easy to make a mistake. There are tons of folks out there with the same name, and you can’t be absolutely sure you’ve got the right Jane Doe’s Facebook page or Twitter feed. And even if you’re sure it’s the right person, the inferences you make about what you see could very well be false. For instance, just because Jane has a lot of photos of herself with two big dogs doesn’t mean they’re her dogs and will potentially be moving into your rental property with her.

It’s best to stick to the tried and true tenant screening methods of having the tenant applicant undergo a credit check, background check and employment verification. Leave the social media to your marketing plan

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Landlord can’t evict tenants for being Bears fans

We’re not sure how legitimate this claim is, but it gave us a chuckle and brought up a decent point about discrimination in the business of property management, so we thought we’d pass it along:

A landlord recently posted on the Landlord Protection Agency forum asking about the legality of evicting tenants who supposedly lied on their tenant application about being fans of the Green Bay Packers. After the couple moved into the home – which is within walking distance to Lambeau Field – they placed lawn ornaments, flags and other paraphernalia outside the home proclaiming to be Chicago Bears fans. This drew the ire of the absentee landlord, a Packers fan who is renting out his home until he retires in a few years and heads back to his beloved Green Bay.

According to the landlord, the tenants’ Bears paraphernalia had angered the neighbors and he was wondering if lying on the tenant application was grounds for eviction. The short answer is no. Lying about one’s employment or criminal record could be grounds for an application to be rejected, but someone’s affiliation with or involvement in a particular club, sport, team, church or other organization is protected under privacy laws. It’s unlawful to deny housing based on something that does not threaten the life or well-being of anyone, and is none of the landlord’s business.

While we’re on the subject, let’s also review the Fair Housing Act (Title VIII of the Civil Rights Act of 1968), which outlawed:

• Refusal to sell or rent a dwelling to any person because of race, color, religion, sex, or national origin.
• Discrimination based on race, color, religion or national origin in the terms, conditions or privilege of the sale or rental of a dwelling.
• Advertising the sale or rental of a dwelling indicating preference of discrimination based on race, color, religion or national origin.
• Coercing, threatening, intimidating, or interfering with a person's enjoyment or exercise of housing rights based on discriminatory reasons or retaliating against a person or organization that aids or encourages the exercise or enjoyment of fair housing rights.

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Unmarried couples should be treated equally and fairly on the lease

In this day and age, a lot of unmarried couples live together. While this is perfectly acceptable and should never be a form of discrimination based on your religious beliefs, landlords need to be careful to treat both adults equally and fairly when it comes to the tenant screening process.

Assuming both are adults over age 18, always have both parties fill out a rental application form, and run a credit check and background check on both of them. You never know what will turn up. Depending on how long they’ve been together, there’s even a chance one person’s past isn’t known by the other person. That’s not to say it’s up to you to disclose anything negative you find, although they are entitled to know why they are being denied if you do decide to reject their application based on something that turned up during tenant screening.

Also, get both parties to sign the lease. Even if one says he/she will be carrying the burden of the monthly rental payment, there’s no guarantee they will stay together. If one moves out, the other needs to be on the lease and therefore legally bound to uphold the tenets of the lease agreement.

No matter what they call each other, to you two unmarried tenants are merely roommates, and should be treated accordingly

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Offering free perks to tenants can strengthen relationships and reputation

The largest landlord in the U.K.’s Peterborough area is offering its 10,000 tenants free IT training this fall. Cross Key Homes will be providing the free training to any tenants who want it. The effort is an attempt to provide a service the company believes is critical to today’s lifestyle.

“We believe that it is essential that our tenants are able to use computers and have access to the internet,” Tracey Croucher, community program manager for Cross Key Homes told The Peterborough Telegraph. “In these changing times so much is being done via the internet from job applications and shopping to applying for benefits. These courses will show tenants that computers and the internet are not as scary as they might seem.”

The initiative is an excellent example of how property managers can do more than make sure the rental property they manage is kept clean and its residents are happy. Giving tenants more for their money, in this day and age, is a worthy goal and can foster a deeper sense of satisfaction and loyalty to the property and the property manager. When tenants are given something above and beyond what they’re expecting, their favorable opinion of a property manager skyrockets. And with today’s social media outlets, those opinions quickly spread, becoming public opinion.

Is there a service or special amenity you think your tenants would appreciate? Chances are it wouldn’t take a lot of effort to make a huge, lasting impact on tenant-landlord relations.

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Tips for landlords to get through their tenants’ divorce

There are several things landlords hate to hear from tenants, and one of the trickiest ones is “We’re getting a divorce.” When your tenants begin the process of divorcing, it can throw a whole bunch of legal and ethical questions into the rental property mix. To help you out with this potential life event, we’ve broken down the issue to address some common questions:

1.     Who stays in the apartment? If both spouses are on the lease, the landlord cannot legally bar one tenant from the property. Don’t change the locks, kick someone out or do anything without a court order.

2.     What if there’s a restraining order? Divorce can be amicable, or it can get ugly. If there’s been an arrest, or even suspicion, related to domestic abuse, contact your attorney for legal advice before becoming a vigilante and attempting to evict someone on your own.

3.     Who is responsible for paying rent?  Whoever is on the lease. This doesn’t change until a court order changes the breakdown in responsibility for the couple’s financial obligations.  Both tenants might try to play you against the other. Stay out of it as much as possible, referring both to the original signed lease specifying who agreed to make timely rental payments and maintain the property.

Divorce is a tricky, sticky, emotional time for anyone going through it. As a landlord, you can be there to assist with the maintaining of the rental home, but otherwise respect their right to privacy and stay out of the mess. It’s better for you in the long run.

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New landlords must work hard to follow landlord-tenant laws

When new landlords get into the business, sometimes they think success comes down to using common sense and building relationships. They think if they perform the proper tenant screening and get someone to sign a lease, they’ll be good to go.

While in theory these are two of the most basic practices in the business of renting property, a good landlord understands that the tenant-landlord relationship is regulated by very important laws, laws you should familiarize yourself with before that first lease is signed. Most aspects of landlord-tenant relationships are regulated by state and local landlord-tenant laws. But federal law also comes into play, especially when it comes to preventing forms of discrimination when selecting tenants and making proper accommodations for their needs.

Landlord-Tenant Law protects landlords and tenants in the renting of real property, both residential and commercial. It defines the rights and obligations of landlords and tenants during the tenancy. A number of states have based their statutory law on either the Uniform Residential Landlord and Tenant Act (URLTA) or the Model Residential Landlord Tenant Code. Some city and county governments also have enacted various landlord-tenant regulations that you should be aware of before beginning your business.

Failure to obey the law can be costly, and ignorance of the law is not a legal excuse. So look up the various state and local laws and read through them carefully before you select your first tenant and sign your first lease.

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