There’s a lot that goes into setting up your vacation rental. But once you’re online and ready for reservations, what then? The first few reservations can be both exciting and intimidating, but what about the first few months or years? Don’t stress from the unknown; we’re happy to give you a breakdown of what to expect so you can plan accordingly and succeed right away!
So much of your initial success will depend on the time of year you start your vacation rental. In the Pikes Peak region, we have a peak season and an off season. Generally, our peak season is from Memorial Day to Labor Day. We get the majority of our business in the summer. Our off season is from the fall into late spring. Travelers tend to stay closer to ski resorts during these months and we adjust our expectations, and our prices, accordingly. You can read more about the best time of year to begin your vacation rental, here.
If your rental begins accepting reservations in the late spring or early summer, you will likely be met with immediate calendar activity because the demand is high. Be prepared with your strategy for constant turnover, or hire a great manager to handle that for you!
Conversely, if you begin in the winter, you may find your rental sitting empty for a while.
Off Season Preparations
In our area, even after a successful summer, winters can be hard to get through in your first year because you still need to recoup the upfront costs. Be prepared for sparse reservations (typically weekends but not many week days) at lower nightly rates. The best practice would be to save extra funds from the summer to tide you over in the off season, or be prepared to cover the costs out of pocket. You’ll need to cover any mortgage payments as well as amenities like internet or cable expenses. Just FYI, we don’t charge any monthly or yearly fees for our management services. If there are no reservations, there’s nothing due to us.
The first winter is usually the slowest. The years following should steadily increase in off-season traffic as reviews build and returning customers come for another visit.
Save Money in the Off Season
One thing that can go a long way to save you money, especially in the colder months, would be a wifi enabled Smart thermostat. You can easily lower the temperatures when guests check out, and bump it back up when new guests come in without making a trip to the house. Then you’re not paying to keep the house toasty warm when no one is there. Smart thermostats are a good idea in general because you can set up notifications for your phone or email if problems are detected. Automation and energy efficiency are the biggest ways we can save during the off season.
The off season is also the perfect time to do any last minute projects, give the house a deep clean, and check out any reviews or notes from guests you’ve gotten so far and improve the house using their feedback. Our team spends the off season going through our houses (and our operations) to make sure we are addressing any issues and are ready for the next summer!
Track Your Income and Expenses
During your first year of vacation rental ownership, you’ll obviously have both expenses and income. We can help you estimate your income based on your house. Each house will be different, but we have years of experience and a portfolio of rentals to help you hone in on some realistic numbers.
For any expense, keep track of your receipts! You can also track things like repairs and maintenance, as well as mileage. Many people choose to set up an LLC for their rental and get a separate bank account for the rental income and expenses. That’s not a requirement, but it’s worth speaking with an accountant or CPA about what works best for you. Your financial expert should also be able to tell you what purchases are worth depreciating, and any other tips to maximize your investment from an accounting perspective.
A simple spreadsheet can get you a long way to keep track of expenses, and with free software through Google Drive, you can easily store scanned receipts online in a folder and keep a spreadsheet or word document without paying for specialty software like Office or QuickBooks. I would recommend keeping a spreadsheet with columns for the date, the amount of the expense or income, a description, and a category. At the end of the year, you can sort the spreadsheet to group all the categories together and find how much you made, and what you spent in each category. That’ll make the breakdown really easy for your accountant. For example:
|1/1/2022||$20.00||Lowe’s purchase of repair items||Repairs|
|1/2/2022||$200.00||Rental Income from Out West Vacation Rentals||Income|
|1/4/2022||$30.00||Walmart purchase of new pillows||Misc.|
When you hire us at Out West Vacation Rentals, at the end of the year, we send out a 1099 for you to include with your income taxes. Behind the scenes, we’ve also been paying sales and lodging taxes throughout the year as required by each tax jurisdiction.
With the right expectations and guidance, your first year with a vacation rental should be successful and as stress-free as possible. And each year after, that success should only grow!