Generate Cash Flow with a 1031 Vacation Rental
Posted by Andy Gustafson on Fri, Jun 11, 2010
If you own a 1031 eligible vacation rental acquired located near or on the coast, June to August is one of two major rental seasons. Hopefully, your weeks are booked solid. If not there are always those who will call to ask for your last minute special.
Increase Rental Bookings
What I found helpful if not essential to recognizing a consistent cash flow in the spring season of March and April, summer season from June to August and holidays of Thanksgiving and Christmas are the following:
- Start now, don't wait until the season to start marketing, the earlier the better. Planners will contact you early;
- Subscribe to at least three web sites that focus on vacation rentals such as vrbo.com, homeaway.com and beachhomes.com;
- Manage the property yourself and save the managerial fee that ranges from 18% to 35% or hire a good, full service company located in close proximity to your property;
- Ask your neighbors, who they use to clean, maintain the pool and yard. Knowing who to call outside of the rental management company when something needs attention is critical;
- Visit the property as often as you can to check on the services hired;
- Know how your rates compare to other comparable properties. If not booked solid, know the price points that will increase inquiries. It is better to book than for the property to sit vacant;
- Require a 50% deposit with the balance due 30 days prior to arrival. Make sure the funds clear before renters arrive.
Conclusion
Owning a vacation rental can be a lot of work. With adequate planning and effort, the outcome can be a positive cash flow, but it takes effort.
When considering selling the rental property and want to replace with real estate, call us to discuss the value of a 1031 tax deferred exchange.
