I have been blessed to be working with an incredible client, Jennifer. When I first met her, she reached out to The Machree Group, LLC to get some advice about rentals in the Woodstock area. Since our brokerage focuses on investment properties, it made complete sense why she called us. She was just starting the process of renovating her home and wanted to know what the likelihood of her being able to rent it was.
I of course being a brand new licensed NY state real estate agent at the time, and only having had experience with buying and selling, not short term rentals, had absolutely no idea. What I love about Jennifer though is she trusted me, took a risk with me, and allowed me to do the research and learn. She believed in me from day one and throughout this process we not only got her to her end goal of renting out her home for top dollar, but we became genuine friends and I am so thankful everyday for it too.
What I also am blessed by is that this project has taught me a lot about the clients and the type projects I want to take on. Through this process I realized I really want to be a "full service" agent. I know I love real estate investing, I know I love interior design and I discovered that I really enjoy working with clients to achieve their dreams too! So this project was a perfect blend of what I hope my career to turns into:
Helping clients find a renovation project
Mentoring them throughout the renovation
Helping them design and stage it
Renting and/or selling it for them for top dollar!
I'm putting this out to the universe because needless to say, this project gave me all the feels and left me extremely proud and excited about the possibilities in the future.
So here were some tips and "tricks-of-the-trade" I learned along the way that can possible help you if you are tackling a project like this as well:
1) Research the STR (short term rental) laws in your area.
I cannot stress this enough. Know them, but also know they change rapidly. From the start of the project, to the end of this project the laws changed in my client's jurisdiction. It's crucial that you have a couple of back up plans in place so that if in the event the laws change in your area, and you are unable to rent it out as a STR, you still have a plan for how to handle it.
In Woodstock, NY. The short term rental laws are very strict and they have a limited number of permits, all of which were taken already. This made renting it out for a weekends or anything less than 90 days impossible for her. So we discussed the other options. Longer term rentals for either the summer season and/or year around are appealing. Some of the pros are there is less turnover, you can pass the utilities charges off to someone else and you can avoid STR taxes. One of the major cons though of course was the moratorium and traditional landlord/tenant laws. It might be difficult to get someone out after you have them in. So you have to take that into consideration for sure (Quick tip: have tenants get a PO Box. It's a lot harder to disprove residency if they have mail coming to your property...).
2) Make renovation choices based on your target customer.
While you can't dictate exactly who your target customer will be (that's considered discrimination folks! Be careful!), you can design your place to attract the type of tenant you are hoping for. For example, if you install bunk beds into a room you are sending the message that you are gearing your place towards families with younger children. If the interior design of the home is masculine and sterile, perhaps you are trying to attract a bachelor? If you have an incredible kitchen that has top-of-the-line appliances and is stocked with all the cooking gadgets you can imagine, you are sure to land a foodie or a gourmet chef. So take some time and make your renovation and design choices with a specific customer in mind. That will help you incredibly when it comes time to market because then you will already have an idea of who you are looking to advertise to and that will lead you where you need to go to find those people.
This kitchen is bright, airy and perfect for someone who loves to cook.
3) Decide what price point you are aiming to rent it out for early on.
This is crucial. If you are wanting top dollar but your property is in a Class C neighborhood, that probably isn't going to work. If you are wanting top dollar and you furnish the house with ikea furniture, that probably isn't going to work either. And just the opposite is true. If you are planning to rent it to people on a budget, don't put in really expensive items that are likely to get destroyed or not taken care of well.
Find items that work in the space and fit with the local theme. Remove any sentimental items that you would be upset if they were damaged.
You have to ensure that everything you do to improve the property or rental matches the expectation of your future renter or buyer's budget. I have blogged a lot about my own renovations in my rentals, like in my Design on a Dime: Rental Kitchen Renovation post, and this is where I talk about how the designer in me struggles because I want to make everything so much more beautiful and expensive than it needs to be. Ensuring you do not over-invest and getting carried away on design is crucial to making sure your cash flow covers your costs and a venture is still profitable. So make sure your budget and the upgrades match when prepping a place to rent or sell. Don't over-invest or under-invest. Think Goldilocks and the three bears: you want your budget and upgrades to match and be "just right" at the end of the day.
4) Make the pictures look like exactly what they will see when they get there.
We had a lot of discussions about this when staging this particular property. My client has these stunning paintings that her father made (he was a painter) and they are of tremendous sentimental value to her. While staging and getting ready to take the photos, she initially wanted them in the room because she knew they looked great, but then she wanted to take them away after so they could be stored for safe keeping. I told her I didn't think that was a great idea because if the pictures are what makes the room, and then they are gone, I would be upset as a renter to have rented a place assuming it looks exactly like the pictures and then it doesn't. She saw my point and agreed. We came up with a great solution to keep the pictures but ensure they would be protected from potentially being damaged or destroyed. I say all this to say, if you have something that is of sentimental value, that looks great, but you don't plan on leaving it in the actual rental, don't include it in the pictures. We all have been on dating apps where someone has an amazing photo and then they show up in person and look nothing like their photo... well, you know the feeling of being let down. It's the same here with real estate. So just make sure that your photos look great, but that you are also including everything in the rental in the condition that it has been photographed. If you make changes, update the photos.
Only include items that will actually be remain in the space.
5) Be honest with your descriptions.
And this is linked to the previous point I made, but it's worth taking it a step further... My husband and I once rented a "beach front bungalow" in Rehoboth Beach, Delaware. The description ended up being a bit generous to say the least. It was actually a double wide trailer about a mile from the beach and across a major thoroughfare. Hardly "beach front" in our opinion. While I found it to be hilarious, he did not. He was deeply disappointed and I get why. He was so excited to surprise his mother and me with this Airbnb, that the disappointment of the misleading description actually cast a bit of a shadow over the first day of the trip.
Just be honest with what you have to offer. There is nothing worse than someone showing up with higher expectations based on a description you wrote, and them feeling bummed the entire time they stay there. That's not a way to get repeat business and it's not good karma. Name any of the drawbacks explicitly, without over emphasizing them, so your renters will at least anticipate it. That is the only fair thing to do.
Everything doesn't have to be perfect, it just has to be honest. For example, letting people know this bathroom is original and full of retro charm is the way to go!
6) Follow the standard practices for your area.
In Ulster County, there are some unwritten rules with STRs that are wise to follow. Usually for a seasonal rental the entire amount is due before the first day and before the tenant takes occupancy of the place. Also in seasonal rentals there, usually the utilities are all included in the overall price whereas with long term rentals, the tenant typically is responsible for paying the utilities themselves.
Other unofficial rules for that specific area include:
When renting out with an agent usually the landlord pays the listing agent and the tenant pays the buyer's agent (although this is changing...)
Long term renters are usually responsible for the yard upkeep, while short term renters are not.
While these aren't concrete hard-and-fast rules, they are general rules of thumb and you should stick with whatever ones your area has. It makes it easier to attract and do business and for people involved in the transaction to feel they got their fair share.
Be transparent and follow the local norms. Explicitly state who takes care of the pool upkeep and the yard work in your listing.
7) Choose how you market your properties strategically.
Airbnb is all the rage now... but with a specific demographic. It also is getting restricted more and more in certain markets, so it may not be an option everywhere.
High-end luxury rentals, while they can be found on Airbnb, often still deal with an agent directly. High net worth individuals like to have someone preview a property for them to ensure it meets their needs. Many times they outsource the whole transaction to an assistant or a broker they feel comfortable with. So if you are working int he luxury rental market, this is worth taking note of and building relationships with those people.
At the end of the day honesty and transparency is still the cornerstone of good business. It's about the value you bring both in your product and your service. Vacation rentals aren't going away anytime soon. People will always want a beautiful place to unwind and spend time with family. So put yourself in the shoes of your guests. At the end of the day, that is the best way to ensure you provide a quality experience. And if you are able to do that time and time again, you will find that your rental will be able to bring in top dollar for you.
Good luck RE investors! I'm rooting for you!