If you are purchasing a condo with the intent to rent it as a vacation rental for part of the year, there are several things you need to think about before you offer your Maui condo for rent. These items will also impact the type of condo you decide to purchase.
Having owned and rented our Wailea Ekahi Village condos for over 11 years and operating a directory website for owners who offer their own condos as vacation rentals I have gained lots of hard won experience in these areas. For more information on this topic – request our tip sheet – 8 Secrets for Successful Vacation Rental Ownership.
Please note, I am not a lawyer, an insurance underwriter or a realtor. Your condo is a huge investment. The information below is meant to alert you to things you should think about before renting, but it is your responsibility to be sure what you do is legal or the most helpful in your community.
WHO WILL MANAGE RENTALS? – Once you decide you want to offer your condo for rental, a great first question is how much do you want to be involved.
- For owners who don’t want to be involved – a Property or Rental Management Company is the way to go. These companies should be licensed and will handle advertising, cleaning, routine maintenance, scheduling of extra maintenance, purchases to outfit the condo, file your rental accommodation and sales taxes, etc. Most require a deposit of $500 to handle the “little” repairs, replacements, but will inform you and ask permission for larger items. Consistency with staff can be a problem. Many owners think they want a rental management company to handle everything but then find they micromanage decisions made by their manager. If you find yourself in this category you may want to consider a more hands on approach.
- Some of our owners use a management company as well as rent on their own. This is a good way to start if you are concerned about building a client list and know you want to be hands on but it can present problems – especially if you don’t think you should pay a fee to the management company for rentals you bring in without their help. If your management company is providing access, billing and other services for all your bookings, they deserve to charge a fee. On the other hand – some management companies accept credit cards and give out free accommodations to travel agents and charge all their condo clients a percentage – even if it was not your unit that had a guest that used a card, etc. That does not seem right to me – so there are issues to work out. One major one is who has the official calendar! –
- If you want to rent yourself, which is what most of our members do, there are no management fees other than what we pay at our condo complexes for monthly dues. Management companies and booking agents charge from 15%-55% of your rental income depending on who they are and the services they perform so by handling your own vacation rentals you have just put some significant funds back in your pocket, but you have a lot to learn before you can operate a legal and successful vacation rental.
It is hard to find a good list of steps to take to run a successful vacation rental and the same with how to identify a property that will cash flow. This blog series will continue with in depth coverage of both issues.