This is the fourth post in a 6 part series to help those that have ever wanted to own a condo but didn't know where to begin, understand what it means to own a condo.
This post will address the questions about how to cover your holding costs while you own your condo.
At this point in my condo ownership blog series you understand; what you own, all the things your HOA dues include and what your holding costs are while you own your condo. Now we get to the fun part, how to cover these holding costs during the time you own the condo so that you can work to maximize your profit when the time comes to sell.
This is simple; rent the condo when you're not using it. This is really the only way to cover your holding costs. The trouble is that renting the condo is cumbersome, so for purposes of practicality, we'll only look at the scenario where a vacation rental property manager is used to keep the condo rented.
What is all required in order to rent out the condo while you're not using it? Marketing the property online in major rental marketplaces, responding to inquiries from prospective vacationers, knowledge of the local area to answer frequently asked questions, knowledge of market rates to maximize rental revenues, knowledge of the seasonality for the area in which your condo is located to maximize occupancy, the ability to coordinate check-in's, the ability to coordinate post-departure housekeeping services, the ability to coordinate check-out inspections, processing credit card payments, working as a concierge for vacationers to the property, locating and vetting local maintenance service personnel for periodic repairs which may include after-hours service calls, handling keys, understanding association rules and restrictions imposed upon vacationers i.e. parking pass rules, pool passes, quiet-hours for the complex, minimum night stay requirements, etc. While this list is extensive, it is incomplete. For this reason, finding a Perdido Key Property Manager which you trust to handle these services on your behalf is paramount to the success of your goal to offset holding costs.
In order to choose the right vacation rental management company, you need to come up with a clear objective in which to convey during the interviewing process. "Making a lot of money" is not a clear objective whereas "covering holding cost" is as it can be quantified.
Increases in market value, not seasonal rental income, are what make your investment profitable when owning a condo. This is notedly different than owning a duplex, triplex or other property which is leased out for long periods of time. A clear, concise and succinct objective such as "meeting the goal of covering holding costs" will allow you to gauge the success of your vacation rental manager and, if met, allow you to spend any remaining time on the calendar in the condo for your personal enjoyment. Exceeding that goal will provide you more revenue, but at the cost of disallowing you the ability to spend time in your condo. Thus, your rental revenue objective may change over time.
How vacation rental management agreements work and what you'll need to understand from each agreement you consider in order to ensure an apples-to-apples comparison. This will be discussed in the next post.
Broker/Owner Perdido Key Resort Realty
GM Perdido Key Resort Management
JD is the Broker/Owner of Perdido Key Resort Realty which proudly serves all property owners in and around the Greater Perdido Key and SW Pensacola areas. If you have questions about buying, selling or general questions about the market then you should speak with JD at your soonest convenience. If that isn't enough... JD Hallam has also been the Board Member serving as the Perdido Key Lodging Representative for the Escambia County Tourism and Destination Marketing Organization, VisitPensacola, and is the organization's FY19 Marketing Committee Chairman after having been the Treasurer for FY17 and FY18 Marketing Committee Chairman.