A very important part of your cottage rental business is determining your tenant process. This is where the physical guest experience begins and it is important that it begins the right way. It can be very hands on, with you greeting guests personally, providing a tour with information and instructions, and then later cleaning the property prior to the arrival of the next guest. Or it can very removed, where you never actually meet your guests, having a third party provide access to the property with written instructions, or a user manual to answer questions and the cleaning contracted out.
There are a number of factors that will affect how this process will be established from the physical location of your property, the cleaning requirements, property security, guest instructions, and support and assistance should an issue arise. The process should reflect the level of service and standards that you have created as part of your cottage rental business, delivering on the promises and expectations of your guests. Ultimately there’s no right or wrong way but it’s important that you are using a process that fits with your business needs.
Do you have the time required to welcome each guest personally and to do the cleaning on your own? It may be the ideal situation, but for most of us either the location of the property, or time constraints, limit the feasibility of such a personal approach. That’s not to say that this may be the best way to first enter the cottage rental market allowing you to scale to permanent solutions as your business grows. Let’s face it nothing reduces your expenses more, or ensures the tenant process is occurring correctly than simply doing all of it yourself.
The reality is that in order to make your vacation property rental a viable source of income, you need a consistent tenant process that is not reliant on your own availability. The least time sensitive aspect of the tenant process is the cleaning and property preparation. Although you may be restricted to a single day or portion of a day should you have back-to-back tenants, you do have some flexibility as to exactly when cleaning will occur. As mentioned you can elect to tackle this mission on your own allowing you to personally ensure that your property is cleaned and set up to your standards. Alternatively you may be able to locate a neighbour or nearby resident who is interested in earning some additional income.
Ultimately you may need to contract a professional cleaning company to ensure that your cleaning and preparation needs can be handled consistently and most importantly when you need them. This can become a significant expense which could easily erode your rental profits. Obtain a number of quotations, or as many as possible before contracting with a specific company. Be specific in writing exactly what you expect be cleaned as well as any special instructions such as refilling needed supplies or whether blinds are to be left open or closed. This will ensure less frustration between yourself and the cleaning company as well as a consistent experience for your guests.
Providing access to the property for your guests has become extremely easy with the use of technology by means of a coded entry, combination key box or even Bluetooth entry codes. You should never take the hidden key under the rock or mat approach as over time these great hiding spots become very obvious to anyone. An arrangement can often be made with a nearby gas station or store to provide key pick up and drop off. Security system pass-codes can be easily updated with your provider and should be changed after each guest as they may have inadvertently been less than private with these codes during their stay at your property.
A vacation property can be a little more complicated than a hotel room and as a result you will need to make sure that you have provided the necessary instructions for you guests. This can include the use of heating or cooling systems, water systems, fireplace, lighting, appliances and even internet access. Not only are you ensuring that your property will be treated correctly but also that your guests will be able to fully enjoy everything that you have to offer.
At a minimum you will need a user manual where you can provide all the necessary information in an easy to locate and access format. A great approach taken by many vacation property owners is to provide a video tour that can be emailed prior to your guests arrival or available as a DVD or USB stick. The better information and instructions you can provide the less frustration your guests will experience and the better treatment your property will receive.
Despite your efforts problems can arise and it is very important that your guests can reach you with last-minute questions or at the very least in the case of emergency or serious situation. It is always a good idea to provide a back-up contact so that your guests are not left to feel on their own should than need assistance.
Whether your tenant process is hands on or contracted out it is a very important aspect of the guest experience you provide and will directly affect repeat bookings. Your tenant process is a very strong reflection of how you view and care for your property. Your guests will react in kind, which could have a direct effect on general wear and tear or even minor damages due to lack of instruction or direction. Be sure to give your tenant process the time and detail it deserves to make your vacation property rental experience the best if can be.
The idea that you may actually need a marketing plan to promote your vacation rental may at first seem more complicated than necessary, but it can make a very big difference in the number of bookings you receive. You may be fortunate to have friends and family who help spread the word however it is not reasonable to think that this will achieve your occupancy goals. Ultimately –even if you have only one property that you rent for a limited number of weeks– you are still running a business. As a business you need to allocate your marketing resources wisely so that you can get the best possible result.
In the vacation rental business, limited resources to invest in marketing is a very real concern. There are an overwhelming number of advertising and marketing opportunities available, all of which could generate the needed bookings, but the cost could completely erode your profits if not used wisely. In every market there will be free alternatives available and you should always take full advantage of those. The added value of many of these free alternatives is that they are local and grass-roots in nature which will ensure you are at the very least reaching your local market.
Some of these local free alternatives include drive-way signage in front of your property, posters or postings at the local stores, gas stations and restaurants. A great way to obtain space for you’re at a local business is to request cards or flyers from the local business that you can then make available to your customers who may potentially patronise these businesses during their stay. Create business cards detailing your property that can be handed out easily, or left at coffee shops or attached to community bulletin boards. Also don’t forget to simply spread the word. Visit all of your local businesses and tell them about your property and what you have to offer. Finally take the opportunity to talk to your cottage neighbours and tell them what you are doing with your property. This is also a great time to ease any concerns they may have.
The number of paid marketing opportunities are virtually endless and it is very easy to be tempted to throw money at a large number of these in hopes of obtaining more listings. Developing a marketing plan can help ensure that your marketing expenses remain in line and that you are allocating resources where they can obtain the best possible impact. There are a two basic methods for setting your marketing budget. Some owners prefer to use a percentage of projected revenue which sets a budget based on a set portion of revenue from the previous year or expected revenue for the current year. The other way is to use a cost of acquisition model where by the owner determines how much they are willing to pay to obtain each booking. The percentage or dollar amount used will be derived from your overall business plan and it should be closely adhered to so as not to jeopardize the success of your business.
Paid options include numerous online listing services, cottage oriented magazine listings, newspaper and community newsletters to name a few. Do your research with any of these alternatives by reviewing the ads listed by other property owners. How long has the company been in business, estimate your potential listing cost and quality of the final advertisement. In selecting which paid advertisements or marketing opportunities to use, start by determining where your potential customers will come from. Does your cottage property region tend to have owners and visitors from specific cities or areas? Is your property best suited to families or individuals? Is it an affordable or luxury alternative? The answers to these questions will determine which of the paid options will work best for your property.
When creating an ad take your time to ensure you are describing your property in the best possible manner, and include images that both truly represent your property but also present it in the most flattering manner. Keep in mind that you are describing your property to someone who has never seen it. Your future guests are taking a leap of faith-based on how you present your property through your marketing efforts. There will always be some trial and error as you try different alternatives, so it is extremely important that you track your results. Ask your customers where or how they heard about you, and adjust your marketing plans accordingly to leverage where you are successful, and change or drop anything that is not working.
Marketing plans seldom work well if not continually adjusted and refreshed based on your results. Take the time to make sure you are getting the most out of every dollar you spend.
It would be great if you could just rely on common sense and didn’t need to set rules for your cottage. The reality is however, that everyone will have a different interpretation of what is and isn’t allowed. It is important to spell out what your expectations are for anyone renting your property. This will not only ensure there are no misunderstandings but it could also protect your property and even your relationship with fellow cottage owners.
It’s tempting when setting rules that will apply to your property, to bluntly create and state things in a matter of fact manner but bear in mind that you are trying to attract customers to your property as well. You need to strike a balance between what is reasonable and expected by cottage renters, and what is required to ensure your property is not being abused or damaged. A good example of this is limiting the number of visitors or guests. It is tempting to not allow additional guests. But many of your customers may want to invite family or friends to visit them and share in their cottage experience. This is where a reasonable balance can go a long way in making sure your property remains marketable.
There are a number of basic rules that are essential:
- Smoking or Non-Smoking
- Pets or No Pets
- Number of Overnight Guests
- Noise curfew
- Number of Vehicles
- Check In and Check Out Times
- Handling of Garbage
Once you have determined the rules that work for your situation, or strike the balance that you are comfortable with, as the property owner you will need to consider how best to present them. This is when you need to switch hats and consider how best to accomplish the task of making your customer aware of the rules without negatively affecting their desire to rent your property. As many of these rules directly affect how your tenants will be able to make use of your property, it’s important to make sure they aware of the rules prior to booking. This will ensure there are no misunderstandings once they arrive at your property. Many vacation property managers make use of a rental application form for this purpose.
The rental application form is an efficient and subtle way to ensure that every potential customer is aware of your cottage rules. The rental application form serves three purposes:
- It can describe the full details of your property such as the number of bedrooms and bathrooms as well as any items the renters is required to bring with them such as towels or bedding.
- It would then list your cottage rules that pertain to your property. This section typically includes wording indicating that submitting of the application indicates that they have read, understand and agree to comply with the rules pertaining to the property.
- There would also be a final section where deposit information can be included with the application.
Finally try to remember your fellow cottage owners when creating your cottage rules. Many cottage owners are tolerant of those who rent their vacation property, but taking their cottage experience into account when creating your rules can go a long way to ensuring they are hospitable and friendly to your guests.
In a previous post we talked about how to set your rental price. Now we need to figure out how to actually get paid. Thankfully the growth of small niche and at home businesses has created a number of easy to use tools and options that are perfect for property managers. Of course all the traditional options are still available but you will need to make some decisions as to what will work best for you and your customers. Also bear in mind that some options represent financial exposure for your and your business as well as additional operating expenses.
In general there are three basic methods of payment that work best for a cottage property manager:
- Credit card payment is in most cases the easiest for both you and your guests.
- Payment by cheque is the most traditional and is preferred by many people.
- Payment in cash while not as common still needs to be considered.
The choice is yours as to whether you want to offer all of these payment options or just one or two. It is important to make sure you are considering not only what works best for you but also what works for your customers.
To use credit card payment you have two primary options. You can either have your business set up as a merchant through your bank, or make use of one of the online credit card processing services. If you make use of your banks credit card services they will provide you with a credit card machine which will allow you to directly process credit card payments in person, over the phone, or even on your website. Should you decide to use an online service, your customers will need to make their payments to you using a link from your web page. With this option you are not able to take credit card payments in person or over the phone. The advantage, of course, is that the fees for these online services are significantly less that the options available from a bank –but you will need to balance the savings against the reduced payment flexibility.
Payment by cheque is preferred by many customers who may not be comfortable providing their credit card number. This is typically not an issue with repeat customers, but for those who may by first time guests you will need to understand their hesitation in providing a credit card, and offer them the ability to pay by cheque. This does make the deposit process somewhat longer, but if you hold the reservation for a limited number of days to allow time to receive a cheque it shouldn’t be an issue. You will also want to ensure that you receive the balance immediately upon arrivalto allow time for the cheque to clear. It may be advisable to have the cheque certified to ensure that payment is received prior to your guests completing their stay. With the exception of having possibly needing to certify a cheque this method is the least costly to you and will help reduce your operating expenses.
It is inevitable that some of your guests will want to pay cash. As a result you will need to be prepared if you are willing to accept cash payments. There is of course no way for you to receive a cash deposit unless your guests are able to physically deliver the payment to you. Typically you will only need to be concerned about those guests who prefer to pay the balance of their rental fees in cash, after paying the deposit by credit card or cheque. To accommodate this you will need to ensure that you can professionally receipt payments and provide change if necessary.
The choice of which, or how many, of the payment options you use should reflect the needs and expectations of your customers. After having attracted prospective guests to your property, or having earned their loyalty for a return visit, you want to make the financial transaction easy and trouble free. You can expect some expense to be associated with accepting payments but it is essential to monitor and minimize these costs where possible. How you handle the transaction is a very strong reflection of the professionalism of your business.
How much to charge for your cottage rental involves a number of elements that you will want to take into consideration. It may be tempting to charge a high rent so that you can reap the level of profits that you feel your property deserves, but that may result in fewer rentals which will ultimately generate less profit.
It really becomes a balance between attracting visitors and earning enough to pay your cottage expenses, and the profit you were hoping to generate when you originally decided to rent out your cottage property. Renting your property is a business, and it makes sense to approach it as one. Take the time to calculate your annual cottage expenses including mortgage payments, property taxes, heating costs and maintenance expenses. Once you have determined your annual total cottage expenses you can now look at expenses associated directly with your rental activity.
Typically for most cottage property managers there will be costs directly associated with renting your cottage property. These include the cost of any advertising used to attract cottage renters to your property, cleaning costs, additional insurance premiums or any other expenses directly related to the rental of your property. Using the number of weeks in your rental season you can then assign a weekly cost to your cottage property so that you can calculate what your profit margin will be from each weeks occupancy. We aren’t done yet though. Now we need to incorporate your overall cottage expenses, and that will take some decisions on your part.
Earlier we calculated your overall cottage property expenses. The decision now is how much you want to associate or assign to your rental activity. There are a couple of ways to look at this. Firstly you can simply divide your overall expenses by 52 weeks and use this weekly overall expense as an equal distribution to be recouped on a weekly basis along with the weekly rental expenses already calculated. Secondly, you can assign a percentage of your overall property expenses to your cottage rental season. This can vary from a representative amount based on the portion of the year, or any amount that you deem reasonable to be paid by your rental activity, which for many property owners would be higher since the useable period for their property may have seasonal limits.
Now that we have taken a look at how much we may want to recoup for our property expenses, we know how much we need to charge to earn a profit. But we don’t know what our potential customers would be willing to pay. Its time for a little market research. There are a number of factors that need to be considered when determining what the market rental price would be for your property. Some of these include location, features, number of bedrooms, amenities, privacy, or even popularity of your cottage area which could result in high demand for rental locations. The best tool at your disposal is comparison research.
Comparison research means putting yourself in your potential guests shoes and looking at the rental options available and what they are charging. Its important to be objective and honest when comparing your property to other options available and the rent they are are requesting. If you’re fortunate there will be other properties in your area that will provide a direct comparison. But if not, you will be able to determine what rental alternatives your customers may be considering. This will allow you to determine where your pricing needs to be so that potential guests will give your property equal or hopefully first consideration.
Having determined your rental price, the acid test is whether it is sufficient to cover your expenses that we calculated earlier. Ideally this will leave you a reasonable profit margin that earns you the additional income you expected, or sufficiently off sets your overall cottage property expenses to a level that makes renting your cottage attractive. If not, you have the alternative of increasing your rental price to a level that accomplishes your goal –but keep in mind that this may result in lower occupancy. It is after all a balance, and as a property manager you should be prepared to periodically retest your pricing to ensure you are priced right and earning as much as you can while maintaining strong occupancy.
Liability exposure is something that needs to be taken seriously when you are in the business of renting your property to others. In many ways this is an extension of the Property Condition concerns that were discussed in a previous article. Once you have taken care of all the aspects of the property that could pose a possible chance of injury to your guests you need to protect your business and yourself. Even with the utmost care to detail and a very well written liability waiver the exposure still exists.
Lets talk about waivers first. They are a great idea and accomplish a number of things that you may not first consider. A waiver attempts to set out a boundary of responsibility between you and your guests. It also makes your guests aware that there are some risks involved and brings those acitivities and details to their attention which may in itself prevent damage or injury. There is nothing like signing a waiver to make you think about what you are about to do. When incorporated with a rental agreement it also imparts a duty of responsibility that hopefully your guests accept and use to guide them while staying on your property. At the end of the day there is no such thing as a iron clad waiver that is going to protect you from all liability or the legal costs associated with defending yourself.
Your property insurance will cover you for the liability associated with friends and family both visiting either with or without you but the moment you enter the cottage rental business the rules change. Many insurance companies offer an endorsement to accomodate individuals who either frequently or infrequently rent their cottage to others. Other insurance carriers will set up a new policy for you based on your cottage rental business. In either case the liability protection will be incorporated with your property protection.
There are few ways to consider how your liability insurance benefits both you and your guests. The primary benefit of course is that you will now have financial protection should you be liable for damage or injury. You will also have protection regarding the legal costs associated with defending yourself which is also part of the liability coverage. There is also the added value in knowing that your guests should they suffer damage or injury that they have a path of recovery. You can be confident that you are truly looking after the well fare of your guests.