Renting vacation homes – Seminar (Part 1)

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The motivation for creating this seminar was the negative impressions I gained in most meetings with my clients. The way they managed their property commercially to rent it in the short term was at least incomplete, not to mention bad-very bad in fact-and I always thought, “I can’t figure it out, something must be to blame.”

Eventually after many properties, many meetings and several summer seasons, I came to the conclusion that short-term vacation home leases are more complicated than they seem at first. It’s a bit like an iceberg, meaning only 10% is visible, the remaining 90% is below the surface. How true that is! So the purpose of this mini seminar is to be able to give you some useful information about short-term vacation rental leases for your holiday home.   

I have been working with Airbnb-type, short-term leases and vacation homes since 2005, for the last fifteen years, and this year I am entering the sixteenth year. My job is to market and manage part of the reservations, in short-term rented houses, that is, I manage the booking process until the arrival, with whatever that entails. While the part of the hospitality and maintenance of the houses is undertaken by the owners, whether they are professionals or individuals. In addition, I make sure that my customers have the best possible financial results in their profits each new season and have the maximum possible fullness in their booking capacity. I started all this long before all the platforms like Airbnb came to the surface, and at the same time I was working as a product marketing manager in the Marketing department of a telecom company named Vodafone. Short- term vacation rental leases are not a new discovery. They have been around for many years in the Market worldwide, but it was just a niche that worked in a minority, and in parallel with the hotels, mainly for the studios the villas and the mansions.

Some persuasions

For those of you who are thinking of starting your own property now, I would tell you not to hesitate. But first of all, make sure you are ‘clean’, legal, because now, nothing can be hidden for long. And the few things that are not visible now, in the very near future will be visible. So, because in the taxes and obligations of the citizens and the companies, countries tend to have continuity, rest assured that even if an audit takes place a decade from today they will find everything with whatever consequences that brings. Experience shows that tax offices are much more organized and intelligent than what the popular sentiment and impressions believe. Worst of all, you ‘ll end up in a blacklist of the most frequent audits – you’ll be the first to be visited every time the audit teams of the local tax office go out for a check.

But mostly remember: Many tests begin after an informer tells the authorities for competitive reasons, so take your measures for this event, and keep a low profile, and you will be fine.

For those of you who are thinking about it, another suggestion for me would be to go back to the calculations you have made so far and deflate the numbers that you have assumed as your pre-tax earnings for the first year. It is better to assume a modest attitude towards your earnings for the first year, with a reasonable increase for each coming season, than to assume that the property to be rented will be fully booked from the first season.

Success is built, and you need to be prepared for it. Build your success. This makes things better and more efficient. You have a better chance. Unless of course the property is in a location that is a global destination (Mykonos, Santorini, Center of Athens, Archaeological site), then, in this case things are far better as the season there  is longer (or all year round) and the demand is greater.

For those of you who made the decision and are starting in the near future, or for those of you who are more experienced, I would like to add a few more things. They may not sound nice but unfortunately, they are the truth.

The prices and the various profiles of the owners

So a word or two about your prices, but before that, a conversation about the emotional bond you have with the property you will rent.

There are three types of people who rent their property: those who are not very interested and do not have any particular kind of sympathy, and just want to make money. There are also those who think more coldly and more commercially, having their feet firmly on the ground – they can see the property as customers who will rent it, skillfully and heartily setting aside that emotion that can be an obstacle to their ultimate goal which is of course to be able to increase their annual earnings by taking advantage of what they have in their hands to rent. And finally, there are those who are completely in love with their property. The worst kind. Their property is the best – there is simply no better property in the area, but also in the whole world. And rightly so, with the most expensive rental price. And whoever wants to rent will pay this price – the rest can go somewhere else.

If you belong to the first and second case, welcome. For those of you who belong to the last category, all I have to say is a) either not to move forward, because moving forward will make you tired, very stressed, and frustrated, and you will also make other people suffer, many times over  b) or do your best to change category-immediately !. People will rent your property for the purpose of their vacation. They will come to rest, and not to pay tribute to the property’s beauty. You want their money, and they want your home for vacation and relaxation-try to remember this. As for the prices, what I have to tell you is that you are not the only one in your area who rents, and it will be good to take seriously the prices that have “similar” properties as yours. Also, it is good to ‘play the game’ in a conservative manner at the beginning, so that, as ‘beginners’ who have neither reviews nor reservations, you can put aside your pride for a while, and turn a deaf ear to the locals. Where the  locals throw in the air some incredible suggestions  for rental prices (“come on my friend put a price of a thousand euros per night, this is what everyone does, what are you, a sucker ?”) But then, when the owner sees with horror that not a single booking was made with this price and asks for explanations, they say to him: ‘but this is what the local gossip says! ‘ So instead of going to get bookings like everyone else, make sure you ‘steal’ bookings, for a start at least, from your competition. And once you see where you are and where you are not, you adjust a little bit up or down next season depending on where you are strong and where you are suffering in the season in term of bookings. 

A little secret

Everyone asks me what is most important to succeed in short-term leasing vacation homes.

The honest answer is ‘everything’. Everything counts towards the end result but also the goal you will set to achieve. But if I could choose two things (except of course, the geographical area and the quality of the property) I would choose the following: photography and professional property management.  

Anyone who doesn’t do photography, paying a professional photographer, a specialist, who knows how to photograph tourist real estate houses, then he makes a mistake, and it is the most important, crucial, characteristic mistake that one can make in this job. Practically he loses money on the table.

If I was in his position (of course knowing the outcome beforehand, due to experience!) and I wanted to have good reservations, and with a good future perspective, I would find the most expensive professional photographer, and I would pay as much as needed for a professional photography worthy of an award- even if I went under. Even if I needed to give 1000 €, and more, I would do it easily. Because quite simply, I know from experience that a professional photography by a photographer who specializes in accommodation, will cover all its expenses in the first reservation that it will bring – and that kind of photo shooting will bring that reservation. And it will bring many more. And then, it will bring bookings completely free, continuously, for 10-15 years. Do I need to explain it further? The best and safest investment.

So if you are starting now, call a professional photographer – you will be overjoyed at the end of the season, you will be with a smile up to your ears, and you will have the courage and appetite to continue next season. If you already rent your property and have photographed it with your mobile phone, or by a photographer specialized in weddings and christenings, and you have reservations, imagine what will happen to the bookings of your property when you switch to professional photos from a photographer specializing in hotel or vacation rental photography. Finally, make sure you have the rights of your property photos. Pay for your photos out of your own pocket. Don’t ‘byte the bait’ if you’ve been told to have your vacation rental photographed for free ‘as part of our services’ etc. etc. because if you break your agreement they have the right to take the pictures, and they will take them from you, or ask you to buy the rights of usage. You will not be able to use the ‘free’ photos of your property anymore. Nothing is for free.

As far as professional management is concerned, this is self-evident. You will have completely different results and gains if you hire a professional, and other results if you try to coordinate the reservations yourself. Almost every time I take a new contract for managing a vacation house, I discover that the owners were very happy to run it on their own and get 50 nights in bookings. But in an area that usually gets 100-120 nights this is probably a bad score. Second, I am usually horrified to discover that they are doing nothing to protect their property other than the classic conventional insurance, with the result that the property is at great risk, without the knowledge of the owners, who are all in good spirits, until they get slapped, the sky falls on their heads and they will run to the courts to save their house. But there is something else. You may be for a small shock. Few realize that all this with Airbnb has some similarities with a ‘bubble’. When everyone profits, or when you listen to the ladies at the super market checkout to speak and say ‘but I rent it and I make good money’ then something is wrong … Those of us who have been in short term rentals for many years know this, and the chances are that the situation will start to change, the market will correct somehow and some balance will be struck, especially in areas where the conventional renting has been completely overturned due to the fact that the area is a tourist destination. Let’s not forget how much of this is fashion, or a trend of times; it will change again at some point and the ball will return to the hoteliers who are the most unfortunate now; soon they will recover at the expanse of short term vacation rentals of course. The role of the serious professional manager is to filter the owners who go for the quick money, from those who want to seize the opportunity, work hard and bring results, and not put the house for rent just for 2 weeks in August to just to make a quick buck.  He will work with those who are serious, having as a goal to make the house a commercial success in the region, soon becoming independent of platforms and other tales, after three or four seasons. That is, if the owners want to become a brand. And wish to end up standing high in their local area from the other few that will also remain to fight for a piece of the remaining market which will reduce to 1/3 or half, due to deflation. So personally at least, I’m looking for the long run. Not the next one or two seasons. And be careful in how to prepare the customer whose property I manage for later. Starting from now but be able to succeed in the post-bubble era.   

So be careful. Professional property management is one thing and amateur property management is another. You can contact me directly through the site.

Konstantinos Papachatzis