If you are reading this piece, then you probably don’t have any trouble booking the peak season weeks for your vacation rentals, whether you rent the properties yourself on sites like VRBO or work with a professional property manager. But what about shoulder weeks, and even low season weeks? For most of us, that’s a different story. You can work harder to market more and fill those weeks, but that is a lot of effort for an uncertain return. What if instead you could do no work at all and receive guaranteed income and turnkey service from a professional manager?
To most people, this might sound too good to be true, but it is actually possible. By selling the rental rights of your vacation rental home to a property manager in exchange for structured payments, you can ensure all of your rental weeks are filled, while at the same time receiving full service management, and guarantees on your property condition.
Rental rights sales, or guaranteed rental contracts, enable owners to smooth income throughout the year. Not every vacation rental management company offers guaranteed contracts, however, and those that do often have property criteria that may or may not match your vacation property. This means your first step should be identifying the managers in your area, and seeing which, if any of them, would be open to signing a guaranteed rental contract with you.
Your next step will then be determining what your asking price should be. This is a personal calculation, but at a high level:
- Start with the amount you make on average today;
- Subtract any costs you have (cleaning, occupancy taxes, etc.);
- Calculate the amount of time you spend managing the property today (owners on average spend 8.4 hours per week);
- Determine what your time is worth – Is it $50 an hour? More? Less?;
- Determine what value you place on having your rental income guaranteed
This should give you an idea of your “ask.” As mentioned above, this is not to say that every vacation rental manager will accept it. Some refuse to do guaranteed contracts at any price, but it is at least a starting point for your negotiation. Then, if you are able to find a number that works for both sides, you can sit back and relax, knowing your home is in the hands of a trusted professional where all you have to worry about is cashing your guaranteed checks.