If you have perused the different listings for professional and/or vacation rentals on CHBO and wondered if this was a good enterprise to enter into yourself, you probably have many questions. Let’s spend some time looking at one of the biggest – whether or not they are authentically profitable.
In a recent article about the profitability of vacation rentals, the author posed one very significant question, which is this: “Those who live near the shore often hear rumors about the piles of money that vacation rentals bring in. ‘The summer months’ rental income pays for the entire year’s mortgage,’ folks will say. That may be true, but what about the rest of the expenses?
That is a great question because there is more to rental ownership than collecting rent. As that same article pointed out, the use of even a certified property as one of the vacation rentals on CHBO means you have both operating expenses and, quite likely, a higher than average mortgage payment, taxes and insurance.
Now, both sets of expenses exist whether or not your certified property is rented out 100% of the time or 60%, or at any other level. After all, for any vacation rentals on CHBO there will always be the need to manage the entire rental process, do some marketing, maintain the premises, deal with furnishings, handle guest check-ins, do all the usual upkeep and cleaning, handle any exterior work, and pay any and all bills associated with the property.
Even if you hand your certified property or quality rentals on CHBO to a management company, you’ll still have to pay their fees. As that article pointed out, there are differences between the vacation rentals (usually in premium locations) and lower key, “moderately priced” rental units and apartments. In fact, the article noted that around 3/4 of the income from a luxurious vacation rental can go to those two sets of fees while around 35% to 45% can go to that alternative option.
Additionally, vacation properties see a lot more traffic than a furnished corporate rental, which will have residents for a month or more at a time. “Simply put: a dollar of vacation rental income is really worth about a quarter (25 cents of net operating profit on each $1 in income), while a dollar of rental income on a non-vacation property is worth 55 to 65 cents.”
If you take the time to research the best markets and cities for a certified property that is a corporate rental, you’ll see much higher profits than if you take a labor intensive vacation rental under your wing.
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