Do I want rental income from my property?

Second homes as vacation rentals

The solution many people choose to help offset the high cost of a second home is to place the home in a rental program. Location is the key factor for determining what return your investment will bring. Generally speaking, rentals in the Blowing Rock area bring the best return because the rental market in Blowing Rock has developed into a year-round business. Rental property in Foscoe, Valle Crucis, Banner Elk, and Beech is more dependent on the ski season.

Some Considerations for Vacation Rentals

Vacation rentals are very popular in this area because the area is a strong tourist destination, and many people want a charming ‘home’ environment to rent, rather than a motel/hotel.

Generally, the highest rent and the best [most extensive] year-round occupancy is in the Blowing Rock area. The Blowing Rock area is virtually a year-round tourist destination now – Spring for flowers, Summer for cool weather, Fall for the leaf colors, and Winter for skiing. March tends to be the slowest month. Nor surprisingly, Blowing Rock properties tend to be more expensive than elsewhere in the area. In general, the further you get from Blowing Rock, the less you have year-round occupancy. Banner Elk and Beech, for instance, rent well during the ski season, not so well during the remainder of the year. Valle Crucis is a close second to Blowing Rock for year-round occupancy. Ashe County is rapidly expanding in rentals.

The remainder of the area provides more limited occupancy. Most vacationers are here to enjoy the cultural events in the Blowing Rock/Boone to Banner Elk area. Hiking, outdoor sports, dining, skiing, golfing, shopping – what they come for – tend to be in these areas, what I term the ‘Blowing Rock to Banner Elk corridor.’ For the majority of people who are here to take part in these area offerings, the 30-40 minute drive from elsewhere is an impediment to their vacation enjoyment.

Some points to keep in mind about what vacationers seek to in a rental:

• For home rentals, log cabins are in great demand.
• Renters like log cabins in a wooded setting but cabins with long-range views or a creek or on the river are also in demand.
• Other than log cabins, vacationers want a home that looks and feels like a vacation home [rather than a home that feels like…well..home, i.e., their primary residence], chalets and round houses, for instance.
• Fortunately, vacationers want different things. That is, condos are also highly popular rentals.
• Rentals with hot tubs are a first choice, when available. I would highly recommend adding a hot tub to your rental, if there isn’t one.
• Vacationers, for the most part, want a rental with a rustic and enchanting feel, something they fall in love with at first sight.
• It’s a wise choice to include something distinctive in the rental home – a striking stained-glass window, a trellis entrance, a bear theme to decorations, for instance — something that is charming and, also, sticks in renters’ minds. Your first year renting will provide the least income. The income will grow yearly with repeat business and referrals from happy vacationers. It is very, very common that vacationers will phone to re-rent but will not remember the street [or the name; many homes up here have names] but usually WILL remember the distinctive feature [as in, “We want to rent the home with the stained-glass picture of Grandfather Mountain,” etc]. If this sort of decorating is not your strong point, consider hiring someone. It makes a huge difference in future return vacationers. I’ll be happy to recommend someone.
• Consider giving a discount [and possibly including a bottle of champagne] to honeymooners. People like to return to their honeymoon spot! And usually have enthusiastic memories to tell their friends and relatives. [Referrals, referrals, referrals…]
• Consider creating a spa feel by supplying a few bars of nice soap, bottles of juice and packages of containers in the fridge, etc. The pleasure of finding gifts after a long drive to the area is a delight well remembered.

Restrictions on rentals

For short-term rentals, it’s necessary to confirm that a home owners’ association or local ordinances allow them. This is something I generally don’t undertake until my buyers are here and ready to look at properties.

For long-term rentals, Boone is the most in-demand area. Should you decide to purchase a rental in Boone, you would need to be aware of a Boone ordinance that prohibits renting to more than 2 unrelated persons. The idea, as I understand it, is to keep single-family residential areas from not becoming overwhelmingly rental properties. You could, for instance, rent to 5 brothers, but you can’t rent to 5 people who aren’t related to each other.

For vacation rentals, it’s important for you to know there is a Town of Blowing Rock ordinance prohibiting rentals of less than 30 days.

Vacation Rental Companies

It’s a good idea to phone the various rental companies.

• They charge different management fees and they also provide different services. You’ll want to evaluate what you’re getting for the money.
• The other issue with rental companies is amount of their inventory vs the amount they advertise. The largest companies maintain the largest inventory — that means your cabin competes against many other cabins for renters’ attention [other than when they phone and ask for a specific cabin]. On the other hand, the larger companies do more advertising. With some of the smaller companies, you’ll have less to compete against, but not the same amount of advertising.
• This is where it’s good to have an estimate from more than one company on both occupancy and rental amount. You’ll want to go with the company that is confident they can rent your home for the highest amount and the greatest occupancy, comparing that with property management fee.

Your choice of which company will depend in part on where you purchase. In general, companies located in Blowing Rock serve only Blowing Rock rentals; companies located in Foscoe/Valle Crucis serve only Foscoe/Valle Crucis; companies located in the Banner Elk area serve only Banner Elk; companies located in Beech serve only Beech. Proximity facilitates cleaning and maintenance.