The top 6 reasons why some villas rent more often than others.
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Renting someone’s home used to be a foreign concept but it’s now common practice as travelers seek more value and a unique vacation experience. From an investors point of view the concept sounds easy right? Purchase a second home; put it up for rent and watch the money roll in. Many investors don’t have experience with villa rentals and often fail to produce a solid rental program, primarily because they didn’t follow these important guidelines
Here’s some quick personal history and disclosure before we dive into this article. I helped co-found Luxury Retreats at 19 (11 years ago) and remain a shareholder. In addition to my thoughts, I’ve reached out to experts in this field to help shed some light on why some villas rent more often than others. What you’re about to read won’t guarantee a successful rental program but I promise you this, it won’t hurt it!
#6 - Less restrictions
Okay, so you’ve just plunked down a few million dollars for that sweet beachfront villa in Barbados. The last thing you want is for your villa to be damaged by strangers so you begin the restriction list. No kids…..no bachelor parties……no weddings……Steve A. Lassman, Vice President & General Manager of Villas of Distinction, adds that owners will sometimes restrict the length of stay, damage deposit etc.. Every restriction placed on the villa could mean that you’re losing out on niche rental markets such as families, weddings, bachelor parties and being strict on the minimum length of stay could work against you.
For example; “we’ll often receive 4 night rental requests from American travelers coming to Playa Del Carmen” says Stephanie Farr, Director of Business Development for Maya Luxe. It’s sometimes challenging to take a full week off so long weekends have become a popular option. You may want to allow for a 3 night minimum during the low season.
Tip: Be flexible, especially in the low season and you may generate more rental requests. As for a larger security deposit if you plan to accept weddings and bachelor parties.
#5 – Fair value
Owners who understand the concept of fair value and seasonality have an edge over others. I’ve personally dealt with many owners who wanted their villa to rent for a certain price but it wasn’t always a fair price. Nick Guezen, Director of Product Development for Luxury Retreats states:
“…every villa has its fair price. Overpriced villas will not sell as well as those offered at fair market value. Owners have to ask themselves how many weeks they want to rent every year and what their expected return is. Key variables have to be considered such as the amenities included, location, and whether or not staff is included. This will help determine the fair rate for a villa.”
Steve A. Lassman also adds that prices should vary depending on the season and state of the market.
Tip: Conduct some research on what similar villas are offering to help determine fair market value. Speak with a villa rental expert if you need advice.
#4 – Intelligent marketing
Ah yes, the million dollar question, what is intelligent marketing? I could probably write a book on reason no. 4 but I’ll focus on a few important points. The first thing I would ask an owner was; “how involved do you want to be?” This is very important because you need to understand that it takes time, energy, maybe even a small investment to get your new villa out there. Nick Guezen says that “the easier it is to find a villa, the more likely it will generate rental leads and ultimately sales.”
Successful villas will usually list their villa with an experienced villa wholesaler who will market the property on the owner’s behalf. These wholesalers often have special relationships with the worlds top producing travel agents like American Express or the Virtuoso network as well as a database of direct clients. The following villa wholesalers are in my opinion the most experienced and professional;
An owner may want to consider listing their villa on HomeAway (based in Austin, Texas, US) which has acquired several independently operated listing websites like VRBO.com, Holiday-Rentals.co.uk, VacationRentals.com etc..
It may also help to join social networks to get the word out. Smaller, more exclusive networks like ASmallWorld (invite only) are good for travelers. Creating your own website is also another wise move. Focus on the markets where travelers are from when deciding where to target your limited resources. For example, the majority of tourists traveling to Barbados are from the UK….so don’t target Japanese tourists.
Tip: Make a choice from the beginning on how pro-active you want to be. Either outsource your villa rental program to an expert or put the time into developing a good program. It all starts with you.
#3 – Excellent staff
This could have easily been reason no. 2 but not all villas come with staff. Destinations like Mexico, Barbados, Jamaica, will often include a maid / cook for rental clients. Successful villas will make sure that a professional team is in place to not only manage the property but service rental clients. Jennifer McPherson, Director of Marketing for Altman Real Estate, sums it up best;
“The reason people return to the same villa is usually because of the staff. Visitors like the personal touch of the staff that comes with the houses and unlike hotels, there is not usually much turn-over so many visitors, especially families, have years of experience with the same staff year after year.”
Stephanie Farr adds to this;
“But overall, I think the level and quality of service included in the villa rental is the most important factor. Good service is what clients really remember from their vacation. This ultimately results in repeats with "word of mouth" generating requests for the property...the cheapest and most effective form of marketing.”
Tip: If you decide to hire staff make sure they can speak English. Remember that this person is usually in direct contact with clients, they’re representing you. You may want to consider swapping time at your villa with international chefs who could teach your staff how to cook fantastic meals.
#2 – Location, location, location
You’ve heard this expression a million times, location, location, location. Well it’s true but the key question is where? The first step is to find that right balance between where you want to vacation and where others want too. I may love Shanghai, China but is there a healthy villa rental market there? If you have your sights set on a Caribbean island it’s no secret that a beachfront villa can command higher rental rates but does this justify the additional investment? Jennifer McPherson (based in Barbados) says that “not all of our villas are on the beach and many that are not still rent well.”
Some markets like Maui are great because rental clients will generally rent for 10 – 14 nights. The drawback there is the price of real estate, it’s expensive. Alternately you could invest in a beachfront villa in Turks and Caicos but you have to factor in hurricanes and the current political situation. Here are a few questions you may want to ask yourself prior to buying a villa;
Q: Is it an easy destination to fly too? Q: Is it safe? (hurricanes / crime) Q: How far is it from restaurants, nightlife? Q: Is it located within walking distance to the beach?
Tip: If the topography of the destination you’re considering investing in is flat, it should be located as close to the beach as possible. If the destination has hills, having a great view can be a strong selling point. Almost all clients enjoy being close to restaurants and nightlife regardless of the destination.
#1 – Quality photos
It always blew my mind away when owners would send me pictures they took with their digital camera and asked me if this was ok? No, it’s not ok! You just spent some serious money buying a luxury villa and then you walk around the property in your jogging pants, spending 5 minutes to take pictures expecting travelers to get inspired to rent your villa….not good. Nick Guezen says “it just so happens that the featured villas selected on LuxuryRetreats.com are often chosen by those with the best photos. So the bottom line is to start with great photos.” Stephanie Farr also agrees that quality photos are a major reason why some villas rent better then others;
“The success of a villa rental program is highly dependent on marketing materials, most importantly it’s the visuals that help a client decipher between one villa and the other. High resolution, large professional photos can help increase requests by 80% and ultimately sales.”
Tip: View a professional photographer’s portfolio prior to hiring them. Ideally this person has experience shooting villas which are very different then weddings and profile shots. Expect to pay anywhere from $800 US to $5,000 US for 20+ photos.
So now you have a few guidelines to work with in improving your villa rental program. Like I said before, this won’t guarantee success but it surely won’t hurt :) Good luck!