Beach House for Fun and Profit

Make money and catch some rays at the same time!

Tag: beach house investment

How to Close Up for the Winter – End of Season Checklist

October and November are the months when owners of beach homes typically close up for the winter. While some duties may vary based on your region or type of house, there are some things you should always consider doing if your property will be vacant for an extended period.

With only a little modification to cover alternative situations, below is the checklist I use.

Close for Winter Checklist

Exterior

☐ Take inside umbrellas, light furniture, and any foam padding/cushions to avoid mold and mildew build up.

☐ Properly secure large furniture that will remain outdoors. I use a bungee cord to secure everything together and cover with a tarp (be sure to secure a tarp well, I use ratchet straps).

☐ Store inside a shed or garage garbage cans which have been rinsed well.

☐ While rinsing, use the garden hose and sprayer to rinse the dirt and debris off the blades and condensing coils of the outdoor AC unit.

☐ Shut off and drain outdoor water spigots to prevent freezing damage. Likewise, drain and bring in garden hoses.

☐ Check weather-stripping, exterior doors and windows to ensure no major deficiencies are present.

Interior

☐ Clean the house thoroughly! This includes:

☐ Remove all perishable foods. Any food that remains should be stored in airtight containers.

☐ Clean the oven to remove food particles.

☐ Clean out the refrigerator, freezer, sink traps and garbage disposal. (Again, we are trying to minimize the chance of rotting bits of food attracting any critters.) I leave the refrigerator on, but if you are shutting off the refrigerator, leave the door cracked open.

☐ Unplug household and major appliances.

☐ Pull shades down to protect from sun.

☐ Put dryer sheets with stored linens.

☐ Replace HVAC Air Filter and consider having your heating system serviced.

☐ Shut off cable TV.

☐ Forward US Mail.

Either:
☐ Turn off the water (requires shut off at main supply and draining all faucets. Typically, you should leave one faucet open on the lowest level of the house to allow air and excess water to drain).

Or:
☐ Keep your home warm enough to ensure the pipes do not freeze. I opt for 59°F to help keep the interior of the floor and wall cavities, where the water piping is likely located, above freezing temperatures sufficiently even if the power should go out for a bit.

☐ Ask a trusted local person to check in to perform a visual on the house occasionally…this could get as extensive as shoveling the driveway, looking for ice dams, snow drifts, etc. for you after big winter storms.

An ounce of prevention is worth a pound of cure and attending to these items now can prevent a potential disaster and expensive service call. The checklist can also be downloaded as a Word document: End of Season Checklist.

 

How to manage a beach house from a distance

How do I manage a beach house when I live far away? It is a question to consider as you contemplate a vacation rental investment or a question you might ask after you have purchased one.

Typical challenges to a long-distance owner include how to manage check-ins/check-outs, cleanings, emergency repairs, payments, etc. If you live close by, it might be easy for you to show up on demand and manage all these things yourself. I have seen it done…with varying degrees of success. However, if you live far away this just is not practical. In my mind, I think of the tagline from the movie Ghostbusters – Who you gonna call? That is was it boils down to. You need to have someone to call for everything.

You can opt for one call…to a management company. They can handle most things for you; from procuring guests, sending leases, providing and retrieving keys, emergency repairs, payments, etc. This convenience however, will cost you. Management companies in Ocean City, New Jersey for example, charge between 12-18% commissions. Ultimately you are still responsible to handle routine maintenance, repairs to appliances and more yourself. (I imagine they could handle this for you too for a still extra charge.)

Quick story: A rental agency guest complained that a toilet seat broke at our place. The agency called me to see what I wanted to do about it. Oh, I don’t know, fix it? OK, do you have someone to send out or do you authorize us to send a repairman to purchase and replace the toilet seat? I opted for the later because I was hours away. I expected to be gouged, but I was not expecting a bill of $260! A standard toilet seat at the Home Depot is ~$35 and while the service call fee for a handyman may vary greatly, $200+ was more than exorbitant.

I learned pretty quickly it was good to have a book with the appropriate people to call for typical scenarios like the toilet seat. A plumber, a cleaner, an HVAC company, general handyman, etc. It will take some time but you will develop a network of others you can rely on and trust to handle issues for you. Sometimes that is a trial and error process. In my case, I was fortunate enough to find a capable person who performs the cleaning during our changeovers which acts as property manager and set of eyes each week at guest changeover. She lives very close and can save me a long trip for cases like a chirping alarm, lockout, etc. Finding an individual like that is a big help to the long-distance owner.

Another way you can manage a beach house from afar is by automating as many processes as you can. Whether you use a booking website, a local agency or you find renters on your own you should automate to the extent possible. You can receive payments via Paypal or Venmo. You can use a standard welcome email, create a list of FAQs, a standard lease template, etc. You should automate check-in/out too. Electronic lockboxes or smart locks can streamline check-in and make maintenance service calls easy too. I opt for a low-tech solution of a simple lockbox that my cleaner changes the code to each week, but it accomplishes the same purpose.

Lastly, when you don’t have someone to call and you don’t have a process for something, you always have a friend in Google. You will not be the first long distance beach rental owner and you will not likely be the last. Almost nothing you encounter will be unheard of, a simple web search can bring you to a blog like this or to an instructional video with a how to and step by steps for the problem you are facing.

While being at a distance from your investment property does pose some disadvantages, if you are willing to devote some time and effort these challenges can easily be mitigated.

New Jersey 2019 Budget and New Taxes on Airbnb/VRBO Rentals

Lawmakers in New Jersey have passed a budget for fiscal year 2019 and as a result, one change affects the bottom line for hosts who choose to list New Jersey rentals on Airbnb or VRBO.

Beginning October 1, 2018, online rental marketplaces like Airbnb or VRBO must collect the state 6.625% sales tax, any applicable municipal taxes, and the 5% hotel occupancy fee.

Strangely, Airbnb does not seem disappointed by this bill.  The full article is here, but Josh Meltzer, head of Northeast public policy for Airbnb was happy the bill was passed.  The article quotes him as saying, “Airbnb has fought for years to ensure that the short-term rental community can contribute tax revenue to support public services throughout New Jersey.”

Airbnb already collects taxes in the New Jersey municipality of Jersey City, so you can expect Airbnb to collect the taxes and fees (Update here) on the front in for the guest…at least making this a non-issue for the host to worry about collecting and remitting.

 

However, it may have an impact on whether guests choose to find you through Airbnb or the local agency.  Oddly, the brick and mortar rental agencies are not required to collect a state sales tax…at this time.  You may have already seen my post touting Airbnb over local Ocean City rental agencies because of the latter’s exorbitant ~15% commissions.  This development changes that calculus.  The conclusion of that earlier post, was that the bonus of using Airbnb was that one could post a rate 11% less than the local agencies (Fox, Berger, etc.) and net the same amount of money.  6.625 + 5 = 11.625% and this effectively makes Airbnb and the local agencies awash, if not a bit worse, from a cost perspective in a rental transaction.  I will not need to adjust my rates, per say, as the renter will be charged the state taxes and fees on top of my rate (see the Jersey City example above) while the agency commission comes out of my rate.  However, it will be interesting to see what effect this has on the marketplace.  In 2018, I had just one week rented through a local agency.  I will update this post with what the 2019 number looks like when this is fleshed out.  The bottom-line is I am trying to maximize my return and this can do nothing but hurt the bottom-line.

How to Ensure You are Ready for the Rental Season: New Season Checklist

The unofficial start of the summer season is behind us and prime beach house rental season is about to start.  To ensure you are ready for the rental season, use this checklist I use to have our place ready to host guests.

New Season Checklist

Exterior

☐ Touch up paint or fully paint depending on condition

☐ Power wash outside

☐ Check screen doors for damage and ensure rollers move freely

☐ Check workability of beach chairs, umbrella and beach cart

☐ Check outside shower stall and hose

Interior

☐ Put away personal effects
(kid’s toys, toothbrushes, hats, etc.)

☐ Swap out owner comforters/pillows/bath rugs to renter versions

☐ Update welcome letter and house manual/guide

☐ Buy beach tags

☐ Carpet cleaning

☐ Change remote, clock and smoke detector batteries

☐ Inspect fire extinguishers

☐ Replace HVAC Air Filter

☐ Test Air Conditioner

☐ Replenish stock of soap and toilet paper our cleaner puts out
(we provide hand soap and a starter roll if none is left behind)

☐ Refresh any “labels” in house that need updating
(ex. Light switches, owner closet, leave washer door open when not in use, etc.)

☐ Restock area brochures and menus if needed

☐ Provide updated magazines (remove my home address!)

☐ Purchase and provide cleaner with welcome gifts for each guest

☐ Through house cleaning

Remember, an ounce of prevention is worth a pound of cure and attending to these items now can prevent a potential vacation disaster and an expensive in-season service call. Some of these tasks may be best performed in the fall at the conclusion of the rental season, but I leave that to your discretion.  The checklist can also be downloaded here: New Season Checklist.

 

Frequent Service Call Alert: Garbage Disposals!

A good, general rule for a vacation rental property is to remove unnecessary items that may fail and cause you a repair bill. I would include things like complicated small appliances, ice makers and trash compactors in this category. Because I market my property as a high-end home, I do offer a few items that some might include in this “unnecessary and likely to break” category: a dishwasher and a garbage disposal.

It is my opinion that both are actually necessary items. A beach house without a garbage disposal and dishwasher would be more akin to a camping trip. Are guests going to feel like they are staying in a high-end rental if they are cleaning a sink trap after every meal? Clogged drains are even more likely to occur than a jammed disposal. So I consider a garbage disposal a benefit to the vacation rental owner as it prevents plumbing backups…and those are actual emergencies! Disposals are a must too if you have a dishwasher. Therefore it is my recommendation you provide both.

While I have never personally had trouble with the Insinkerator Badger 1  disposal at our unit, without question the number one reason I have been contacted is for trouble with it. Maybe some of these folks have never used one before or maybe they have more industrial versions at home. Either way, it has been a bit perplexing as to why all the trouble. It has been described as “jammed”, “stuck”, and just “not working.”

In most cases, any disposal that is jammed can be reset by inserting an Allen wrench underneath or pushing the reset button. I understand guests do not want to spend their precious vacation hours even doing that. One thing I do NOT understand is how people can lack common sense with the items they put in the disposal!

I debated installing a special strainer like this here. However, people would probably just pull it out.

Since I am tired of the calls, I decided to upgrade. My goals were to find a disposal that would grind virtually anything and one that had a decent warranty. I found and purchased a Waste King 9980 1 HP disposal. A triple grind, continuous feed system will grind almost anything and the warranty seems unbeatable…full lifetime warranty with free in-home repairs!

I believe Waste King can only be found online. I purchased it on Amazon…you can find it here. At that time, I purchased it for $168 and the good folks at Lenegan Plumbing performed the install for $110. So $278 all in. About the same amount I spent last year for two service calls. My thought is that if anything goes in the disposal, crazy or not, it will be obliterated.

I will update this post if I should encounter any issues but I expect to no longer hear about the disposal being jammed!

How to Save Money with the Comcast Seasonal Hold!

Buffering stinks but....

Save $ with slow internet….sometimes

What is no fun is S-L-O-W internet and guests spending thousands of dollars to stay in Ocean City, NJ expect blazing internet. A good internet and TV plan are simply essential for a beach rental property. Unfortunately, there is no real competitor to Xfinity in the area, so I am at the mercy of Comcast and whatever the monopoly charges for the HD Preferred Double Play plan. Currently, $200 a month for this plan is just the cost of doing business.

 

What is REALLY no fun is paying this amount in the dead of winter, particularly when I have not been to the shore in months! I was aware Comcast offered a seasonal suspension option but I was under a few mistaken assumptions. One, that we might visit Ocean City anytime and with young kids who rely on their iPads and Disney Junior for entertainment, we did not want to ever be stranded without Internet and TV. Two, that taking advantage of a Comcast contract promotion with a Minimum Term Agreement (MTA) excluded me from this seasonal downgrade option. Three, that if I had a security system or smart home devices like a thermostat that required internet then I would be cut off.

I have since learned the error of my ways and share that with you.

There will very likely be 90+ days where you do not go to your seasonal vacation home.

It is cold, dark and most everything is closed in Ocean City between New Years and Easter. We just are not likely to be “down the shore” in January, February or March. Should a freakishly warm weekend occur during this period, however, I can use my phone as a decent hotspot and there are Xfinity hotspots accessible from the house (would use primary home credentials to access). In other words, there are options to get us by for a couple of days. Likely there are options for you too and if not, is it worth hundreds of dollars for the convenience? Seasonal spots are just that and if Comcast is willing to let you pay less for three months when you likely will not be there, you simply must take advantage. Remember we are trying to maximize the profits with this enterprise!

The only Comcast imposed restriction is WHERE.

I have also learned that while Comcast is somewhat stingy on choosing what LOCATIONS can opt for a seasonal downgrade (related news article here), a contract promotion is no such constraint. So it does not matter if you just joined.

Comcast offers a plan with a trickle of internet.

It probably helps that Comcast is in the home security/automation business now. It had been a complaint of the seasonal suspension in the past that there was absolutely zero internet. A lot of owners have smart thermostats, security cameras, and even smart refrigerators which are rendered “dumb” without internet. Comcast has accommodated the need to maintain a “lifeline” to these with a seasonal suspension option that includes a minimal amount of internet. 10mbps is frustrating slow for general web surfing and forget about Netflix, but it will be OK for your Nest!

BOTTOMLINE: I COULD HAVE SAVED OVER $500 AND LIKELY SO COULD YOU!

You will need to call Comcast and verify eligibility in your area (again Seasonal Suspension is only permitted in predetermined “vacation” areas) but below is the skinny:

As of 2018, Comcast offers a once a calendar year downgrade for a minimum of 90 days and maximum of 270 days to one of two options:

$8 for limited cable channels + $8 for no internet access
OR
$8 for limited cable channels + $29.99 for 10mbps internet

Benefits:

Obvious savings each month off the cost of your ordinary plan while you are not using the service anyway.

Avoid installation charges involved with the alternative of physically disconnecting/returning equipment and restoring service and picking up new equipment again.

Hassle-free suspension and restoration. It can all be done on the phone without the need for a technician to visit or the time involved with the “self-installs.” Customers in certain locations can even change their seasonal suspend end date online at https://xfinity.com/seasonal.

Negatives:

Below is a chart from Comcast that details what is and is not included during the suspension. Obviously the negative is that it is a pretty limited service.

If you are spending more than a few days at the house you should probably consider lifting the seasonal suspension. However, if Comcast offers this option in your area AND you spend months at a time not there to use Xfinity then this is an option you just need to take advantage of. Comcast does not promote or advertise the details of this much but I guess they are not looking to make it easy for you. Hopefully, this information compiled here helps you.

How to Furnish Your Beach House

Keep It Simple…But Nice!

Keep It Simple…But Nice should be your mantra when outfitting your beach rental.  No doubt you have heard the axiom “Keep It Simple” before.  However, you could take that to mean that buying all your furniture from a thrift store and featuring household appliances from the Dynex brand was OK.  Sorry, Dynex!

SIMPLE

Simple does not need too much explanation.  Everything should be functional and intuitive to your guests.  Household appliances should be both easy to use and clean.  Furniture should be low maintenance, not prone to smudges or stains, no deep crevices, power features, etc.  If consulting a manual is necessary for use, then it is not simple!  Keep it simple.

NICE

But Nice!  You should furnish similarly to how you would furnish your own house.  If the place screams “RENTAL!” at every turn then people will treat it like one.  Consider your own experience, even when your vacation budget is tight, you are still looking for the best when you spend your hard earned vacation dollars.  Your renters are no different.  They are not going to appreciate damaged or mismatched furniture.

HOW TO BE “NICE”

That leads to another important point.  It is best to start with a theme and furnish consistent to that theme. The uniformity will convey quality in your profile pictures and net you bookings. For example, we chose a nautical theme for our beach property as that reflects our location.  Just do not get too kitschy.  In any case, your place should have neutral colors and crowd-pleasing decorations for widespread appeal.  If you decorate with a Victorian theme then you are probably going to turn off most renters under sixty years of age. 

Be mindful that while renters will generally be respectful, accidents do happen.  Your vacation home furniture will pick up a few scratches.  Therefore it is best to invest in quality furniture and small appliances which will prove durable.  You make money not having to buy a new blender or sofa every other year.  We chose to spend extra for Sunbrella upholstery.  Nothing is worse than soiled furniture.  (More about Sunbrella to come.)  That extra expense up front is worth it if my sofa satisfies guests for additional years before replacement.

Here are some more “nice” items to remember when outfitting your beach house rental:

  • Opt for firm mattresses and purchase waterproof mattress pads.
  • Remember to be kid-friendly, no sharp corners etc. and consider supplying some children’s cups, pack and plays or baby gates.
  • Do not leave personal effects around for your guests. Photos of your family are going make them feel like intruders, put these types of items away in a locked, owner’s closet.
  • Consider area rugs in rooms with hardwood floors.
  • There should be art on the walls in every room, again just keep it simple (and preferably on theme).
  • All windows should have curtains or some type of window treatments.
  • And of course, there should be some beach chairs, sand toys, beach umbrellas for your guests to use.

If you keep these things in my mind when outfitting your beach house rental you will be on your way to accomplishing the primary mission of the beach rental owner…attracting quality guests willing to pay top rates for your property!

 

 

4 Questions that Answer Are You Ready to Invest in a Beach House

If you are reading this, you likely do not need a lot of persuasion about the benefits of real estate investment (build equity, control a tangible asset, tax benefits, etc.). However there are four key factors that indicate if you are ready to consider the investment of a vacation rental.

YOU CAN USE IT.

Finding a good deal is not so great if you cannot make use of the property. My wife and I traveled frequently and always researched the real estate market wherever we vacationed. So in 2011, just a couple of years after the housing meltdown, we went to Clearwater, Florida. There were numerous beachfront, short sales we could afford that only a few years previous had sold for four times their current list price. While intrigued, we knew we had children in our future and our primary residence was over 1000 miles away. The likelihood was that we would not be able to get down very much.

You simply have to be able to get to your property often, particularly upon initial startup. There will be repairs that you need to do…or at least verify are done or are necessary. Furniture to purchase and receive, and of course you want to be able to enjoy the place yourself from time to time. It just is not realistic to expect to be able to do manage EVERYTHING from afar.

YOU CAN AFFORD IT.

Real estate costs money. There is the down payment, whether it is 5, 10, 20 or 30%, I have yet to verify an individual who was able to purchase a second, investment property with zero money down. Then there is the cash on hand necessary to make initial repairs, purchase décor, list and market your rental, pay utilities and initial deposits, etc. Believe me these costs really add up as I will outline in detail elsewhere. You need to be in a strong financial position.

YOU HAVE DONE YOUR HOMEWORK.

Mine is a beach rental, maybe your preferred locale is a ski chalet, but either way you need to know the ins and outs of your location. Is the area you are considering in demand with renters? Does the investment property have the necessary amenities? Do you thoroughly understand the market, and is the current price justifiable? Have you run all the numbers for your situation? Do you understand local laws, property association rules, etc.? For example, in my analysis of Clearwater, Florida I discovered that most of the condo associations we looked at would not permit rentals of less than a month! That pretty much put a damper on my plans of running a weekly rental.

YOU ARE READY TO WORK.

Your guests ex­­pect near perfection for paying top rental rates. Garbage disposals must work, doors cannot stick, and the internet and cable cannot go out. When these things go wrong you will hear about it or plan to pay someone else (a management company)­ to…which of course will eat into your returns.

Getting the property initially furnished, managing inquiries and fielding calls when things break certainly requires effort and energy. A beach house is not a truly passive investment. However, unlike a 401K you can enjoy this investment and vacation there! Just expect to end your vacation storing personal effects, emptying drawers, locking up items you do not want renters to use, like bikes, sheets, etc.

Check, check, check, check? Then investing in a beach house for fun and profit is probably right for you.