Tag: real estate investement

Replace or Rekey a Door Lock?

April 15, 2018 / efdawson

Does your house have too many keys? If your beach condo is anything like mine, you might have a key for the common front door, a key for your own unit, and another key for an owner’s closet. That is three keys and counting. You might still have different keys for a locked shed, outdoor shower stall, garage closet…you get the picture. Did you know you can straighten the jumble of keys out to a manageable number by simply rekeying a lock?

Quick story. During the rental season last year, I received a call from my renters that the key would no longer work the front door. It seemed as if it was the wrong key entirely. Of course, I followed with, “are you sure you have the right key?” After some troubleshooting over the phone, I determined I had to locate a locksmith. I was so relieved when I finally secured someone that I did not think to insist that he replace the lock in almost any case and rekey to match my existing key. Instead, I left the locksmith to do his job. After the service call, I received a bill for repairs to a faulty latch. Faulty latch? OK, it is not clear to me then how a latch could be stuck in a manner that the key would not work the lock…but my renters could use the door so I did not think much more about it. Then, during the offseason, I ran into the same problem with the front door lock…the key would not fit in the lock at all! See video for the problem in action.

I decided to do what should have been done to begin with, replace and rekey a new lock.

Replacing a lock is somewhat self-explanatory it refers to changing the hardware out with a new knob and lock entirely. This is useful if you want a new color or style of hardware or maybe a different, more secure brand of lock. When you rekey a lock, you are adjusting the internal workings of the lock cylinder so that the lock functions with a different key. While you could do this yourself, I would not recommend it. It requires adjusting the pins and springs inside the tumbler. Most lock pin sets are a few hundred dollars and this just would not be cost-effective. If you need to rekey multiple existing locks, call a locksmith. However, if your situation is similar to mine and you need to replace a lock but do not want a new key, look to buy the same brand of lock (in most cases Schlage or Kwikset) and ask the hardware store to rekey that new lock to match your existing key. Lowes and the Home Depot will both do this, typically for another $5. Keep in mind that different brands of lock (Schlage, Kwikset, Medeco, etc.) cannot be rekeyed to work with each other. If you have different brands you will need to opt for one throughout. I highly recommend Schlage and you will have no problem locating that brand in stores. So get that mass of keys in order and rekey your locks!

How to Furnish Your Beach House

February 11, 2018 / efdawson

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!

Why You Should Use Airbnb to Find Renters

January 26, 2018 / efdawson

I have snagged many vacation rentals for amazing prices in Hawaii, Florida, the Poconos, and even Turks and Caicos using sites like Airbnb or (in the past) VRBO. I have long seen the value in renting privately and in the process saving substantial, hard-earned vacation dollars. So naturally, when we bought our own beach house in Ocean City, New Jersey I fully intended to rent my place online and in the process lower the rental agency bite (commission) of our income. The following are some of the reasons why I think it is the best avenue for obtaining bookings for your beach rental.

Fees

In Ocean City, New Jersey there are many brick and mortar rental agencies. They are respectable outfits and provide the service of exchanging keys with renters, damage insurance, marketing, and securing payment. However the services offered by these outfits just do not come close to meriting the typical 14% commission. Even for that hefty fee they do not alleviate most grief or further cost, as I will share at another time! What I need from a rental agency or website is to facilitate bookings, secure payment and insure me against the worst. Airbnb does that while only charging me a 3% commission.

Mind you, 3% is not the only money Airbnb is making on each booking. Guests pay a service fee that ranges from between 6-12% (generally the more expensive the subtotal, the lower the percentage fee). Also, Airbnb allows for a cleaning fee (if you choose) after this subtotal. I like this pricing arrangement for a few reasons. Reason one, it is more straightforward to potential guests as they can see what they are paying and to whom. Like any capitalistic venture, increased costs are passed on to the consumer. When I have a rental agency booking, I need to account for their commission and the cleaning fees in my rate upfront. Therefore, my upfront rate appears much higher to these guests. By comparison, the Airbnb guest will see a lower rate with the cleaning fee separate and apart from the rate and I can charge 11% less (the difference in commission, 14%-3%) and still net the same amount. Reason two, all of this is negotiable. Since the guest can see a clear breakdown of the cost, they are free to negotiate and often do. Airbnb allows me to offer them special pricing too. When you receive a special price you tend to close the deal. None of this flexibility is possible through an agency and this helps me secure my bookings much earlier in the year than with an agency.

An additional bonus with Airbnb is that it is entirely free to list as a host and free to search as a guest. Some other sites like FlipKey, VRBO and Homeaway charge an annual fee in order to list. Quite simply Airbnb is the outlet that costs me the least amount of money.

Control

With a local agency like the kind that exists in Ocean City, NJ all the rentals are by the week or longer. I can offer monthly or seasonal discounts but that is about it. Airbnb allows me to offer my choice of term discounts, check in/out times, minimum and maximum stays, and much more. I can rent for one day in December if I choose. The local agency has little reason to accommodate those kind of bookings. If I receive a booking inquiry, but want to charge a different price, I can send the guest a Special Offer. This is a great way to hook someone who might be on the fence. The more control I have over my bookings the better and Airbnb gives me the most total control.

Vetting /Communication

This is big. When I receive a booking through the local agency, I know almost nothing about the guest I will be hosting. Typically, I receive a contract that has the guest name and the number of people in the party but little else. Airbnb provides a variety of tools to help me screen potential guests. Basic contact information such as phone number and email address are verified of each guest during the Airbnb account set-up. I can see how many points of verification and what type of information has been verified for each user too – the more you see the better.

Also, I am able to review users “about me” section. Here members write a little blurb about themselves, upload a photo and answer credit report type questions to verify their identity through the site. You can glean information about interests, age, vocation, and most importantly, level of maturity. Often there are links to a user’s social media. You certainly should not use this information to discriminate, that is un-American, but this is your investment and this information can give you a general feeling for the type of guest you may be hosting and some assurance that they are not going to throw a huge party if you do not want to allow that!

Reviews/Feedback

In the 21^st century online commerce works by giving and receiving feedback. Airbnb works in a manner similar to sites like Amazon or eBay in that hosts and guests both have the ability to review each other. This is great because guests in your place are much more likely to take care when they know your review afterwards can impact their ability to rent nice places in the future. In fact, it has been my experience that the people who break things or are generally problem guests have been the people who rent through the local agency. Those guests just are not accountable to me. I have lodged complaints with the agency about particular guests and it goes in one ear and out the other. I can refuse that guest in the future, but the agency will take their money and pass them on to some other unsuspecting host. Mutual accountability leads to good outcomes.

Quite simply, Airbnb is a great site for procuring reliable, accountable guests without the pain of double digit commissions.

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

January 4, 2018 / efdawson

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.

Tag: real estate investement

Replace or Rekey a Door Lock?

How to Furnish Your Beach House