By Allison Settle-Smith

We all know someone who has become a successful entrepreneur thanks to modern accommodation booking websites such as Airbnb. As popularity for vacation rental properties continues to increase more homeowners are starting to ask themselves whether this a worthwhile income option.

As a rental associate at Rego Sotheby’s International Realty, one of the most common conversations I have with homeowners is advising them of the pros and cons of entering the market with a long-term rental versus a short-term/vacation rental. People often want to know which option will generate a higher revenue opportunity, what will work best for their lifestyle, and whether renting their property or apartment on Airbnb is truly worth it. The answer to these questions is yes! Renting your home on the vacation rental market can be worth it if you have the time, resources and a property that can exceed the average vacation rental market statistics.

What do the average market statistics look like in Bermuda?

First, let’s take a look at the short-term/vacation rental market. The average daily rate is $160 BMD per night and the average number of nights that a property is booked is 72 nights per year.  Therefore, the average annual revenue of vacation rental properties is $11,520. Of course, many exceptional properties in Bermuda will far exceed this number.

Now let’s compare that with the long-term rental market. An average one-bedroom apartment rents for $1,200-$1,500 per month. Therefore, the average annual revenue of one-bedroom properties on the long-term rental market is $14,400-$18,000.

It is important to consider that the operating costs of a vacation rental are higher than a long-term rental. For a long-term rental your operating costs are land tax, landscaping, appliance maintenance and general property maintenance. The operating costs of a vacation rental encompass all the costs of a long-term rental but have additional expenses such as utilities (electricity, internet, TV package, water), cleaning costs, maintaining supplies for guests (toilet paper, dish soap, salt, pepper etc.) and cost of replacing furniture or kitchenware due to normal wear and tear.

So how can a property owner create a vacation rental business that will be more profitable than renting their property on the long-term market? Maintaining a 5-star rating on the website which you use to advertise your property is critical. You get a five-star rating by providing an exceptional experience for your guests.

A quick response and being available to your guests 24/7 is crucial to achieving the profit you desire. The work involved in this could include things such as: answering all guests questions before their arrival, arranging airport transportation, facilitating grocery store deliveries, supplying basic toiletries and pantry items, check-in/out inspections and condition reports, professional standard cleaning and attending to property maintenance or internet issues without delay. There is also a requirement to report bookings to the Bermuda Tourism Authority and pay a 4.5% Vacation Rental Tax.

Ensuring that a vacation rental is ‘guest-ready’ for each booking requires a financial investment, as well as a time investment. Do not underestimate the value of your time. Many successful vacation rental property (VPR) owners will tell you that operating a successful VRP is a full-time job.

When you are deciding on a rental option for your property ask yourself if you have the time to properly commit. Are you prepared to work an on-call job on top of your full-time job? Or do you have the means to make VPR management your full-time job? If you have a passion for tourism, a property that will be in high demand and the drive to work for yourself, then you can absolutely create a VRP that will beat the vacation rental market average statistics.

If the time commitment is daunting, and you desire an easier revenue stream from your property then renting your property on the long-term market will most likely be better suited for your lifestyle, while still being profitable. Remember, there is also the option of hiring a property manager for a small fee to alleviate some of the responsibilities related to maintaining a vacation rental property.

There is no denying that websites such as Airbnb have had a significant impact on the tourism industry, and it is only growing. Every property and every owner is different. Take the time to reflect on which option is best for your lifestyle, and of course, do not hesitate to contact the professionals for advice!

Allison Settle-Smith is the Long-Term & Vacation Rental Advisor at Rego Sotheby’s International Realty.

This article was originally published in the February 2019 edition of the RG Business Magazine.

The post To Airbnb or not to Airbnb? appeared first on RG Magazines.

We all know someone who has become a successful entrepreneur thanks to modern accommodation booking websites such as Airbnb. As popularity for vacation rental properties continues to increase more homeowners are starting to ask themselves whether this a worthwhile income option.

As a rental associate at Rego Sotheby’s International Realty, one of the most common conversations I have with homeowners is advising them of the pros and cons of entering the market with a long-term rental versus a short-term/vacation rental. People often want to know which option will generate a higher revenue opportunity, what will work best for their lifestyle, and whether renting their property or apartment on Airbnb is truly worth it. The answer to these questions is yes! Renting your home on the vacation rental market can be worth it if you have the time, resources and a property that can exceed the average vacation rental market statistics.

What do the average market statistics look like in Bermuda?

First, let’s take a look at the short-term/vacation rental market. The average daily rate is $160 BMD per night and the average number of nights that a property is booked is 72 nights per year.  Therefore, the average annual revenue of vacation rental properties is $11,520. Of course, many exceptional properties in Bermuda will far exceed this number.

Now let’s compare that with the long-term rental market. An average one-bedroom apartment rents for $1,200-$1,500 per month. Therefore, the average annual revenue of one-bedroom properties on the long-term rental market is $14,400-$18,000.

It is important to consider that the operating costs of a vacation rental are higher than a long-term rental. For a long-term rental your operating costs are land tax, landscaping, appliance maintenance and general property maintenance. The operating costs of a vacation rental encompass all the costs of a long-term rental but have additional expenses such as utilities (electricity, internet, TV package, water), cleaning costs, maintaining supplies for guests (toilet paper, dish soap, salt, pepper etc.) and cost of replacing furniture or kitchenware due to normal wear and tear.

So how can a property owner create a vacation rental business that will be more profitable than renting their property on the long-term market? Maintaining a 5-star rating on the website which you use to advertise your property is critical. You get a five-star rating by providing an exceptional experience for your guests.

A quick response and being available to your guests 24/7 is crucial to achieving the profit you desire. The work involved in this could include things such as: answering all guests questions before their arrival, arranging airport transportation, facilitating grocery store deliveries, supplying basic toiletries and pantry items, check-in/out inspections and condition reports, professional standard cleaning and attending to property maintenance or internet issues without delay. There is also a requirement to report bookings to the Bermuda Tourism Authority and pay a 4.5% Vacation Rental Tax.

Ensuring that a vacation rental is ‘guest-ready’ for each booking requires a financial investment, as well as a time investment. Do not underestimate the value of your time. Many successful vacation rental property (VPR) owners will tell you that operating a successful VRP is a full-time job.

When you are deciding on a rental option for your property ask yourself if you have the time to properly commit. Are you prepared to work an on-call job on top of your full-time job? Or do you have the means to make VPR management your full-time job? If you have a passion for tourism, a property that will be in high demand and the drive to work for yourself, then you can absolutely create a VRP that will beat the vacation rental market average statistics.

If the time commitment is daunting, and you desire an easier revenue stream from your property then renting your property on the long-term market will most likely be better suited for your lifestyle, while still being profitable. Remember, there is also the option of hiring a property manager for a small fee to alleviate some of the responsibilities related to maintaining a vacation rental property.

There is no denying that websites such as Airbnb have had a significant impact on the tourism industry, and it is only growing. Every property and every owner is different. Take the time to reflect on which option is best for your lifestyle, and of course, do not hesitate to contact the professionals for advice!

Allison Settle-Smith is the Long-Term & Vacation Rental Advisor at Rego Sotheby’s International Realty.

The post To Airbnb or Not to Airbnb? Let’s Run Some Numbers appeared first on RG Magazines.

Sally Aggarwal had used Airbnb previously for family trips and always had good experiences. Then when a waterfront property became available for sale across from her home, she figured it would make for the perfect short-term rental for the Bermuda market. It had an amazing view and was in a great location within walking distance to Church Bay and local restaurants, as well as on a bus route.

BRING THE OCEAN FEEL INSIDE:
Let’s face it, one of the Island’s biggest selling points are the beaches. Capitalise off of that by creating a light, modern and coastal feel with the décor. In Sally’s case, she also put in glass railings to maximise the view of the South Shore.

ALWAYS HAVE FRESH LINENS

There’s nothing better than checking into a hotel and getting that first whiff of clean, fresh sheets. Try to recreate that experience for guests by having plenty of white sheets on hand for each bedroom and ample white towels in the bathrooms. Having at least three sets for each room allows Sally to prepare for a quicker turnaround between guests. Also, make sure linens are high quality and able to withstand repeated washing.

COMMUNICATE WITH GUESTS IN ADVANCE
Many guests come to the Island for a special occasion, such as an anniversary or birthday. Communicate with them in advance to make sure you understand their expectations and can assist with any pre-planning, such as having taxis waiting for them, groceries in the house or any baby/ toddler items ready.

Sophie Francis and her husband Matt decided to put their spare apartment up for rent on Airbnb to generate a rental income, while also ensuring more privacy for themselves than with a long-term tenant. They were doing a full renovation of the space anyway, so opted to stick to neutral décor and brought in a few Bermuda-inspired decorations as well, such as a retro poster and Bermuda kite on the wall.

DON’T FORGET THE LITTLE DETAILS
Guests will need everything from cutlery, to a kettle and beach towels – and don’t forget to stock up on extra toiletries. In the event someone arrives to the Island on a late flight, this way they’ll still have the basic necessities to get a shower and settle in for the night before finding a grocery store the next day.

SECURE AND INSURE YOUR HOME
While vacation rental sites like Airbnb state they offer host liability insurance of up to $1million, the Francis’ learned this coverage didn’t apply to homeowners in Bermuda. To protect themselves, they went back to their home insurance provider and added additional coverage – in the event, a guest takes a nasty fall on the property, or something out-of-the-ordinary should happen.

THINK LIKE A GUEST
We all look forward to our vacations – sometimes months or even years in advance. That’s why it’s important to make sure guests have all the information and resources at their fingertips to get the most out of their time in Bermuda. The Francis’ have included a guest book in their property, which is filled with restaurant recommendations, sightseeing suggestions, public transportation routes and other tips for tourists to read up on.

This article was originally published in the Summer 2018 edition of RG Magazine.

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