Special Edition for Owners of
Vacation Properties
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"Have
you booked your Hawaiian vacation yet? What are you
waiting for?"
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accommodations. |
"Who's been
sleeping in my bed?"
Would
you pass up the chance to earn an additional $30,000 a year? (Or more.
Often much more?) Surprising as it may be to readers of this newsletter,
the vast majority of owners of vacation property--some 84 percent,
according to the National Association of Realtors--do just that.
There
are lots of reasons, of course. But as the New York Times pointed out in
mid-September 2004, one of the main reasons more property owners don't
offer their places as vacation rentals is that, frankly, they are just
not comfortable with the idea of letting some other couple or family
stay there.
The
article opened with a quote from the proprietor of a store called
Metaphysical Books and Tools in
Sag Harbor
,
New York
. Apparently there's always a post-Labor Day run on "sage
sticks," which vacation property owners "come in and buy to
use in purification rituals."
After
this grabber of a lead-in, the Times reporter pulled back and included
quotes from people who, while they are not into formal purification
rituals, nonetheless are uneasy about renting out their properties.
One
owner in
East Hampton
,
New York
, was distraught because his renters had left his house "a
mess." His chief
complaint: The towels in the linen closet were folded differently than
the way the homeowner had left them.
Another
complained that he was missing several
Limoges
place settings at summer's end.
If
you aren't chuckling by now, you probably should be. Any reader who has
ever taken a class in basic psychology will recognize this as a classic
"approach-avoidance dilemma."
The
owners want the rental income, but they don't want the renters to occupy
their second homes.
We
understand such feelings. And we have a solution. It lies in an attitude
adjustment centered on the term *second* home. By definition, a second
home is not your main nesting place. It is not your "home." It
is ancillary. It is auxiliary. It is someplace else.
It
can be a sweet little moneymaker. As well as a place to get away to when
you desire. So you furnish it with practicality in mind.
Limoges
china? You've got to be kidding!
A
second home should pay for itself through rentals, with enough time left
over for you and your family to enjoy it free-of-charge. Furnish it with
the high thread-count sheets, fluffy towels, and other amenities needed
to attract the renters who will pay your bills. Lock away anything
really important to you in the owner's closet.
Then
get over it. And get on with it.
Excise
the phrase "second home," because it's nothing of the sort. It
is your vacation rental property--that pays for itself thanks to your
renters, that increases in value each year thanks to the real estate
market, and that you can use whenever you want because you own it.
Here
ends today's lesson!
Writen
by Hunter Melville and Dave Bollinger
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In
this Issue:
- Who's
been sleeping in my bed?
- The "Nigerian Scam"
- Straight
Talk on "Fair Housing" Laws
- Why RBC Travel Insurance?
Click on the banner!
- Featured Listing - Luana
Kai, Maui
- Archived
issues of GWC newsletters -> Here!
FEATURED
LISTING
Luana Kai
is an oceanfront property located in North Kihei and consists of four
three story buildings offering ocean and garden views. The beach
fronting the property is excellent for watching sunsets and is popular
with windsurfers during the summer months....Read
more
The
"Nigerian Scam"
There's
a wonderful lost treasure of a movie we'd like to recommend. It's called
"The Flim-Flam Man," and it stars George C. Scott as a
fast-talking grifter working the back roads and whistle-stop towns of
the rural South in the 1960s. He encounters a 20-something Michael
Sarrazin, recently AWOL from the Army, and sets about showing him that
there's a touch of greed in everyone. Sarrazin doesn't want to believe
it, but, of course, he learns otherwise.
It's
a lesson all of us who own and rent out vacation property should take to
heart. Particularly now that a variant of what is commonly known as
"the Nigerian Scam" has surfaced in our field.
There
are innumerable variations on the classic Nigerian Scam. But they all
involve the "certainty" of a large sum of money coming to you
if only you will help facilitate things by writing a check to someone.
Don't worry. You'll get all your money back quickly. And then some. The
scam gets its name from the fact that the letters or e-mail messages or
faxes that set up the fraud often originate in
Nigeria
.
(Unconfirmed
reports list the scam as one of the top five sources of foreign currency
in the country.)
Here's
how criminals have adapted the scam to the vacation rental market.
Someone who has seen one of your online ads or your Web page sends you
an e-mail expressing the desire to book your place for an entire month.
If your weekly rate is $1,000, that's $4,000. Like all of us, you're
suddenly very interested.
But,
unfortunately, there are a few minor complications. The prospective
renter is a sailor currently at sea, so he can't get to a bank. Or his
funds are otherwise tied up. But, he does have a cashier's check for
$10,000, thanks to an insurance settlement he has just received. He'll
FedEx you that check. You're to deposit it and keep the $4,000 for the
rental while sending a check drawn on your own account to the renter's
travel agent to pay for his tickets and those of his special friend.
Perhaps he will suggest that you keep an additional $500 for your
trouble and inconvenience.
There
will undoubtedly be some very plausible sense of urgency for you to
write your check and send it off. That's crucial to the scammer's plan,
because the cashier's check he sends you will be a complete counterfeit.
With
an infinite number of variations on this scam you can expect at some
time that you may run into a request for a change in the way you
normally handle rental payments. No matter what the offer, stick
to your usual way of doing business to keep yourself from being taken.
Written
by Jan and Pat VanVoorhis
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Straight Talk on
"Fair Housing" Laws
Here's
a question: A couple with a two very young children wants to rent your
place. Can you refuse them because your property is not "toddler
friendly?"
Or
how about this: The social chairman of a college fraternity calls you to
book a group of sixteen of its members for Fourth of July week. Can you
turn him down?
To
put it another way, can you impose age restrictions of one sort or another
without violating the Federal Fair Housing Law? The answer is,
"Yes," at least in the vast majority of cases.
One
of the advantages of following and writing about the real estate business
for so many years is that you get to know many leading authorities in the
field. Early in her career, Emily ran the national Real Estate Licensing
Exam program for Princeton-based Educational Testing Service (ETS). So
when the question of how the Federal Fair Housing Act applies to vacation
rentals came up recently in a Yahoo forum, Emily contacted her old friend
John Reilly for his authoritative advice.
John
is a nationally recognized expert on real estate law and the author of one
of the best-selling books in the field--*The Language of Real Estate*, now
in its fifth edition. He's also a licensed attorney in both
Hawaii
and
California
and a licensed real estate broker in
Hawaii
.
Here
is the essence of what he explained to us about the Federal Fair Housing
Act as it applies to rental properties:
1.
If you own no more than three single-family properties and you rent them
without the services of a licensed real estate agent, you're exempt from
certain key provisions of the Federal Fair Housing Act under what's
commonly referred to as the "Mom-and-Pop exemption."
2.
There's also a "Mrs. Murphy's Exemption" for owner- occupied
multi-family dwellings of four units or less. This means that if you
occupy one unit in a multi-family dwelling of this sort, you can rent the
other units to whomever you wish.
State
and local fair housing laws vary, of course, so to be completely safe on
these matters, you'll want to consult a reputable real estate attorney who
knows the laws governing the area where your vacation property is located.
After all, your job is to get your place rented. Let the legal eagles
worry about the law.
Written
by Alfred and Emily Glossbrenner
The
Glossbrenners are vacation rental experts and best-selling authors of *How
to Make Your Vacation Property Work for You: The Quick & Easy Guide to
Advertising, Renting, Managing, and Making Money from your Second Home.*
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