Saturday, November 26, 2011

Owners who turn houses into short-term vacation rentals – do it to keep homes they love

By Susan Lahey
SPECIAL TO THE AMERICAN-STATESMAN
Updated: 7:56 a.m. Saturday, March 12, 2011
Published: 7:52 a.m. Saturday, March 12, 2011
Sharon and Michael Walker's house is sleek, spacious and spare, with enough weathered wood and soft seating to make it homey, and great views of the Austin skyline. It's their dream home.
While they were designing and building the Bouldin Creek neighborhood home, she worked in marketing and he sold custom home appliances. But when they had their first child, Sharon Walker decided to quit her job. Then Michael Walker started seeing the economy's toll on his business. Suddenly the Walkers' dream home was feeling a lot like the Titanic.
"I don't think we would have let it get to the point where we lost everything to keep the house," Sharon Walker says. "But it could have."
Reluctantly they tried to sell the house, but didn't get an offer that was suitable to them.
Enter HomeAway.
HomeAway is an Austin-based listing service for people who rent houses or condominiums to tourists, business travelers, families in town for a wedding or reunion. The company lists nearly 500 homes in the Austin area and more than 230,000 internationally.
Within weeks after discovering HomeAway, the Walkers had moved to a more affordable place and booked their first guests for South by Southwest last year. They now charge $1,500 a night during events and $650 a night the rest of the year. It is rented about 10 nights a month.
"It pays the mortgage," Michael Walker says. "It enabled us to keep our house."
HomeAway's statistics show 1 in 5 of their homeowners cited the economy, job loss or the threat of losing their homes as reasons to start renting. The company says nearly 40 percent of its homeowners cover 75 percent to 100 percent of their mortgages with short-term rentals, and 63 percent cover at least half their mortgages.
For $300, HomeAway lists the house on its site and a couple of European rental sites, but the owners themselves have to run the rental business. They prep the house with adequate furniture, linens, bedding and kitchenware. They pay extra insurance and pay 15 percent hotel tax to the city. They usually hire a cleaning service between renters. Some, like Jeannie DeFrese, offer renters a grocery-shopping service for a fee. Before deciding to do short-term rentals, homeowners should check their homeowners association's deed restrictions to make sure they are not breaking any rules.
Most homeowners say the 10 to 20 hours a week they spend on the business are spent taking inquiries and screening potential renters.
Renters must agree to a contract that establishes rules, deposits and guest limits. Most homeowners forbid parties or charge event fees for extra people in the house. Damage or calling of police by neighbors often results in forfeiture of the deposit and sometimes eviction. But that rarely occurs.
Homeowners say a phone conversation with prospective renters usually tells them what they need to know. Many won't take renters younger than 25.
"If we ask them why they're coming in and they mention Sixth Street, forget it," Sharon Walker laughs.
Some renters include groups that will be in town for a few months while working on business projects. Having a house saves them the extra expense of renting office space. DeFrese has rented her house to a visiting professor for a semester. There are family groups for weddings and girlfriends on a getaway, who, the Walkers say, leave the house in better shape than they found it.
Connie Leaverton says a lot of her guests are international: Australians, New Zealanders and Britons. She has a funky little 1960s house east of Interstate 35, near downtown. When she realized she couldn't sell the house for what she thought it was worth, she turned it into a short-term rental.
"It's a weird little house," says Leaverton, who does video production and circus performing, "so I capitalized on the weirdness."
She decorated with bright colors and retro lighting, furniture and décor, adorning the walls with old LPs and framing the floor mat from a Twister game. The house says "fun."
She had a significant initial outlay , she says. But she rents her house for $199 a night, less during the winter. It is rented most weekends, and she sometimes gets a renter for as long as a month.
The City of Austin has discussed some neighbors' concerns about short-term rentals, which city officials say are not addressed by city code.
Some owners of short-term rental properties do not pay the hotel tax. And some neighbors have complained about having the rentals in their neighborhoods. In October, the Rollingwood City Council voted to ban rentals of homes or rooms for less than 30 days.
But DeFrese says short-term rentals can be better for property values and for peace of mind than long-term rentals. She owns several properties and has had both long-term renters and short-term renters. When she and her husband couldn't sell their house near Zilker Park, they decided on a two-year plan to do short-term rentals.
"With the short-term renters, you're getting in there and keeping it in tip-top shape. You get to do yard care, all those things you want to do. \u2026 It's a little easier emotionally, too, because you get to check on the house, not just turn it over and take it back in whatever condition in two years."
A group of HomeAway owners is creating an organization to convey a "stamp of approval" to the owners who maintain their properties to a certain standard; pay their taxes; choose renters with an eye to the neighbors' concerns, and otherwise build a good reputation for the short-term home rental business.
For many HomeAway owners, the experience has been almost entirely positive. The Walkers' worst experience was finding that renters had left wadded paper on the floor, for example.
"When we started this I thought, 'Oh no, my couch!'" Walker says.
"I don't want strangers coming in and sitting on my couch. But the wonderful people who have rented our place are exactly the kind of people I would invite into my home if I lived here."

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