Friday, April 20, 2012

Tell the Story About Vacation Rentals

While neighbors of vacation rentals often peg VR owners as “wealthy out town investors who don’t care about the community”, and local legislators in many communities that host our homes often see us as a group that violates local laws and regulations without making any important contributions to the local community, the truth about short term rental owners and their homes is quite different.

The Many Reasons We Rent

First, vacation rental owners are a very diverse group of people.  I have met VR owners with all sorts of motivations for renting their home, including:
  • ·         Owners that actually live in the local community and have invested in a home as a small business endeavor or a labor of love. 
  • ·         Owners that live in nearby cities, fell in love with the local community, and bought a home there that they plan to eventually retire in.  They are often renting out the home to help defray the costs of owning it while they wait for retirement and a chance to move to the community.
  • ·         People that have had a family vacation home in their family for generations, and now find that they need to rent it out in order to be able to hold on to the property.
  • ·         People who bought a home as an investment that might eventually cover college education costs for their children, and have to rent it out as a way to cover costs, in hopes that the property will appreciate in value.
  • ·         People who found a special home in need of restoration.  It may be in a pristine location, or have historic significance, or be a classic that just needs some loving care.
  • ·         People who run homes to raise money for charities, to support their church, to educate about environmental and wildlife issues, and to provide opportunities for children to see the ocean, the mountains or the countryside.

Most owners don’t break even on their short term rental activity over the course of a year, and their only hope for financial reward is long-term appreciation of the property.  For others renting out their home  simply provides an opportunity to hold on to a property that might otherwise slip away from them in these difficult economic times.  Rental owners know that they won’t get rich by renting their homes, and it is often the non-financial considerations that keep them renting – such as the opportunity to contribute to the host community, the opportunity to meet people from around the world and show them what is special about a home and a community that the owner loves.

Some of us own more than own home and try to run them as businesses.   Most of us barely break even doing this, and it would be more appropriate to refer to such operations as “cottage industries” or “lifestyle businesses.   Other owners that I know only rent their home to members of their church, or an inner circle of friends.  Some are rented out as much as possible, while other owners are only renting out their homes for a few weekends each year.

How We Contribute

It’s not unusual for a small destination community to have several hundred short term rental homes. 
Vacation rental homes are often high-value homes that pay significant local property taxes.  In one community that I work in fully 40% of the homes are short term rentals.  What would happen to such a community if all of those homes were empty?  Property values and tax revenues would plummet.

VR guest pay significant lodging taxes in most communities.  A single frequently rented VR can easily generate $5 to 10,000 per year in taxes for a small rural community.  Some of them generate twice that amount or more. 

On top of that many VR owners pay permit, licensing and inspection fees that further contribute to the support of the local community.

If you do the math you’ll see that even with 100 VRs in a small community the tax contribution is substantial.  But taxes and fees are not the only contribution of VRs. 

Vacation rental home owners and their guests support a wide variety of businesses.  Owners patronize property management firms, cleaning and laundry services, construction and handyman services, local banks, hardware stores and a variety of other types of businesses. 

VR guests patronize local restaurants, gas stations, grocery stores, tourist attractions, marina’s and many other types of businesses too.  The revenues provided to these businesses support local employment, and if there is a sales tax, even more taxes are paid into the community.  Everyone benefits.

Short term rental owners contribute in other ways too:
  • ·         They bring investment dollars into communities that would not otherwise attract such monies.
  • ·         They rescue homes that might otherwise deteriorate.
  • ·         They provide low-cost seed money that supports the development of tourism in communities that otherwise might not be able to attract investment dollars on a larger scale.
  • ·         They provide an alternative means of employing people in communities where older industries are in decline and unemployment is rising.
  • ·         They offer a lower impact form of tourism for communities that want to protect fragile ecosystems and avoid the negative impacts that come when major resorts move into smaller communities.

We Have An Important Role to Fill

Detractors of short term rentals may claim that owners burden their communities with traffic, crime, neighborhood disturbances, and other problems.  They argue for bans and restrictions on vacation rentals.   Some of their concerns are legitimate and VR owners need to work with local residents to address such problems where they exist.   But the conversation about such problems can not be productive if the many benefits that short term rentals provide are not taken into account as well. 

First, as owners, we need to realize how much we bring to the table.  In a pinch, VR owners will often stand on their rights as property owners, and this is an important argument to make.  But we have a much bigger story to tell, and its time that we tell it.

Doug Coates
at Homeaway Summit 2012

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