Taking on Vacation Rental? Anticipating your Overhead Expenses
A quick checklist of associated costs that come with owning & running a vacation rental by week, month, quarter and year
When we first began our journey into Vacation Rentals we were a bit naïve; we had not anticipated about half the cost that would eventually be involved. The list is not meant to scare just prepare you for what to expect.
Every region and its associated climate has its own particular extra costs. When researching the mountains, we discovered that mountain home’s water needs to be shut off between renters because it could freeze the pipes. Are there people you need to hire to do that? If so, how much does it cost?
In the desert, palm trees need to be cleaned yearly because the seeds fall and stain pools and concrete. In Palm Springs, it’s odd to find a house without a pool (or a palm tree for that matter), so you clean them to protect your pool and your neighbors, and your neighbors reciprocate. It’s an extra $400-500 a year buyers may not expecting. If you are in an HOA, it’s probably covered.
The following is a straightforward list of what to expect. Check your region for supplemental costs you can expect.
Weekly
Per booking – Assuming you are renting weekly, a 3% credit card fee plus the Booking sites’ cut will be subtracted from your rental charges before they distribute the money into your bank.
Monthly
Gas Our gas bill is minimal in the summer but in winter with pool heating can get up there $$$. The best thing we ever did was install new efficient equipment and a remote system so we could control and monitor the heat from our phones. Our pooling heating cost is down almost 40%.
Electricity Summer bills depending on your area can be $300-700. It’s a very good idea to add a remote thermostat to monitor and control the air-conditioning and heating. Change filters regularly. It’s also a good idea to ask for the previous homeowner’s utility costs to better predict your future bill.
Water Drought resistant garden or lots of cement help.
Trash Our city has a walk up service. This means that for an extra $5 per month they will pick up trash from behind your gate and not have to bother your renter. WORTH IT!
Cable/Internet During COVID, we cancelled our cable bill and added ROKUs ($30 per set) to all the TVs, it saved $300 per month on cable and now renters can sign into their own Netflix, Amazon Prime and we offer Hulu & Disney Plus at a mere $15 per month.
Pool Service In the desert because of the heat and winds twice per week pool service is required so we pay double for our pool maintenance than we do at home.
Gardener I think we have uppity gardeners in the desert, all of them charge twice as much as I have ever paid at home. I think they secretly unionized.
Post –Guest Cleaning Fees We receive a monthly bill for all post-guest cleanings.
Spa Maintenance If you have an above ground spa.
Mortgage Principal / Property Taxes / Commercial Short Term Rental Homeowners Insurance / HOAs (if you have them)
Short-Term Rental Occupancy tax of your township In the desert, we pay 10% Occupancy Tax of rentals earned for any stays less than 30 days.
Short Term Rental Licensing & Business License It varies city to city but ours is $200 per year.
Quarterly
Alarm/Security Company Many alarm companies allow you to set up several codes or let you change them regularly.
Pest Control We have them spray in and outside the house for ants, spiders, roaches, bedbugs, etc. If you are pet-friendly, spray for fleas too.
Home Restocking Toilet Paper, Paper towels, Toiletries, Hand soap, Laundry Supplies, Cleaning Supplies, Guest Gifts, Firewood, etc.
Deep Cleaning Professionally Cleaning Carpets, Sofas, Rugs, and Comforters. If your Vacation Rental is pet-friendly it should be more often.
Yearly
Palm Tree Cleaning (for tropical and desert climates) These guys are amazing and climb up the palm trees and trim off the dead leaves and seeds that stain when they fall on their own. They charge an average of $50 per tree.
Furniture Replacement Inevitably furniture has to be replaced to maintain the house looking great as a result of natural wear and tear, and constant use. Don’t forget to update your professional photos as you update your home.
Fireplace Cleaning It’s a good idea to have your chimney swept yearly if you are using it regularly.
Taxes to Uncle Sam for any rental income made
Renewing your Short-term Rental license
Website maintenance (if you have one)
Booking website membership fee
Thanks for stopping by,
Deisi Vazquez
www.DVIdecor.com
[email protected]