Short-term vacation rentals have been very popular in California the past ten (10) years or so. With such popularity, challenges arise for the property owner wishing to undertake a vacation rental business, and for the licensed real estate agent who assists such a property owner.
Key issues that I have dealt with over the years with respect to short-term vacation rentals for landlord clients and real estate agents who assist the landlords are:
- Obtaining proper permits for a short-term vacation rental enterprise
- Placing proper insurance for risk of loss for a short-term vacation enterprise
- Creating maintenance and cleaning protocols for a short-term rental
- Implementing a fraud-prevention protocol for the property owner in a vacation rental enterprise
- Implementing a protocol for short term renters who refuse to leave when the rental is up
Obtaining Permits for a Short-Term Vacation Rental Business
All vacation rentals in California are regulated at the local level, either a city, or the county where the desired vacation rental is located if it is not within the limits of a city.
If the landlord or real estate agent wants to operate and assist in a short-term vacation rental, one needs to understand the permitting process to operate a short-term vacation rental, apply for a short-term vacation rental permit, receive one and display a copy conspicuously in the short-term rental.
Understanding the local rules for the operation of a short-term vacation rental is paramount, such as how many guests there can be at a time, quiet hours, number of automobiles that can be parked on the premises and the like. Local permit and resource departments often impose zoning restrictions, occupancy limits, and licensing requirements
The violation of local laws could put the landlord at risk for fines or even the forced closure of the short-term rental business.
It is imperative that the landlord and any real estate agent assisting in a short-term vacation rental endeavor understand the regulations that govern short-term rentals in your area.
Fluctuations in Demand
Short-term vacation rental demand varies. Factors such as seasons, the economy, and pandemics such as COVID-19 impact the demand for a short-term vacation rental. For example, the early fall through December is very busy for short-term vacation owners in Napa and Sonoma Counties in California, due to the many tourists who come to see the prevalent wine industries in these two counties.
However, with the grape harvest and the fall and early winter holidays being over, mid-January and the month of February are normally very quiet for short-term vacation owners with very few guests booking during this period.
The month and a half period from mid-January through early March is a good time for repairs to be made to the vacation rental, as well as for a deep clean to the unit.
Ways to possibly increase interest in a short-term rental during this mid-January through early March lull are to offer flexible booking options, such as a free cancellation policy within 24-hours of check in, and/or offer a discount to past guests that enjoyed the short-term rental.
Wear and Tear
Like long-term rentals, the short-term rental which is furnished can sustain damage from guests. Taking steps to reduce the risks associated with wear and tear can keep short-term guests’ satisfaction with the amenities on a positive note and preserve the value of the vacation rental.
The landlord and/or real estate agent should have: 1. Clear written house rules online when the rental is booked and a binder with the house rules in the short-term vacation rental, 2. Security deposits and an insurance policy in place to protect against property damage or loss, 3. Implement regular detailed inspections and maintenance of the short-term rental and 4. Have quality bedding, furnishings and fixtures that can hold up to regular use of the rental by different people.
Excessive Noise
Have clear house rules (online and in paper form) for your guests detailing quiet hours for the property reminding them that there are nearby neighbors. If the short-term vacation rental is a hosted rental (property owner lives on site), the chances of excessive noise by one’s guests decreases significantly. Having noise monitors on the rental helps the landlord or real estate agent monitor against unruly and loud guests.
Providing Value and Security to Your Guests
A key factor in the hospitality industry is providing value to one’s guests. In short-term vacation rentals, providing snacks such as fresh fruit at no cost if the rental is on a farm or ranch is a nice touch. If the rental is in wine country, a bottle of white wine (you do not want red wine due to staining of fabric) to guests twenty-one years or older is a nice touch.
Having a recommended list of attractions and restaurants on the online advertisement and in a binder in the room is suggested. Enclosing discount coupons to specific wineries offering for guests is appreciated.
You should regularly change guest codes to access the lock box for entry to the short-term rental to provide a sense of security, in addition to having sensor lights activated by movement when it becomes dusk.
A kitchenette with a microwave and refrigerator (with a freezer) are a nice addition to a short- term rental where guests can heat up their own food or leftovers and have a cool drink.
Management
Operating a short-term vacation rental is a business. The property owner and any real estate agent should treat it as such. Attend seminars in person or online about short-term rentals. Join a local organization which caters to short-term rentals and regularly attend meetings and open houses of short-term rentals in your community to get ideas on how to manage your business in a more efficient and productive manner.
Have a handy person on call to make repairs and touch ups that you cannot do or don’t have the time to get done in a quick manner.
Have contact with your guests when they arrive and leave, letting them know you are available to assist with questions, planning and the like.
Your online and written guidelines for the guests should include clear instructions for check-in and check-out with the start of check-in time and the check-out time.
Overstaying Guests
Guests who purposefully overstay their welcome and refuse to vacate when their booking period is up are a major headache for the property owner and real estate agent (in addition to damage to items within the short-term rental.)
To assist in preventing a short-term stay from becoming a long-term rental —which can be costly in terms of costs but also peace of mind — there should be a clear online and in-house policy with respect to check in and check out times, occupancy limits based upon local zoning and permit mandates, and penalties for overstaying.
Communicate directly with guests with respect to their departure plans addressing any issues in saved emails to your guests.
And be sure you have California property management E&O insurance to protect you, should something go wrong.
By: Edward McCutchan
Sunderland | McCutchan, LLP
1083 Vine Street Ste. 907
Healdsburg, CA 95448
(707) 433-0377
emccutchan@sunmclaw.com
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