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It’s easy to get excited by the numbers when you consider renting out your property as a vacation rental, but there are a lot of variables that come into play before you can calculate your long-term income.
“Depending on the location, size and quality of a rental home, some homeowners find that getting in a long-term or seasonal tenant makes more sense for their situation,” said Jonathan Jones, owner and managing broker of Fortunato Properties, a leasing and property management company based in Summit County. “If a homeowner isn’t personally going to use a property often, a long-term and seasonal renter should not be overlooked. A longer-term rental creates stable, year-round cash flow, and can be less wear-and-tear on your property.”
Fortunato Properties handles all aspects of the leasing process including finding tenants for 5+ month leases on properties throughout Summit County. Here are five reasons their customers enjoy the benefits of long-term rentals.
Steady income, lower costs
Unless your home is right at the base of one of Summit County’s ski resorts, it can be harder to rely on a set amount of annual short-term rental income. Income from a long-term rental is not affected in the offseason or by snowfall averages, and less affected in a down market cycle.
Many homeowners don’t accurately factor in the costs associated with the hospitality side of short-term rentals — such as utilities, furnishings, supplies, amenities, cleaning fees, short-term rental taxes and more — either, said Amanda Jones, director of marketing at Fortunato Properties. While vacation home rentals can provide lucrative income for some homeowners despite these costs, healthy profits aren’t a sure thing for all vacation rentals so it’s important to do your research to determine which route is best for your investment property.
Less wear-and-tear
Longer term tenants tend to treat their rental as their own home — after all, it is their home for the duration of their lease. This results in the home requiring less housekeeping and maintenance services in order to maintain the home’s condition.
“A vacation house has to be set up on a full-service basis, including the latest media and technology, utensils, furniture and decor. It can be difficult to maintain and keep track of the costs associated with this level of inventory,” Jonathan said.
Opens up future investment opportunities
The longer term market not only provides stable cash flow for investors, but it opens up the possibility to purchase more investment real estate. If a homeowner is interested in buying a third or fourth property, or they’re looking to refinance, banks won’t count short-term rental income when reviewing a loan application.
Banks will count documented rental income associated with longer term leases, though, which helps investors qualify for better loans and interest rates.
“Rental income is an acceptable source of stable income if it can be established that the income is likely to continue,” according to Fannie Mae, the Federal National Mortgage Association.
Community benefits
There is a huge demand across Summit and Park County for long-term and seasonal rentals for the local workforce.
“Some of the owners we work with specifically invest in properties in these locations that are better suited to longer term leasing based on the high demand for rental housing,” Jonathan said. “From an investment perspective, buying properties with a longer term lease produces a good rate of return. It also provides a home for a full-time Summit resident or family, which is great for the community.”
Places like Alma and Fairplay are popular homes for Summit County workers, as well as for long-term rental investment properties.
“We are also seeing a significant uptick in long-term demand for locations in the core and vicinity of the ski resort and town area,” Jonathan said, “which is being fueled by the growth in the Denver metro area of professionals who have the ability to work remotely.”
Full-service management
Image courtesy of Fortunato Properties
Fortunato provides the highest level of real estate services to clients, including marketing and leasing, property management, accounting, and project management services. Fortunato Properties handles all levels of communication with prospective and current tenants, taking the hassle out of being a landlord.
“If the tenant has an issue at the property, Fortunato is all over it. Our in-house maintenance staff if always available.” Jonathan said. “Homeowners have the peace of mind that they are in good hands. Fortunato prides itself on communication with both homeowners and tenants so no one is surprised and everyone feels taken care of.”