Orlando is a popular area for vacation home rentals since millions of tourists come here every year to visit attractions like Walt Disney World® and Universal Studios Florida®. If you plan to purchase a home to use as a vacation rental, you need to know how to price that property to attract guests. Price it too high, and you’ll lose business to the competition in the area. Price it too low and you may not be able to make a profit. Plus, you risk attracting people who may abuse your property as a cheap rental.
Here are some tips on how to set the best rates for your Orlando vacation home.
1. Know your expenses – Before you can determine what price to charge, you need to know your fixed expenses for the property, such as insurance, taxes, maintenance, cleaning services, management fees, advertising and transaction costs, and of course, your time. Once you have these numbers in place, you can start to figure out how much you can rent your vacation home for and how many rental days it will take before you see a profit.
It is standard practice for owners to pass along some expenses such as cleaning fees to rental guests. Vacation rental websites like FlipKey have specific fields for you to enter these fees. You might also choose to collect a refundable damage deposit, usually around the $200-$500 range. However, if you are renting a luxury-style villa, you may want to consider damage insurance instead. This type of insurance policy allows you to insure your home for up to $1,000, $3,000 or $5,000 worth of damage and only requires the renter to pay a small fee.
2. Study your competition – When coming up with rental rates, it’s wise to check other vacation rental listings to see what fees and rental rates other properties are charging in your area. Make sure you’re focusing on properties that are comparable to your own. If you own a 7 bedroom luxury villa near Disney, it doesn’t make any sense to compare it to a 2 bedroom apartment.
Another factor to consider when setting your vacation rental fee is to consider local hotels. If your property sleeps a family of 6, that family would likely need to book two hotel rooms in the area. Multiply a hotel’s nightly rate by two and if your rental rate is higher, consider whether your amenities make up the difference. Otherwise, you might have to make an adjustment in your fee.
3. Consider weekly discounts – Since many travelers who come to the Orlando area stay upwards of a week or more, it’s common to set a weekly rate that provides a discount over a nightly stay. The most common way to calculate this is to multiply the nightly rate by 5 or 6. You might also want to consider a monthly rate, especially during off-season periods, that offers a discount to encourage rental guests. Some communities have set requirements around short-term rentals, so you’ll need to review their by-laws for any restrictions. A real estate firm that is knowledgeable about the area, like Team Donovan, can help you choose a community that will meet your needs as well as the needs of your rental guests.
4. Get an objective opinion – Once you’ve set your rates, seek an opinion from an objective third-party such as a friend or relative, for their honest opinion before you start promoting your property. You may have to adjust your rates higher or lower to position your property as an attractive alternative to the other vacation homes in Orlando.
Need help finding an Orlando vacation home? Contact Team Donovan today at 407-705-2616.