Tell me about owning a vacation rentals

The husband and I are looking into buying property in Hawaii. For health reasons, we’re likely to stay there during the winter months, and would like to rent the property out the rest of the time. Does anyone here have any experience owning a vacation rental? Do you use a company to handle reservations? Do you have someone who provides the cleaning? How do you handle the gardening? The maintenance? Do you have any suggestions for us, such as what to look for in a rental property and what to avoid?

Your help is greatly appreciated.

Hasn’t Hawaii clamped down on vacation rentals? I seem to remember something about short-term vacation home rentals are now forbidden, and owners are trying to skirt the rules by having guests pretend to stay longer than they actually do. My memory of this is spotty, though.

There are definitely legit vacation rentals in Hawaii, but that brings up a good point: make sure that the property you are considering can legally be rented on a short term basis.

I owned two vacation rentals in Montana for a number of years and can answer your questions, but states have very different laws and regulations regarding rentals so you’ll need to see how Hawaii does it.

  1. In the state where I live you could only declare yourself a business if you spent no more than 2 weeks staying at the rental, so spending an extended amount of time there yourself may be an issue.

  2. When we first started, VRBO was the big rental company and we used them to take reservations for us. Once Airbnb took off we added them too. In the end, we got about 50% of our reservations from each service. Some people use local booking services so you need to see what’s available locally since they often provide other services like cleaning etc.

  3. We hired someone to clean both of our condos and it worked out well for us. You can of course charge a cleaning fee to cover those costs.

  4. Our rentals were condos so the HOA took care of all of the exterior maintenance. Of course, we had to pay a quarterly HOA fee.

  5. It sounds like you don’t live full-time in Hawaii so you need a well-maintained property that’s not going to require a lot of maintenance. What happens if the water heater blows? Are you going to call a plumber and trust that the issue is resolved satisfactorily? If you aren’t local then you should think about hiring a management company to handle everything for you. You’ll have to pay a hefty fee, typically 20-25% of the bookings, but it saves you from getting a call at 2 AM saying the roof is leaking and having to figure out how to fix it from 1,000 miles away.

Montana is another area we’re considering, down the road.

We’d like it to be a business, but it sounds like it might be an issue. We’ve used a management company for our rental in Oregon, and that has worked well. It sounds like it would be worth getting one for our future rentals too.

Thank you for the information. :slight_smile:

I can’t imagine this is true. There are so many short term rentals in Hawaii, that if they suddenly eliminated them, that would cut off a huge number of tourist visits.

A quick look at Vacation Rentals By Owner for Maui in March shows me 300+ properties available (not sure how many above 300, with a priviso that only 26% of properties are available for my dates.

While I don’t have any experience, my parents have several properties in the Cabo San Lucas area (Mexico) that they ‘own’ as 99 year transferable leases. They generally stay in one of the three for the winter months, and then back in the states for the rest of the year.

The one thing they say is key is to have 1) reliable renters and 2) someone local you can trust financially and in a general sense. They refuse short term renters, because they are a lot more likely to be party folks who will get in trouble with the local authorities and treat the properties like trash. So one of the two properties they actually lease at roughly 50% of the norm. That person handles most of the local, hands on needs when my folks are in the states: arranging for a house cleaning after another tenant leaves, making sure utilities are paid, checking the property to make sure nothing is going wrong, and the like.

So you may not maximize profit by ignoring the short-timers, but you’ll probably have a lot fewer headaches down the line. And a management company or friend on the ground is probably going to be key sooner than later.

No personal experience, but some from siblings/friends.

If I wanted to be a landlord, I’d lean more towards owning property near me, where I could keep an eye on it and wouldn’t be reliant upon a management firm via long distance. If I wanted to vacation somewhere else, I’d use the profits from my rental properties to allow me to rent in my desired location.

Some people have things run smoothly. Others have the expected issues of vacancies, damage by renters, maintenance/repair issues, high management fees…

If I wanted to OWN a vacation property, I’m not sure I’d want other people in it while I wasn’t there. Plus - if you own a vacation property, you always have to go there.

Just a few thoughts. Good luck.

Yes, that’s the idea exactly. It’s called COVID. I’ve heard the same thing about restricting short-term rentals in Florida.

It does seem like there was, and is, some stuff. This may be a good jumping off point:

Thanks for that. My experience is mainly Maui, and I see they are fairly flexible (16,000 units, not too many regulations)

I have a Hawaii rental booked so it’s not restricted from what I can see, though every island may be different. Tahoe is trying to crack down on rentals.

AirBNB and Vrbo take their cut but it’s the best way to advertise. In that case of course you’d need a local cleaner and whatever maintenance.

Taxes will get complicated, you will want to first log the days you are renting the home vs. living there.

Thank you for that link. It was very helpful.