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Turning a Second Home Into Vacation Rental

Get the right management
You may think all you need is a lockbox and good email to coordinate guest stays. In reality, unless you intend to manage the property yourself, you'll sooner or later need a house manager or management company. Find a company or person to walk guests in as well as check them out to ensure the house is kept in order and a deposit can be refunded in full. The house manager will also be the point of contact for guests should the plumbing need repair or a pool not get properly hot, which, by the way, it never does. Expect to pay a management company 20% to 30% of the total rental income, or a local manager anywhere from 10% or a negotiated monthly or hourly fee.

Friends and family or renters?
Sure you wanted to spend New Years in St. Barts or loan your Laguna Beach property to friends for the Fourth of July, but those are your peak rental periods. They generate more income and are more likely to encourage repeat business. Should you give in to whim or sentiment?

Look at it this way: You can either have a second home or a vacation rental. You need to decide on a priority. Should a friend ask to borrow the house during key rental times, try simply referring them to your VRBO listing with a discount (if you like them) or a polite note that says, "We really use the house as an income property, but would love for you to give it a try." They'll get the message, and you won't lose the income or, hopefully, the friend.

The kingdom of VRBO
You've bought the house, decorated it and are ready for your VRBO debut. Since you're not using a local manager, it's up to you to make sure your house is really ready for guests. Do you have two sets of sheets per bed, two towels per person, a fully equipped kitchen and someone or something to walk guests through electronic gadgetry to turn on the television or pool heater? Be sure to go though each step and think about such things as the amount of your deposit, how you will process rental payments and whether your house lives up to its lofty descriptions. Renters can and will post feedback online that affects your income, so don't misrepresent.

Why isn't my house renting?
You've got the glossy photos and editorial perfected on your online listing, but for some season you can't get it rented. Your first problem may be the price. Make sure your rental rate is in line with area competition. Next, take a look at the availability of other properties in your area to see who's got a full rental calendar -- then try to emulate their formula for success. If you've managed to get inquiries but just can't seal the deal, make sure you're responding to your potential renters in no more than a two-hour period, and try not to be too aggressive or too quick to close the deal.

>To submit a news tip, email: tips@thestreet.com.

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Michael Martin is the managing editor of JetSetReport.com, a luxury travel and lifestyle guide based in Los Angeles and London. His work has appeared in InStyle, Blackbook, Elle, U.K.'s Red magazine and on ITV and the BBC.
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