Whether for additional income or as the start of a fledgling business allowing others to use your property is a big step. It may sound simple but when you decide you want to rent your cottage there are a number of considerations to keep in mind. To help you decide if you are ready to enter the cottage rental business I have put together a list of some of the more common considerations. This is by no means a complete list, but it will at least give you a start to the process of preparing to rent your cottage. In future articles I will expand on each of these areas to give you more detailed information.
Being mentally prepared can’t be discounted when considering renting out your cottage. This may be more clear when dealing with a family cottage with history and numerous personal memories attached to various aspects of the building and even the furniture. It may surprise you though to find that you may have some concerns about virtual strangers using even a newly acquired cottage and furniture. These are your things after all, and you can never be sure that others will treat them with the same respect that you would. For some it is even a matter of allowing others to invade a corner of your life even if it may be small. Consider this aspect carefully as you don’t want to be surprised by unexpected discomfort and anxiety.
2. Property Condition
This is an often over looked consideration. There may be a number of less than perfect or functional aspects of your cottage. You and your family may have grown accustom to them but a paying customer may be very upset and disappointed. You will need to inspect your cottage with the objective eye. Look for not only areas of repair but also functionality for someone who may not be used to cottage life. Using a pair of pliars to turn on a faucet or dumping a bucket of water in the back of a toilet tank to make it flush really won’t do for a paying tenant.
3. Liability Exposure
The moment you begin renting your cottage you have gone into business –like it or not. You aren’t simply having friends or family over to use your cottage. On some level you are responsible for the safety of your paying guests. A lot of people may think that a well crafted waiver will protect them from any and all exposure. While a liability waiver may be a good idea, you will need to consult with your insurance provider to ensure that you have the liability coverage necessary to protect you from a potential lawsuit.
How much to charge has a number of separate components that need to be considered. Not only do you need to determine that you are charging a fair price but also whether the amount you are charging is sufficient to earn a profit and cover your costs. Will your pricing change dependent on the time of year? This is also a time to think about what kind of cottage rental you are providing. Simple more rustic locations tend to be lower priced but you also need to off set this by unique locations and superior features like sand beaches and privacy. All of these separate components should come together to determine a suitable price for your cottage.
5. Payment Process
Now that you know how much you are going to charge you need to determine how your tenants will pay you. Your payment process will also be affected by other considerations like the type of business structure you choose, and your tenant change-over process. Your options can run from being paid in person in cash, or by personal cheque made out to you when you meet your tenants when they arrive, to online credit card payment systems payable to your corporate name. Keep in mind that this process can evolve over time, and it may make sense to keep things simple and grow them as the business grows.
Its always nice to think that common sense will prevail and that people know right from wrong. The reality is that everyone may have their own definition and you need to clearly spell out your intentions with a set of rules. Your rules need to include some basics like allowing pets or smoking but also some more complex issues such as the number of people staying at, or even visiting your cottage. Remember you may have neighbours who would not appreciate their peace and quite being invaded by a large noisy group. Also the number of occupants and visitors can cause excess wear and tear on your cottage.
7. Marketing Plan
You may be fortunate enough to be able to rely on friends, family and neighbours spreading the word about your cottage availability, but the reality is that you will likely need to find a way to market your cottage. There are some great free approaches, such as putting up flyers at the local general store or restaurant, but you will likely also need to pay for a listing either online or in a publication. Regardless of the methods you choose make sure you are marketing the best features and think carefully about the wording of your ad and the images you use. Remember you are describing something that your future guests will have to take a leap of faith in hoping it will meet their needs and make for a great vacation.
8. Budget and Forecast
Having decided what your pricing will be and what your marketing cost will be it is very important to now consider all of your relevant costs and offset these against how much revenue you plan to generate. How many weeks a year will your cottage be available for rent? Will there be additional costs with each weekly rental such as cleaning or booking agent commissions? What will your occupancy rate be? By looking at this information in a objective way you should be able to develop a realistic projection of your potential profit.
9. Tenant Process
The tenant process can be as simple as you welcoming each guest personally and doing your own cleaning when they have departed. With all of us living busy lives it may simply not always be feasible for you to take such a hands on approach. What is most important is that the process you choose is consistent and makes renting your cottage simple and hassel free for your guests. In most areas the local general store, gas station or restaurant can be recruited (usually for a small fee) to allow your guests to pick up and drop off the cottage keys. Similarly there is likely someone in the area who would be willing to earn some extra money cleaning your cottage between guests. This makes it possible to ensure that if you have back to back guests, the cottage will be fully cleaned. Depending on where you live it may not be feasible for you to drive up to your cottage every week to complete the cleaning.
10. Business Structure
The growth of your business can and should be a work-in-progress, and it is advisable not to jump the gun and find yourself owner of an incorporated business with only one week of rental income a year. You do however, need to think about to structure your business as it pertains to how you will be paid for your rental. Will cheques be made out to you directly, or will you establish a business name. How will you report the income? There are advantages and disadvantages to all business structures and some research in this area is a must –before you accept your first rental payment.
The order of these considerations will vary for each of your depending on your own circumstance experience and expectations. I hope this is a good place to start and will help make your cottage rental a success.