So, did you know that Bub and I have a condo, in our town, that we rent out on VRBO? Yeah, well. we do. And there has definitely been a learning curve– probably more on my part than on Bub’s. From the very beginning, being a condo owner has been my brain child. I am the one that pushed to find a way to buy a condo as an investment property. Now, Bub totally did all the research and he most certainly had a say on the whole process but, it was my brain child. Bub and I struggle to save money… but- I thought and still think that a condo would be a means of saving money.
Bub has contributed lots to the condo- but, he has a full time job running a restaurant. His time to be a condo manager is limited. My time, on the other hand is a little more flexible than his and so for the most part, the management part has been on my plate. And let’s be honest, I didn’t and kinda still don’t, know what the hell I am doing. I have learned along the way and am still learning as we go along.
I looked all over for some sort of guide to do this… okay, when I say all over, I mean- I looked all over Pinterest and I Googled extensively. But, I really didn’t find any good sources of know-how. I am not saying there aren’t some good resources out there- I just had trouble finding them. I thought I would put my two cents (sense) in the pot in case there is some other person looking for some advice on buying and managing a short term rental investment property. It can be stressful- but, it can be rewarding.
The first thing, we started looking around at what was for sale in Gulf Shores and Orange Beach (the towns we live and work in) and we defined the deal breakers. My deal breaker was that I did not want high-end luxury because I knew that if something happened (Heaven forbid), we wouldn’t be able to fix it- financially. Bub absolutely wanted to be on the side of road as the Gulf- beachside. He thought as a rental property- being beachside would be very appealling. And he really wanted a view of the Gulf and another of my wants was the complex had to have a pool.
We looked and looked on our own and finally signed on with a realtor. That is a whole other discussion- but, my grandmother was a real estate broker, so I knew that ultimately, we needed a realtor. And at the end of the day, we discussed what we wanted in a condo and our realtor took us to the complex we ultimately ended up buying in. Our complex was built in the mid-80’s. Yes, it’s over 30 years old but it has stood through countless hurricanes- which was super important to me. It’s like a tank.
And also, our complex has one of the highest rental percentages on the beach. It doesn’t make the most money but it has one of the highest rates of staying rented. And if you are thinking about doing this- your realtor can get you the rental history of not only the complex but also the unit. (At least in Alabama they can.) And that will put some things in perspective- you so want to know what the unit you are about to buy made in rental income the last several years- it’s a selling point.
We bought a unit and were super excited and maybe even a bit delusional. There were lots of posts and or articles out there about the buying process but seriously, I could not find much about managing a short term rental. I quickly found out that I was not cut out to be a condo cleaner. I can’t even keep my house clean! Okay, so I tried to be our condo cleaner… and it was disastrous. So, I found a cleaning company. And man, the universe was looking out for me
when I found Ana at Coastal Cleaning Services LLC!! Ana and her cleaning ladies run a tight ship! They keep me in line and even more importantly, they keep my condo super clean and they let me know when things get cray. And they cover my arse when I drop the ball.
Ana brought 2 other services to the table that make both of our lives easier when it comes to keeping the condo clean. The first is Resort Cleaning. This service is free to me, the owner- and it is amazing! I don’t know what it looks like on the cleaning company end but- I cannot say enough great things about it as an owner. It syncs with your booking service (in my case, VRBO) and each time the calendar is updated Resort Cleaning schedules the cleaning with Coastal Cleaning Services. All I have to do is confirm it. So, I do not have to constantly call Ana to make sure my cleaning is on her calendar. It makes my life and hers so much less complicated.
And the second service Ana brought to the table is Venmo. It is an app that you can pay people with – light years better than Paypal although it is a part of that company. It’s described as a free digital wallet that you can use to make payments and share money with friends. It’s super easy and did I mention, no transaction fees? Yeah, there aren’t any.
So then. I read every thing I could find about Vacation Rentals By Owner or VRBO. When we initially joined, there were tiers of packages, VRBO has since done away with that structure- it is just a straight subscription. And they threw in some extra fees… yeah, there’s that. But, it provides some protection for me as the owner and for my guests as well. And it keeps a live calendar of all my bookings. And the app is super convenient and very easy to use. I can keep up with my calendar and communicate with anyone that has interest in booking the condo and also with everyone that does book the condo. And it also takes care of collecting all the money for me. And that is really nice. It may be that Air B&B is a better fit for you. We decided on VRBO because it is the most widely used here on the Alabama Gulf Coast.
So far, this has all been pretty easy to get a handle on- but, this is where the rubber hits the road. Taxes are a bitch! I can only speak from my experience in Orange Beach, Alabama. And I am here to tell you that if you are like me and just don’t want to or choose not to wrap your brain around taxes… find someone to do them for you. Seriously ALDOT or whatever it is, they had a contest to see who can design the most non-intuitive system and then picked the winner from that pool.
This is what I can tell you about what I have learned- and all I know is how it has to be done in Orange Beach, Alabama. First of all, you need a business license- renting is a business. You can get a tax ID number and file your taxes that way or you can use your social security number. I don’t know enough to give you any advice on that matter. At this point, I use my social security number. In Alabama business taxes have to be paid once a month- yes. Once a month. After you have proven that you can pay taxes on time and such, you can start paying quarterly.
Also, AL-DOT is like reading and deciphering a foreign language. I would think that the local and state governments would make it as easy as possible to pay taxes- but, no. It is complicated and dare I say tricky. It totally went over my head- it may be super simple but, my brain just did not want to connect the dots. I ended up getting a professional to help… and having to pay some… okay, a lot, of late fees. Please learn from my mistakes- if you dial up your state’s department of taxes and it goes over your head- find someone that can do your taxes for you. It’s a business expense and it’s so worth it.
Now, finding someone to do it for you- might mean hiring a rental company. They typically charge any where from 18-30% of your total rental income. In theory- they are supposed to keep your property rented. They advertise it and manage the booking and all that and I would suppose that they take care of the taxes too. And they deal with the headaches (and the bitching- renters sometimes bitch about the weirdest stuff!) When Bub and I started this adventure, we were like hell-no! that’s way too much to pay a company to manage our condo when we (and I mean me) can do ourself. A year into the process and we are like… well… maybe we should think about it. However, if we didn’t live in the same town as our condo- we would def have a management manage it.
If you do decide to give managing it yourself a whirl, I have some helpful tips for you.
#1. You need to create a spreadsheet. It doesn’t have to be overly complicated or intricate- but, it needs to cover all the bases. Because you are going to need that breakdown for your year-end taxes. Oh yes, there are not just monthly taxes you have to wade through- but, those pesky year end taxes too! You need to know how many nights were rented. You need to know how much income came in including what you played your cleaning coming. You need to know the totals of all your utility bills. And just a friendly reminder- anything you spend on the condo (paint, fixing crap that breaks, light bulbs, filters, linens, your mileage to go take care of all that, your phone bill (a part of it, anyway), and I am sure I am forgetting items that should be on the list- but, you get my drift? You need to keep up with all those receipts and all that. I feel really good that you will be able to find a way to keep it all together.
#2. And the second thing I want to tell you about is a Keyless Lock. Yes. If you are not familiar- it’s real cool. No key needed. This means for me, that I don’t have to meet each guess with a key because that is a pain! A major pain! The one we have on our condo door keyless lock is also wi-fi compatible which means I can change the code each time a new guess checks in. It’s cool. It’s so cool, in fact, that Bub and I have one on our back door at our house.
And finally, advertising- get the word out- I am still trying to figure this one out– and I am pretty open to any and all suggestions and if I learn and perfect a way that is awesome. I will certainly pass that along but, so far- it’s kinda hit or miss.
So, there you have it- my 2 cents on managing a short term rental. If you have any suggestions or tips for me- you know I want to hear them so please lay them on me. And in the mean time, if you are looking for a cute little place to stay on the Alabama Gulf Coast- check out Sugar Beach 370!