Confessions of a Hamptons vacation house landlord, Part 2
The beach: A Hamptons landlord (and tenant's) reward.
As you may have heard, becoming a vacation house landlord isn’t as easy as it might sound. Picking out which property may work best for your business needs can become a quagmire, especially if you’re unfamiliar with the local market; and getting it ready to lease out can be a chore. But what about the rest of the process? In this second half of a two-part series, we check back in with our subjects, a Brooklyn-based couple (who asked to remain anonymous) who’ve taken on a beach house they now rent out. In their own words (as told to Brick):
Putting it on the market
We listed the house on VRBO because friends of ours who had rented in the Hamptons told us that was the big rental site out there. We also posted it on Airbnb and Corcoran, our real estate agent’s agency. We paid up for a premium membership on VRBO. It was expensive, about $1,500, but so worth it because our property is featured at the top of the site when renters enter search criteria that matches our house.
We contemplated professionally photographing the house, but I know a bit about photography, so I took the pictures myself. I waited for a sunny day when the light was great and all the foliage was in and looks green and lush and there were flowers in the pots. I made sure to frame each shot so anything distracting from the focal point was cropped out. Our pictures look great! I think I did a pretty good job. Our listing looks really good. It must, since we get, literally, daily inquiries on VRBO.
Our agent thought we could get $50,000 renting out the house for the summer, which would be pretty close to covering our mortgage for the year. The seller’s agent said $75,000. A look at similar listings revealed a wide range of prices, so we set the price in the middle of the high end, at $9,000 per week, and began to get multiple inquiries a day. Some of the people who contacted us were clearly new to VRBO. They asked basic questions like price and availability, which is included in our listing. The more informed respondents provided info about themselves and asked more pertinent questions, like did we have a hot tub. (We didn’t—yet.)
Selecting the perfect renters
When we first started renting the house, my husband and I were not seeing eye-to-eye on the subject of renters. He just wanted to fill the house with pretty much anyone in order to recoup some of the money we had spent. I was slightly more discerning. This was my house, after all, not just some property we were never going to use ourselves.
We definitely made some mistakes. Our second renters presented themselves as a couple and a few extended friends and family members. They turned out to be a group of 12 that trashed the house. They chipped our granite countertops by opening beer bottles on the edges of them, spilled wine on the floors, left lipstick on the pillow. When our cleaning crew arrived, they were still there, having overstayed their time period, and there was a fight going on. They denied the damage and we threatened to withhold their security deposit but my husband didn't want to risk a bad review. In the end, we sucked that one up. That was the biggest disaster.
From then on, we vetted people more carefully. For example, we don’t allow shares unless it’s two families; our lease asks for the names and birthdates or all renters and we have a clauses stating we reserve right to show up unexpectedly to check that there are no unlisted guests in the house. Renters can be evicted if they are lying about who is there.
Our favorite renters are two families with kids (this is a family house, after all). We have two master bedrooms and two big bedrooms for kids. We have one group like that coming back this year for a second time. Our other favorite renters are a family coming with the grandparents for a big family getaway. Those groups tend to take really good care of the house and we know there isn’t any partying going on that might result in damage. This year, every renter is a family. We provide some basics, like toilet paper, hand soap, dish soap, paper towels, etc. We also pro-rate the utilities, which I think helps the renters take more care with the house. Since they’re paying for the air-conditioning and pool heating, and the like, they’re more careful not to leave doors open and the pool heat on unnecessarily.
Last year, we had 12 renters. This year, we have eight, with some staying for two weeks. Ideally, we’d have just one or two families for the whole summer, but we don’t get a lot of long-term inquiries, and the ones we have gotten have asked if we had a separate space for the nanny, which we don't. Our house has three bedrooms upstairs and a large guest room downstairs. Families who intend to bring the nanny tend to want her room to be somewhat separated from the immediate family. And they don’t want to give up a guest room, either. If you want to rent to families for the whole summer, you really need a set up for the nanny. Maybe we’ll add one someday. We also haven't had many inquiries for the off-season, but now that we’ve added a fire pit and a hot tub that could change.
Maintaining a rental—from afar
We hired our real estate agent to be our property manager. We pay her 10 percent of each rental fee and, in return, get peace of mind. She greets the guests when they arrive, gives them a tour of the house, answers questions about the house and the area, acts as a concierge, booking restaurants, etc. She’s on call for the renters throughout their stay so, for example, if something should break or doesn't work, they call her. She does an inspection when they leave. There are property management companies that offer similar services but we might have had to work with a revolving team of people. We felt more comfortable working one-on-one with someone who knows our house and us really well.
We also hired a cleaning crew who come after the guests leave to clean, wash the linens, remake the beds, and ready the house for the next renters. Again, there are companies that offer such services, but we hired a single person who comes with her own team of two additional people. It’s the same “crew” every time so they know the house really well, too. Another crew might do a similarly good job but it might be different people each time, which seems to me less efficient.
And I keep a “house book”. It’s an extremely detailed binder of information regarding the running of the house that I leave for renters. There are tabs for everything from important contacts to instructions for the pool/spa and other appliances, local favorite things to do and check-out instructions. It’s manual to the use of our house.
One mistake we made last year was offering same-day turnover (in other words, one set of renters check out the same day as the next set arrives) with a very narrow window. Our checkout was noon and the new people checked in at 3 pm. It just didn’t give the cleaning crew enough time to get the house ready for the next renters. This year our check out is 11 am and check in is at 4 pm, which gives the crew more time to clean and do laundry. I also bought three sets of linens for each bed so the old ones could be removed, fresh ones put on the beds and a spare left behind for emergencies. Our cleaners wash the towels while they clean the house and take the old sheets to wash off-site.
Even with so many people involved in the maintenance of the house, things don’t always go perfectly. Last year we rented the house to one family who flew in on a private jet from Miami. They broke our washing machine and the handle of the fridge among other things. We sent them an email with a damage report for $2500, which was the amount of their damage deposit. We were expecting some kind of exchange, but an assistant wrote a back and just said, “Okay, thank you.” And that was it.
We’ve also had some stressful situations beyond our control. Ten minutes before our very first ever renters were due to arrive, we got a frantic call from our property manager telling us there was a dead wild turkey in our driveway. We were imagining these fancy people, driving up in their fancy car and the first thing they saw was a dead bird in the driveway. How’s that for a “Welcome to the Hamptons!” The bird was huge and heavy but our property manager called pest control and then shoveled it into some brush moments before the renters pulled in. While she was showing them around the house, pest control arrived and quietly took it away. Crisis averted! Fortunately, most problems are minor and manageable, like how to turn the heater on in the pool.
The upside
I cannot convey how stressful an experience buying, selling and furnishing the place has been, not to mention stressing about renting it, maintaining it, hiring the various people who take care of it, and making sure they are all on top of everything. I’m sure I’ve lost five years of my life to stress. There were, and continue to be so, many variables at play that are in need of attention. It’s a huge juggling act but when all is said and done, this is by far the best decision we have ever made. We couldn’t afford to buy in the city and didn't want to move to the suburbs. Buying this house was a way to be homeowners in NY and have a vacation, too. This year, we will make $90,000 from Memorial Day to Labor Day. We were hoping that by renting the house we would offset our mortgage, but instead, we’re covering 100 percent of our mortgage (plus maintenance fees), and will have some money left over for home improvements, like a new irrigation system.
Best of all, we have this house. It’s our happy place. We love it. It’s been a dream. I have zero regrets.
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