What nightly income could I expect to receive from my rental condominium?
As a real estate broker in Mammoth Lakes, one of the most frequently asked questions I hear from new condominium buyers is, “What type of income can I expect to receive if I were to rent my condominium on a nightly basis?” This question may seem simple enough to answer, but it actually has a bit more depth than most buyers might expect.
As a resort community, Mammoth Lakes is heavily dependent on tourism as its economic driver. The winter and summer seasons are months with the greatest visitation and while summers are stable, winters can be extremely undependable. With winter offering the greatest potential for tourism and rental income, a good winter vs. a drought year can make or break an income property. Recent drought years have resulted in winters with nearly half the skier visitations observed during peak winter years. This results in both lower visitations and lower nightly rental rates. During the same years, summer months have proven increasing visitations and revenues. The summer of 2016 is expected to be the best summer on record for a sixth year in a row.
Property owners looking to rent their property on a nightly basis often have different goals in mind. For Example, some owners may purchase a condominium strictly with a goal of maximizing income and obtaining the best return on their investment. Others, may simply be looking to generate occasional income as a means of offsetting their mortgage while still enjoying the property from time to time. The dates and frequency with which the owner uses the property can have an impact as well. If an owner chooses to occupy their residence during prime holidays or weekends, income can greatly diminish. In short, making the property available will increase the likelihood of generating income.
Method of Management:
When considering your property as a nightly rental and as a means of generating income, it is going to be imperative to consider the method in which you market and manage your property. This form of management can have a significant impact on the level of owner participation and net income produced.
For an owner that is open to some owner participation, online rental services may be the right way to go. AirBnB, VRBO (Vacation Rental By Owner), Flipkey, Homeaway and other online rental services are a hands on approach to renting property, growing in popularity due the ease in which an owner and renter can coordinate the rental of a property. These online sites offer details on a property and a calendar of availability. They don’t typically include all services needed for the rental property, such as key access, cleaning, towel service, or on-site service in the the event of an emergency (i.e. pipe break, parking issues, etc. ). Due to the limited services, costs to the owner range from $0 to 15% of the gross rental depending on owner participation. There are 3rd party services offering limited help from the local community and these services typically charge about 15% of the gross rental income for calendar management and coordination of limited services (i.e. cleaning, or towels).
Full service management companies can also be found throughout Mammoth Lakes and these businesses offer marketing of the property, managing the property calendar, towel services, maid service, 24-hour emergency services and more for a fee ranging between 40% and 60% of the gross rental. This is a more traditional method of management and appropriate for the owner looking to be very “hands off”.
Unit Location and Condition:
As with most places, location and condition mean a lot in Mammoth Lakes. Those rental properties located within close proximity to key linkages are able to charge premium rates and often rent first. For Example, properties near the Village at Mammoth are a bit newer and located near bus transportation, ski gondola, events, and mountain bike trails. As a result they command the highest occupancy and rates in town.
With the evolution of online rating services such as those used in VRBO, AirBnB or even Yelp properties, as well as guests, can now be reviewed and rated, altering the rent-ability of a property. Quality properties and properties delivering what has been promised are rated best.
I’ve heard of one bedroom condominiums rent for as much as $40,000 (gross) in Mammoth Lakes and as little as $10,000 (gross). These rental rates are primarily dependent on the factors outlined above, so if you want to know how to how to maximize your income consider these factors and see how the match up with your goals.
Please contact our office if you are looking for more information on Real Estate in Mammoth Lakes.