Have you ever wondered how much money you could make renting a vacation home when you’re not using it? Real estate expert and entrepreneur Scott McGillivray helps owners do just that on HGTV’s “Vacation House Rules” show.
On the show (which returns for its second season on Saturday), McGillivray and his team take some of the more old-fashioned and neglected homes and turn them into unlikely slices of vacation paradise. In an age when everyone is looking to break out of their quarantine routine, a rental home can really make a lot of money.
Curious to learn more, we chatted with McGillivray about the allure and logistics of owning a vacation home, its own story of how it went from one to 25 rental homes, the only thing. fun that vacationers are looking for in a rental, and more.
When you were in college, you had a hard time finding a place to live. How did it inspire you to work with real estate, and leasing in particular?
When I was in college, my landlord sold my house at almost the last minute. My roommates and I struggled to find a place to live. The real estate agent who was trying to help me find a place to rent suggested that I buy a place instead, which I thought was a crazy idea. But we’ve talked about the economics of owning versus renting a property, and how it might actually be more affordable to buy. And it turns out she was right.
We looked at a bunch of properties and found one, and my roommates were excited. I said we should all do it together, but everyone got nervous. I ended up using my student loan as a down payment, and my roommates became my tenants, and the rent I earned from my roommates was enough to cover all of the expenses associated with owning the house.
So I just treated my down payment as prepaid rent, and after I graduated, I had built some equity in the property. I was really excited about the opportunity to profit from this type of business and ended up taking equity out of that house and buying two more. And then when I was 25, I owned 25 student rental units and decided that was what I wanted to do full time. I have been doing it ever since.
What a success story! Do you have other memorable stories from your clients?
I’ve been doing HGTV shows and helping people invest in real estate for almost 12 years now, and have been fortunate enough to meet hundreds of homeowners. I have done over 1,000 renovations. So there are a lot of stories for sure.
A few years ago, a woman was trying to afford her first apartment. She said, âI would like to buy a house. I’ve been saving for years and don’t know how I can do this. How am I going to be able to afford it? And we looked at the economics of it, and she was right. It was going to be difficult for her to afford a house. So I suggested he buy Three.
She thought I was crazy. But if she had three of these apartments, she would earn enough income from those other two rentals to pay for all the houses. She thought it was the craziest idea, but we helped her get private funding, and she was able to buy all three two years ago.
She just sent me a message to tell me that she’s saving like crazy, the other apartments pay for her house, and everything is fine [appreciated] of $ 150,000. In just a few years, she has earned almost half a million dollars in equity.
What’s the biggest mistake you’ve seen landlords make with their rental property?
The biggest mistake I see is that people think, “Oh, this is just a rental, leave it alone”. But I always tell people that the caliber of your space is the caliber of your tenant, and that it’s easier to be a good landlord than to be a bad one.
If everyone has a great experience, you get repeat customers, they hit the jackpot, and they make your life easier as well.
Are there any small DIY improvements that homeowners should make to a rental property?
Usually we tell people to update fixtures so faucets, fixtures, door hardware. Upgrading all of these are simple DIY projects you can complete in a weekend. It’s not a massive investment, but it has a big impact. These are the jewels of the house.
The other things I tell people to consider are appliances and counters. Countertops make a significant difference, especially if they are old and damaged. Some solid surface quartz or quartzite is a fantastic option to increase the caliber of the space.
What features will attract the most short-term tenants?
N Â° 1: attractiveness, because a book is judged by its cover when it comes to short-term rentals. It could mean fixing the front door, the front walkway, planting a garden. These things are not expensive. Most of it can be done using sweat equity. One of the rules of my show is to “roll up your sleeves” which means you don’t have to hire someone to do it all. There are things you can do on your own that add tremendous value.
And the second thing I would suggest to people is to consider designing your space with a theme in mind. Rental properties with thematic spaces rent out faster and for more money than non-thematic properties. So, for example, if you decide your property is in the mountains, maybe it should be âThe Lodgeâ. Then you can choose objects that reflect that experience or paint in colors that reflect that experience.
Or maybe it’s a Malibu beach house. Even if you’re not in Malibu, you can have a property that looks like a beach house in Malibu, with beautiful sand-colored floors and light white walls, maybe some turquoise accents. The theme itself isn’t expensive, but it makes a huge difference to people drawn to the property.
2020 has been a big year for vacation homes. Do you think this demand will continue into 2021 and beyond?
The reason we started doing this show a few years ago, before the pandemic, was that there was a great tendency to move to smaller towns, enjoy quiet places, and live in destinations. vacation. In the short-term vacation rental market, the number of people listing properties has doubled every year over the past three years.
The pandemic has really accelerated this trend for people. So instead of waiting 10 years to buy vacation homes, they’re like, “Life is short, I’m going to do it. now. âWhat we’re really seeing is a fast forward button on what people really want out of their lives. So realistically, inner travel will become a habit for a lot of people. It will become a tradition of. going to the cabin, to the cabin, to the camp, whatever you call it, wherever you are. It will ultimately be a way of life, not just a trend. If you can get your hands on something now, my advice is to do it. It’s not going to be any easier.