March 1, 2016
Case Study: First-Time Investor Makes Guaranteed $150,000 Per Year With Out-Of-State Investment
Help out-of-state real estate investors profit with guaranteed rental income and full-service Airbnb management.
Sharon works at a law firm in New York. While on a business trip, she first visited several vacation homes in Palm Springs with a business partner looking to purchase one in the area. Impressed with the beauty of the California homes but living on the other side of the country, Sharon thought that buying a vacation property in Palm Springs would be a ridiculous idea for her.
Back in New York, however, Sharon started thinking about purchasing a vacation home of her own. She assumed that she would book the property through VRBO or Airbnb and self-manage from New York, but as a full-time owner/employee managing two companies, she didn’t think this would be viable.
Sharon then came to the realization that self-managing also did not align with her financial goals for a vacation home. As a first-time real estate investor, she did not want to take on all the risk associated with traditionally renting out a vacation home. Sharon also wanted the home to be profitable enough to cover what she would be investing in it.
The reality became very clear that managing my own home long distance…is a full-time job.
Sharon’s business partner then introduced her to Rented.com, a company that could help her generate a guaranteed yearly rental income while a professional manager provided turnkey service.
Through Rented.com’s marketplace, Sharon could pass on the financial risk to a management company with a local presence while they handled things like maintenance, cleaning, occupancy taxes, etc.
After learning more about the Rented.com marketplace, Sharon became more and more excited at the thought of being able to own a Palm Springs vacation home.
After choosing a Palm Springs vacation home that she wanted to purchase, Sharon decided to get started by getting a guaranteed income offer. The first step was for her to work with her Rented.com Associate, Paul Liguori, to create a private profile for her property in Rented.com’s marketplace where managers would bid on the right to manage the home.
The next step was to determine an asking price to be included in her profile. She estimated that the home might be able to bring in $231,000 in retail rates over a year, which would leave Sharon with approximately $150,000 after paying for expenses like marketing, booking, occupancy taxes, maintenance, cleaning, and home essentials like linens. As the management company would take on those expenses, Sharon determined that her net asking price would be $150,000. “I liked that I had the option to put an asking price out there since I knew what kind of offer I wanted.”
The bids came in, and Sharon was offered her exact asking price.
It’s a healthy competition between managers, and the homeowner wins.
Sharon’s Rented.com contact, Paul, stayed in touch with her throughout the entire process to make sure she received the most competitive bids possible. “[Rented.com] will reach out to the management company if you’re not getting any responses. I felt like that was a real benefit of the process.”
For Sharon, it was also really important to have a strong management team. Matched with a national management company with a strong presence on the West Coast, Sharon met the local employees, became confident in the management team, and decided to move forward.
Sharon was immediately impressed with the results. “During the month of August (the slow season in Palm Springs), the home was rented for the entire month.”
For Sharon, the best part of working with Rented.com was the guaranteed rental income. Because she viewed the vacation home as an investment property, Sharon said, “I like knowing what I can expect.” Another benefit of working with Rented.com was the ease. “If it were to be as successful as I wanted it to be, it would be a full-time job…to do it right and well.”
Rented.com introduces you to a management company, and the relationship blossoms from there.
Sharon has been delighted with the customer service to her and her guests. She recognized that the manager has been selective in screening guests and honored all of her pre-determined requirements (i.e., no pets, no smoking). She said, “[The manager] worked with me on any of the things I needed.”
Reflecting back on her decision not to self-manage, Sharon said, “Oh my god, I’m so thankful that I didn’t do the [self-managing] VRBO route.” Sharon’s attitude toward the home is that it is a business: “I feel the pride, but I don’t allow myself to get attached to it. I went to Palm Springs and stayed in a hotel while the house was being rented out. I don’t care. There’s no emotional attachment, the home is my business.”
And that’s why Sharon can now…
Relax. It’s rented.