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Ever wonder how much cash you could rake in renting out a vacation home when you’re not using it? Real estate expert and contractor Scott McGillivray helps homeowners do just that on the HGTV show “Vacation House Rules.”
On the show (which returns for its second season on Saturday), McGillivray and his team take some of the most dated and neglected homes and turn them into unlikely slices of vacation paradise. In a time when everyone is looking to get out of their quarantine routine, a rental home can really bring in the big bucks.
Curious to learn more, we talked with McGillivray about the allure and logistics of owning a vacation home, his own story of how he went from one to 25 rental homes, the one funny thing vacationers crave in a rental, and more.
When you were in college, you had a hard time finding a place to live. How did that inspire you to work with real estate, and rentals in particular?
When I was in college, my landlord was selling my house, pretty much at 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 maybe I should buy a place instead, which I thought was a crazy idea. But we talked about the economics of owning versus renting a property, and how it might actually be more affordable to purchase. 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 go in on this 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 that I brought in from my roommates was enough to cover all of the expenses of owning the home.
So I basically just looked at 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 on this type of venture, and ended up taking the equity out of that house and buying two more. And then by the time I was 25, I owned 25 student rental properties, and decided that’s what I want to do full time. I’ve 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 I’ve been fortunate enough to meet hundreds of homeowners. I’ve done over 1,000 renovations. So there’s lots of stories for sure.
A couple of years ago, one woman was trying to afford her first apartment. She said, “I would love to buy a home. I’ve been saving up for years and just 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 home. So I suggested she buy three.
She thought I was crazy. But if she had three of these apartments, she’d generate enough income from those other two rentals to pay for all the homes. She thought it was the craziest idea, but we helped her get some private financing, and she was able to buy all three two years ago.
She just sent me a message to say she’s been saving up like crazy, the other apartments are paying for her home, and everything’s [appreciated] by $150,000. In a couple years, she’s gained almost half a million dollars in equity.
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What’s the biggest mistake you’ve seen homeowners make with their rental property?
The biggest mistake I see is that people think, “Oh, it’s just a rental, leave it alone.” But I always tell people that the caliber of your space is the caliber of your tenant, and it’s easier to be a good landlord than to be a bad one.
If everyone’s having a great experience, you’re getting repeat clients, they’re paying top dollar, and they’re making your life easy as well.
Are there any small DIY improvements that homeowners should do to a rental property?
Typically, we’ll tell people to update fixtures—so faucets, light fixtures, door hardware. Upgrading all of those are simple DIY projects that you could do over a weekend. It’s not a massive investment, but it makes a big impact. It’s the jewelry of the home.
The other things that I tell people to consider are appliances and countertops. Countertops make a significant difference, especially if they’re old and beaten up. Some solid-surface quartz or quartzite is a fantastic option for increasing the caliber of the space.
What features will attract the most short-term renters?
No. 1: the curb appeal, because people will judge a book by its cover when it comes to short-term rental. That might mean fixing up the front door, the front walkway, planting a garden. These things aren’t expensive. Most of it can be done using sweat equity. One of the rules in my show is “roll up your sleeves,” which means you don’t have to hire somebody to do everything. There are things you can do yourself that add a tremendous amount of value.
And the second thing that I would suggest people do is consider designing your space with a theme in mind. Themed-space rental properties rent faster and for more money than non-themed properties. So for instance, if you decide that your property is in the mountains, maybe it should be “The Lodge.” Then you can choose items 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 Malibu beach house, with beautiful sandy-colored floors and light white walls, maybe some turquoise accents. The theme itself is not expensive, but it makes such a huge difference for people being attracted to the property.
HGTV
2020 was a big year for vacation homes. Do you think this demand will continue in 2021 and beyond?
The reason why we started doing this show a couple of years ago, pre-pandemic, was because there was a big trend of people moving to smaller towns, enjoying quiet places, and living in vacation destinations. The short-term vacation rental market, the amount of people listing properties has doubled every year for the last three years.
The pandemic just really expedited that trend for people. So, instead of waiting 10 years to buy vacation homes, they’re, like, “Life’s short, I’m going to do it now.” What we’re really seeing is a fast-forward button being hit on what people really want with their lives. So, realistically, domestic travel will become a habit for a lot of folks. It will become tradition going to the cottage, the cabin, 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 get any easier.
The post Exclusive: Scott McGillivray’s Tips From ‘Vacation House Rules’ That’ll Make You Rich Off Real Estate, Fast appeared first on Real Estate News & Insights | realtor.com®.
source https://www.realtor.com/news/trends/exclusive-scott-mcgillivrays-tips-from-vacation-house-rules-thatll-make-you-rich-off-real-estate-fast/
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