The first person I knew in the United States to take COVID-19 seriously was a Manhattan blogger who owned vacation rental properties in upstate New York. By February, she had pulled her children out of school and gone to the Adirondacks, a move her peers first found dramatic but turned out to demonstrate excellent foresight.
As the pandemic began to stalk New York’s five boroughs, more acquaintances began to ask for her real estate agent husband’s services -- to the point where, once he’d rented out their own properties to Big Apple escapees, he became a specialist in upstate New York rental homes. And not for short-term rentals. Many families, including their own, decided to stay in the wooded, vaguely wild rural region of upstate New York until… well, who knows?
In communities like the Adirondacks, most vacation rentals are typically booked solid in peak months and slow in the off-season, with marketing efforts geared toward extending peak season numbers into the shoulder season. That's no longer the case. Vacation travel is floundering and pummeled by COVID-19's peaks and people’s reactions to it -- just ask Hawaii, where at least two peak times have come and gone, with the islands’ hotel rooms 80% unoccupied due to near-total lockdowns.
But that doesn’t mean units must sit empty. They just need to change their rules.
The pivot away from short-term rentals
The silver lining to the slowdown in travel bookings can be the less pricey per-night, but much steadier, long-term rental.
Articles have come out everywhere, from Vogue to Business Insider to The New York Times, about wealthy, privileged folks fleeing the cities to wait out COVID-19 in luxury resort areas such as Aspen, Colorado, and Tulum, Mexico. However, as social distancing and remote work become the norm, more people are looking for a long-term alternative to cities, and they don’t need jet set destinations. Some folks are buying, but many are choosing -- for financial reasons, or just caution -- to rent.
Length of stay, regulations, and market pricing issues
Family circumstances led to me fixing up and renting out a relative’s Maui condo six months into the pandemic. As an owner, landlord, or manager in Hawaii right now, the first thing to know is that when stay-at-home and mandatory quarantines hit, short-term rentals are pretty much not allowed.
Even in most of the developments that do typically allow them, COVID-19 quarantine orders banned renting to anyone quarantining. And other states have implemented similar measures. Yet plenty of people decide to wait out the bans at a hotel or a relative’s house and then look for a two- or three-month lease.
For people who can only accept long-term leases, the flurry of three-month requests is a major annoyance. But for many vacation rental property owners, it was a great turn of events that helped make up for months without bookings earlier in the year -- provided the county and complex allows it.
The issue is when would-be renters expect to pay long-term rental rates or when landlords try to get regular peak-season rates. That’s when the negotiating starts. And it generally ends at a place where the owner is getting less than their usual nightly rate, but the renter is paying substantially more than they’d pay for a regular long-term lease.
Tips for finding a medium-term renter
What can you as a landlord do to find good opportunities but diminish the risk of cancellations? Get as much as possible of the rent in advance, of course. Make your peace with the tradeoff of charging far less per night than you would during vacation peak season -- but knowing your unit is booked for eight weeks instead of sitting empty and earning nothing. Also, get used to last-minute bookings often being more reliable than those made far in advance due to the nature of the times.
Finally, if possible, try to link up with companies that may be renting houses for essential workers, e.g., nurses or construction crews. Sometimes this falls under the umbrella of traditional corporate housing, but for agencies handling essential workers, it becomes more about speed and proximity to the work site, in places that don’t have a lot of corporate apartment inventory.
Can this type of traveler save your vacation rental? It’s possible
Although vacation rental owners have more reason to be optimistic about the near term than hoteliers do, the outlook for leisure travel this winter is uncertain at best. But the reality of people wanting to get away from congested cities is on the rise.
If you’re willing to take a reduction in nightly rates and can connect with a renter willing to commit to that one-, two-, or six-month time frame, you very well might have found the solution that’ll enable you to pay the mortgage on your investment properties until the world returns to normal again. And if not? Well, there are plenty of former city dwellers looking to buy in their favorite vacation stomping grounds, too.