Changing travel trends drive wave of vacation home renovations

In a stroke of luck, North Shore resident Pam Levy and her family purchased a vacation home in Union Pier, Michigan in 2019.

For the past two years, they’ve barely been able to use it.

The four-bedroom, three-bathroom home near, but not on, Lake Michigan has been booked, even during the generally quiet winter.

The annual rental income represents almost 10% of the purchase price of the house and more than compensates for the 25% commission charged by the rental agency which markets the property and the deep cleaning now required between tenants.

“I have nothing to do,” said Levy, 53. Nothing except trying to find a rare open week where she can move around and sit in her own screened porch.

The pandemic has changed tourism trends, with many travelers opting to rent vacation homes, especially large homes with lots of amenities. Demand is up and so are rental rates, changing the economics of owning a vacation home. In vacation home-focused markets like Wisconsin, Galena and St. Joseph, Mich., homes are selling an average of 11-24% more than they did a year ago. But even when the extra costs of cleaning, insurance, and amenities are factored in, rental agents say many getaway houses end up paying for themselves over time.

Larger homes rent faster, and for more, because they can accommodate those who have created “pandemic clusters” of people whose COVID-19 status and immunity they trust, said Steve Stadel, who runs an accounting firm and eponymous insurance agency in Scales Mound, IL, in the Galena territory. Several couples or two or three families might consider a large home with amenities like a swimming pool and movie theater as their own mini-resort. And, although venturing into Galena town centre, renowned for its unspoilt Victorian vibe, holidaymakers are looking for a bubble of protection around their accommodation, he said.

This explains why many vacation homes being built in western Illinois are currently being renovated and expanded, Stadel said.

Expanded homes need to be insured accordingly, Stadel said, and it costs more to heat and cool the extra cubic meters. Popular amenities like hot tubs and swimming pools pose risks that need to be covered by increased home insurance. “It’s relative to the value of the house, but it’s still dollars out of your pocket,” Stadel said.

Not all costs are borne by the owners. Some rental contracts require customers to pay damage insurance for each reservation so that owners are protected against damage.

The post-covid momentum for vacation home rentals is expected to continue as renters embrace their favorite destinations and explore them year-round, said Jason Milovich, who runs Bluefish Vacation Rentals in Union Pier, Michigan.

Even though travel restrictions have been lifted, some people who have only been to Michigan’s southwest coast don’t want to go any further. “They get to see the vineyards and distilleries in the fall and it’s fun tobogganing in the Warren Dunes,” Milovich said. “And because people come year-round, many restaurants and shops also stay open year-round. Small businesses that live and die four months a year now get an extra four months. »

Last November, Jason Smolarek expanded his Florida rental management business into southeast Wisconsin, in partnership with his mother, a longtime resident of the area.

EliteLakeRentals, the duo’s rental management company, manages five properties and confirms to tenants that the homes are properly licensed – reassurance savvy renters ask for, given that annoyed neighbors can snitch on landlords who follow the regulations. Although even if a visitor inadvertently rents a property that is not licensed, Smolarek said any fines would apply to the landlord, not the tenants. Of the 17,000 known absentee landlords in Walworth County, Wisconsin, about 500 are fully licensed to rent, he said.

Homeowners were initially concerned that rising gas prices, inflation and a partial return to traditional offices would undermine rental prices and demand, Smolarek said, but the main change is that ” the booking window has gotten shorter,” Smolarek said. Renters often book trips of less than four weeks, he said.

Local rental professionals agree that the unexpected shocks of inflation and high gas prices are causing some renters to decide at the last minute whether or not to make or maintain their reservation. A resurgence of COVID-19 is also fueling rolling cancellations and last-minute requests.

The more flexibility customers have in their own arrangements, the more likely they are to land an attractive last-minute rental. It’s a good idea, local agents said, to stay in close contact with rental agents in the area you want to visit, especially if you can give them a range of arrival dates, length of stay and type of accommodation. property you want.

A more thorough cleaning between clients takes longer, and this trickles down to the reservation system. Milovich hands over some properties on Thursdays, allowing those with flexible schedules to arrive late Thursday and settle in for a long weekend, instead of arriving Friday night or Saturday morning. “You can explore on Fridays when most people leave,” he said, “and have more options to avoid the crowds.”

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