Challenges Of Owning a Bed and Breakfast

Posted on July 3, 2014 by Maria Rekrut
Starting a bed and breakfast can be rewarding but it comes with its challenges. Before starting a bed and breakfast, it is wise to do your research. Ask yourself if you are truly suited for entrepreneurship and if you understand the significant effort that may be required.
You should thoroughly enjoy the field you are getting into and believe in your product or service because it may take up much of your time, especially in the start-up phase.   Several aspects need to be considered such as regulations, financing taxation, managing your business, advertising, and much more.

Bed & Breakfast Industry Overview

The bed and breakfast industry is made up of establishments primarily engaged in providing short-term lodging in homes. These establishments provide guest rooms in private homes or in small buildings converted for this use, and they often have a unique or historic character. Bed and breakfasts are characterized by highly personalized service, and the inclusion, in the room rate, of a full breakfast served by the owner or owner-supervised staff.

Questions to ask yourself before starting a bed and breakfast:

  • Is your home located in a desirable setting?
  • What makes your home unique or attractive?
  • Must the structure of your home be altered to function well for you, your family and your guests?
  • Will additional furnishings be needed?
  • Will you have the time, money, and skills needed?
  • Is your family prepared to have strangers stay in their house?
  • Have you consulted professionals with expertise related to the bed and breakfast industry?
  • Do you like being with people? Do you have good hosting, conversational and listening skills?
  • Do you enjoy maintaining a neat and clean home?
  • Are you well-organized (e.g., to maintain reservation schedules and prepare breakfast)?
  • Do you understand the basics of managing, accounting and bookkeeping?
  • Have you done your research (demand, competition, advertising)?
  • Do you have realistic expectations? (Do not expect big profits. These are not get-rich-quick operations.)

Choosing Your Location

Choosing the right location for your business is important; for most businesses, an appropriate location is critical. A good location will depend on the needs of your business, where your customers and competitors are, and such things as taxes, zoning restrictions, noise and the environment.

Licenses, Permits and Regulations

All businesses must comply with regulations and obtain necessary licences and permits. When creating a business, you must contact your local government and your state and federal governments. The question of licences, permits and regulations is very complex and there is no uniformity throughout the country. It is better for you to start with your local government (local city hall, town or village office or rural municipal office).

Most of the time it has the authority to issue its own business licenses. Verify with them also about local regulations, licensing requirements, and zoning by-laws that control property uses in their municipalities. Then contact your state government and the federal government.   Contacts for these administrations can be found in the government listings of your telephone directory  site.

Examples of licenses, permits and regulations:

  • business license
  • tourism establishment license
  • food establishment license
  • liquor sales license

I’ve just outlined a few things to consider before you enter the wonderful world of owning a Bed and Breakfast.

Happy Investing,

beprepared

 

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Writing A Vacation Rental Contract

Posted on July 3, 2014 by Maria Rekrut

When renting out a vacation home, a homeowner should have a rental contract, or agreement, which spells out everyone’s obligations in order to ensure that both parties are clear as to what exactly the agreement is, and are protected, should the other not hold up his or her end of the bargain.

 

Writing  A  Vacation Rental Contract

1.  Create a title for your contract.  The title of a contract should be at the top of the document in bold type and should reflect the contents of the agreement.

2.  Describe the parties to the contract and state the date the contract will be signed. When describing a party, include his or her name, and the title by which he or she will be referred to throughout the contract, such as Guest, Homeowner, or Tenant.

For example, “This Vacation Rental Agreement is being entered into by John Smith, “Guest”, and Jane Smith, “Homeowner”, this 10th day of April 2013.”

3.  Describe the property being rented.  One or two sentences stating the address of the property and what furnishings and/or appliances are included is sufficient.

For example, “The property is located at 1212 Lawrence Street, Lawrenceville, ON 55555, is furnished, and includes a refrigerator, oven, stove, and dishwasher.”

4.  State the term of the lease.  One sentence, which states the date upon which the Guest may enter the premises, and the date upon which he or she must vacate it is sufficient.

For example, “This lease begins on May 1, 2013 (“Check-in Date”) and ends on October 31, 2013 (Check-out Date).” 5.  Provide the payment details. Include the amount of the deposit and monthly payments due, the date upon which it is due, the form(s) of payment accepted (cash, check, money order, or credit card), the beginning and ending dates of the payments, and the address where payments should be mailed and/or can be dropped off.

For example, “Guest shall pay to Homeowner a deposit in the amount of $700 due upon execution of this Agreement, and then $1200 on the 1st day of each month, beginning on June 1, 2013 and ending on September 1, 2013. Payment shall be in cash or personal check or money order made payable to Jane Smith, and mailed to Jane Smith, 1212 Lawrence Street, Lawrenceville, ON 55555.”

6.  Describe your cancellation policy.  Keep this simple and easy to understand.

For example, “Should Guest cancel his or her reservation, in writing, at least twenty-one (21) days prior to the Check-in Date, one hundred percent (100%) of the deposit will be refunded. All other cancellations will result in no refund of the deposit.”

7.  Describe the terms of your deposit refund policy.  A sentence or two stating when the deposit will be refunded, under what circumstances it will not be refunded, and to whom and in what form it will be returned is sufficient.

For example, “All deposits will be refunded by check payable to the first Guest listed on this agreement, within forty-five (45) days of Guest’s Check-out Date. If any amounts are subtracted from Guest’s deposit refund, a complete invoice will be provided to Guest along with any partial deposit refund.”

If you allow guests to purchase a non-refundable deposit waiver in lieu of paying a security deposit, this information should be included in this section.

8.  Define the duties of each party.  This section can be as long or as a short as needed to completely and accurately describe the duties of each party. Some things to consider including in this section of the agreement are:  Condition in which the property should be left.  While it seems obvious that a Guest should leave the property clean and undamaged, ideas about what clean and undamaged means may vary. Be specific about what you mean by clean. For example, “Guest shall leave the property swept and vacuumed, with washed appliances and bath fixtures, and trimmed lawn.”

Having your lawyer or paralegal look over your vacation rental contract is highly recommended.

Happy Investing

05-05-14-rental-contract

 

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Is Your Vacation Rental Marketable?

Posted on July 3, 2014 by Maria Rekrut

The vacation rental industry has turned into an enormous billion dollar market that has taken shape and has been evolving worldwide over the past few decades. Online services have followed, assisting vacation rental property owners to now effectively market their vacation rental property online.

In addition to online services that simply allow you to list your property on their Website for people to inquire about, entirely new companies have emerged focused around the vacation rental industry.

Here are 3 ways to determine if your property is a suitable Vacation Rental – While there are many vacation rentals on the market today, it certainly helps if your property has unique features.

1. It is important to determine whether or not your property is marketable and desirable. You should ask yourself the following questions: Is my property up-to-date enough and have the amenities that many travelers are looking for such as high-speed internet, jacuzzi tubs, etc. Is my property in a frequented geographic area? Is my property’s location desirable (i.e. on the water, great views, or close to landmarks such as theme parks.

2. Prepare a description of the property, amenities, nearby activities and bedroom/room layout – It’s very critical to provide potential guests with accurate information regarding your property.

You’ll use this information in marketing your property on various Websites throughout the Internet. You’ll need to put together a descriptive paragraph or two regarding the property, a list of the amenities & activities, and room/bed layout.

3. Create a System for Providing a Key or Entry Instructions to Guests – If you are going to rent your property as a vacation rental, you will need to somehow provide a key to your guests. Most property owners generally tend to setup a lockbox on their property.

You can use property agents to provide the key or simply meet the guests at the property themselves to walk through the property and provide entry instructions, keys, and other property details.

Vacation rental owners are still renting out their rentals. There is an element of satisfaction in preparing your own property for rental, marketing it, then seeing the fruits of your labor when the rentals actually come pouring in. While this is not for everyone, people with time on their hands generally like to take the reigns when it comes to renting out their own properties.

Happy Investing

 

07-03-13-vacation

 

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Is This The End Of Small Real Estate Investors?

Posted on July 3, 2014 by Maria Rekrut

In Canada, right now, it’s becoming more and more difficult for real estate investors to make money. The reason for this is that it’s becoming more challenging for real estate investors to obtain money from the bank.  Also, the Landlord and Tenant Board’s guidelines are making it increasingly difficult to evict tenants. This will force landlords to sell their properties because of a bad tenant issue, which will incur effect on the serious small residential real estate investors.

 

What I predict for the future is that the small landlord will sell their properties and less people will invest in small properties, therefore, small real estate investors who own duplex, triplex or fourplex will sell their properties. This will force the tenants to move into either a larger apartment building or the tenants themselves will be purchasing a condo or house.

The perpetual apartment renter will end up in buildings owned by commercial real estate investors or will live in government owned buildings. This will produce a larger division between small and large real estate investors.

If we continue this way, the landlord will face more challenges in choosing their tenants. The small investors will be putting their money without making a profit on their properties. Myself as a real estate investor, I sold a number of my properties when I realized because of the new Landlord and Tenant Board guidelines I was less able to control what was going on with my properties. I decided that it was not fair for people who take financial risks to have other people determine how I run my business. So I decided to sell my properties and keep the money in the bank.   At this point, I’m investing in properties that are not regulated by the Landlord and Tenant Board.

I look forward to hearing from other real estate investors who feel the same way as I do and who want to share their war stories.

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Banking In The Real Estate World

Posted on July 3, 2014 by Maria Rekrut

As a real estate investor, I find it difficult to understand why banks make it so complicated for real estate financing, especially when real estate investors have to prove themselves to the bank that they are a good financial risk.   In fact, the bank should be looking for real estate investors who have strong portfolios.  Banks should actively seek good investors to lend their money to, instead of waiting for customers to come to them, they should come to us, the real estate investors.  What the bank should actually do is to come  to the investors proactively, ask what they need in their upcoming project, and lend them more mortgage funds to facilitate their investments.

For instance, I have been with a number of banks and financial institutions for years, some of them even as much as 30 years. I have been putting money in there, why can’t they come to me and say can we lend you more money to make more money.  What I think is that nowadays, the banks should change and do something different for the real estate investor.

The bank should trace the people who are making money for them, partner with them on their projects, figure out how much money they need for their next project. Then the bank should be able to get a mortgage broker involved and do the mathematics to see whether the investors are able to make money or not.  Actually, there are three parties involved, they are the mortgage broker, the banker and the real estate investor.  And they should talk as a unit, the mortgage brokers know the financial situation of their customers who have cooperated with them  for years.

The mortgage broker can prove to the bank that their customers are a good financial risk by reviewing the investors portfolio and  from past  performance.    Therefore, it will become easier for real estate investors to borrow money from banks.  If someone has been losing money and has declared bankruptcy in some cases for more than one time, how can the bank possibly lend them money? On the other hand,  investors who pay their debts on time have proven themselves to be good investors, why wouldn’t the bank want to lend them  more money?   Where is the logic in that?

 

10-16-13-Bank

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How To Start A Business With Zero Funds

Posted on July 2, 2014 by Maria Rekrut
Starting a new business  isn’t always easy, but with the right attitude, and not wanting to make a million in the first year, you can comfortably start a new business. In fact you can start  one without spending more than a few dollars. I’ll give you a quick and brief overview to get you started.

 

Six Steps to Starting a Business with Zero Funds
1.    I would run the business from my home or apartment or even a room…whatever, don’t waste your money on office space, meet your clients in a coffee shop.
2.    Take a small  portion of  funds and put it toward a good website,  people have to  find you, if they can’t find you, you can’t make money.  Or learn to build your own website.
3.    Get business cards and don’t spend a lot of money getting them made, you can get 250 cards for free from Vistaprint.
4.    Next I would find a mentor ( at no cost).  Start to network at Business after Five events with various Chambers of Commerce.  Look for Meetup groups in your area that have your customers attending and market, market, and….more  marketing to these folks.
5.    Ask your friends and family if they know anyone who needs you service or product. It’ll take up to 5 years to get your business to a place where you start to make enough money to live off of.
6.    I suggest to all new businesses, that while they build their business they also get a part time job.
You don’t want to  starve while you’re building your business from scratch and you need to pay your bills. You can’t think straight if you don’t have enough money to pay bills, rent and food.
Good Luck, it’s not easy to start from scratch, but it’s exciting!!
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Vacation Home Owners – Don’t Fear Negative Reviews

Posted on July 2, 2014 by Maria Rekrut

I came across a really good article that I want to share with investors thinking of getting into the vacation rental business that I’d like to share with my readers.

 

It’s face and strategy, which puts owners at a disadvantage, but there is a light at the end of the tunnel.  I myself have gotten a few negative reviews about my cottage rental and looking at their comments some of the comments were justified and some were not, the guests comments where from a purely personal perspective, with ideas of black mailing me about getting a refund, as we don’t give refunds, I was told in uncertain terms that their negative review  would hurt my business, which I’m sure it did, but I won’t let myself be bullied and I certainly won’t pay my blackmailers!!

My logic against paying a blackmailer is even if you give a refund, where’s the guarantee that once they get the money they will still put in a bad review!!

According to Roomz at: www.roomz.ca

Here are 3 reasons why we should not fear getting a negative review.

(1) Negative reviews create trust. 70% of guests will believe the reviews when they see good and bad,  30% of guests will suspect fake reviews if they all appear to be all good! (Data provided by Reevoo). Important Note – Potential guests who go out of their way to read your bad reviews, will convert 65% more than the average guest. Nobody will expect your establishment to be perfect for every person. Bad reviews will provide balance.

(2) Negative reviews provide real feedback. They let us know what we are doing right and wrong. If a guest is reporting a problem, we should want to fix it as opposed to pretending it does not exist. Negative reviews will help us to make better business decisions. They will suggest we make dramatic improvements or stop doing it all together.

If guests don’t like the speed of your WiFi, speed it up or stop it. If guests love your master bedroom but hate the television, take it out or get a new 3D plasma!

(3) Negative reviews help your SEO. From Google’s point of view, it doesn’t matter if your reviews are negative or positive. Google sees it as a “sign of life” for your business and it’s generating some interest. They will list you higher in the search results!

And after all being at the top of Google’s search result isn’t such a bad place to be!!

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7 Must Have’s For The Best Vacation Rental Contract

Posted on July 2, 2014 by Maria Rekrut
Or what your best vacation rental contract should include so you stay out of trouble and sleep well at night.

 

Vacation rental contracts are essentially short-term leases drawn up between a property owner and a renter who wishes to use the property for a short period of time, namely the length of their vacation.  According to Bailey Richert,  an eHow Contributor, Rachel states thatyour rental contract serves as a legal agreement between the two parties and therefore must be carefully worded to protect the rights of all individuals involved.
In the fourteen years of owning rentals, I agree with Bailey, that having a proper contract isvery important.  Having the best contract available has been my saving grace and  I didn’t havetoo many sleepless nights worrying if all parties were on the same page.
Here are 7  Must have’s  to include when you’re pulling your contract together:
1.  Download a sample vacation rental agreement to use as a template or reference guide when crafting your own to give you an idea about how to word the agreement properly.  Check your finished agreement against a sample to look for missing sections.
2.  Include the names of every tenant who is going to stay in the property during the rental period. When the agreement is finished, have every tenant who is listed sign the agreement acknowledging he has read and understands the lease. If the property is damaged and the main tenant is unable to be reached, others can be held responsible for costs owed.
3.  Specify the time period of the rental using dates, not a general time frame. Note which day the tenants are permitted to move in and which day they are required to vacate the premises.
4.  Write exactly how much rent is due and by what date. Specify how the rent is to be paid to the property owner, and in what form the rent is due. This may include check, cashier’s check, money order or cash. Specify the financial penalties in the case of late rent, which could include a cost per day or week.
5.  Explain clearly the tenant’s responsibilities for maintaining the property during the duration of her stay. These may include lawn care, garbage pick-up or minor house repairs.
6.  Include a clause stating the purpose of the home as a vacation rental property. Specify that it is not meant to be used as a business property, location of illegal activity or housing for other than the specified tenants.
7.  Ask your attorney to review the lease agreement before you present it to the renter. A lawyer will be able to tell you if a key element of the agreement is missing or if rewording to protect your rights is needed.
Key parts  of the contract should include explanation of fees, time the property will berented and a clear definition of the rates to be paid.  This way by making sure that the rentalcontract has the  above 7 Must have’s you’ll come up with the best vacation rental  agreement thus ensuring that you’ll have the best vacation with no surprizes.05-05-14-rental-contract
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How To Get Your Vacation Rental To Wow Your Guests!!

Posted on July 2, 2014 by Maria Rekrut

Getting your vacation rental ready for the high season can be a very daunting and time consuming part of your vacation rental business. I’ve found that my low season is the best time to tackle larger projects such as painting, revamping and moving around furniture and updating bathrooms and kitchens.

 

In my off season I’ve also invited an interior designer to choose both wall colours and fabrics and bedding to give my vacation rental a more “boutique hotel” look.

On top of these renovations and updates done on the inside of your vacation rental there is a most often overlooked and forgotten part of most updates which is updating both your front and back yards. Remember to landscape and create “curb appeal”

Myself I’ve preferred perennial plants over annual plants when redoing my garden. Annuals will give you consistent flowers all summer long but in the fall and winter they’ll will die off and you’ll have to purchase more plants the following year.

On the other hand if you have perennials, your garden will ebb and flow with the season. Perennials will give your garden an ever changing collage of colours and plants. I find that my perennial garden requires less care and watering than the annual garden. Also the nice thing is that your perennials will flower and bloom year after year with very little care.

I’ve come across an additional list of vacation rental updates shared by Ezine Article contributing writer Vincent Orlando “Getting your Vacation Rental Ready for the High Season ” to take care of both during high and low season.

I’m sharing Vincent’s partial list below:

1. Perform construction and updates to make the house a better rental

• Upgrade appliances, if needed.
• Add new amenities.
• Deep clean the entire home including windows and carpeting.
• Paint the ceilings and walls with fresh paint in neutral colors.

2. Furnish the rental appropriately

Decorate the home using a theme and color scheme as a guide.

• Landscape and create “curb appeal”
• Perform a security and safety evaluation.

3. Rental Turnover & Day-to-Day Maintenance

Interview and hire cleaning staff.

• Interview and hire maintenance people.
• Establish a backup plan for cleaning and maintenance emergencies.

4. Marketing & Advertising

Stage and take professional-quality pictures of the rental, inside and out.

• Consider building your own vacation rental website.

5. Create marketing text

List on vacation rental sites.

• Research other online marketing methods.
• Advertise the property offline to reach your targeted market.

6. Financial Planning

Plan a budget for expenses.

• Research applicable taxes in your area
• Find, learn and use a basic accounting program.

7. Guest Services

Stock the home with necessities; like toiletries, paper goods, and cleaning supplies.

• Create welcome packet.
• Make a “Guest Information Binder” of local attractions, menus, maps and information.
• Create an emergency contact sheet.

As you can see there’s a lot of work and preparation in getting your vacation rental ready for the high season. You may not get everything done before your high season hits but at least you get a head start and can continue with the less important updates during the high season. Let’s face it our end result and the reason we as vacation owners work so hard, is so that our customers get the WOW factor when they come to our rentals.05-19-14-vacation-rental

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The Good, The Bad And The Ugly Truth About Accepting Credit Card Payments For Vacation Rentals

Posted on June 10, 2014 by Maria Rekrut

06-09-14-credit-card-vacation-houseThe whole truth about accepting credit card payments for your vacation rental.

All vacation home owners who are renting out their vacation homes will have to deal with this question.  Should I accept guest payments via credit cards?  Myself having been in the vacation rental business for 14 years have had to make a decision about this.  Before I go into detail about how I’ve dealt with this payment issue, I’d like to share valuable information that I came across from Rick Smith.

Rick Smith, President of SmallBizAssist:  http://www.smallbizassist.ca/decided after his own struggles with credit companies, to read and study the small print and offer advice to business and the general public of how to make the most of your credit cards and how to stay out of debt.

According to Rick here are 5 Questions to ask your credit card company and for you to consider in order to protect yourself:

1. Calculate your bottom line fees after subtracting debit/Interac fees (IDP and IDP Network Fees). If the total bottom line cost is more than 2.1% of your credit card sales you may be paying too much (percentage depends on volume, with who, how, when and where your do transactions)

2. Do you have 2 statements one for debit/Interac and one for credit card transactions? This is not necessary and you are probably paying unnecessary fees.

3. Do you have more than one account? Some Processors and ISOs will sign businesses up to more than one account when it is not necessary. When it is necessary they should be linked and you should get only one statement more than one usually means extra fees.

4. Does your money usually go into your bank account the next day? Some Processors take their time with deposits, with the exception of weekends or bank holidays money should be in your account the next day (subject to a cut off time of day).

5. Do you have more than one deposit per batch and do your fees come off the deposits? This causes extra bank fees and is a nightmare for bookkeepers. Deposits should match your batch report and their fees should come off once a month separately.

6. Have you received a notice of a “change” in the way fees are calculated of similar wording in a statement or separate letter from your Processor. They need to give you the details of any changes and you have 90 days from the date the details are received to cancel without penalty according to the “Code of Conduct for the Credit and Debit Card Industry” in Canada and the USA.

For myself with my vacation rental, I’ve been able to do business never having to process a credit card, I know it’s difficult to believe!! What I do is ask my guests to  send me either an email bank transfer or a personal or business check.  For last minute guests, I ask foreither personal checks or cash.  Of course I ask for their credit card details in order to hold their reservations, I can always go back and charge their credit card, that’s my blanket of security.

Happy Investing,

Maria Rekrut

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