THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, October 1, 1994 TAG: 9409290352
SECTION: REAL ESTATE WEEKLY PAGE: 02 EDITION: FINAL
SOURCE: Chris Kidder
LENGTH: Medium: 86 lines
Ten months ago, Tim Cafferty, an agent with the Kitty Hawk Rentals division of Beach Realty, Kill Devil Hills, became president of the Dare County Board of Realtors. It's the first time someone from the property management side of the business has held that office. It tells you something about real estate on the Outer Banks.
Not that long ago, most real estate companies considered their rental programs break-even propositions aimed at supporting their sales or construction services.
Then the big real estate slump of the late 1980s hit. But guess what - rentals kept going. Thousands of vacation cottages from Carova Beach to Ocracoke, with rents ranging from $300 to $4,000 per week during prime season, kept bringing in the bucks. Property management gained new respect.
No one knows how many rental cottages are on the Outer Banks. Cafferty says he and Paul Breaux, owner of Sun Realty, figured the total and came up with ``something over 10,000.'' Angie Daniels at the Outer Banks Chamber of Commerce says, ``10,000 is too low; 25,000 is probably too high.''
Either figure is significant when you consider that there are fewer than 3,900 hotel and motel rooms in the same market.
No question about it: Vacation cottage rentals are a major player in Outer Banks real estate. And its competitive. Both sides - agencies and owners - stir the waters. The feeding frenzy for 1995 property management contracts is just winding down.
There's no need to convince most cottage owners that letting real estate professionals handle seasonal rentals is easier and often more profitable than drumming up renters on their own. The hard sell for property managers is persuading owners to use their program.
About 10 percent of all cottage owners will jump ship and sign with a competing rental company each year. A company will lose some cottages to year-round rentals or family use. Generally, new homes coming into the market more than make up for the loss.
For the last three months, rental companies have been running newspaper ads, mailing newsletters and pamphlets, working the phones and glad-handing every owner they can corner. Homeowners have been calling rental agents, looking for someone to promise them more rental weeks, higher rents, lower maintenance bills and better service.
What vacation cottage owners find is that real estate firms typically require a one-year minimum contract for handling a vacation cottage. They charge a fee based on actual rentals that usually runs between 15 and 20 percent of rents paid. For that fee, the firm handles the advertising, the reservations, lease preparation and rent collection, cottage cleaning between tenants and other services.
Beyond those basics, owners should look for three things, says Cafferty: A focus on more than just dollars, the ability to turn their promises into performance, and a good marketing program.
If you're shopping and all the rental manager talks about is rental income, make sure that money is all you really want. When you're hours away from your property, you may want a rental firm to go the extra mile with service.
Make sure the company can back up their promises. Do they have their own cleaning and maintenance crews? Do they inspect cottages regularly? Do they have enough staff to properly supervise and maintain the cottages in their program and keep their guests happy? Is the staff properly trained?
Look at how a company attracts and keeps renters. Is their rental brochure attractive and organized? Does the company provide a toll-free reservation number? Do they advertise out of the area? How do they treat their guests and encourage repeat business?
``One of the mysteries of property management'' is to keep the proper perspective about guests, says Cafferty. Rental agents see the guests week after week, says Cafferty, so its easy for agents to get their priorities skewed. ``You have to remind yourself that your absolute duty is to the owner.''
Cottage owners should look for a rental company that understands the finesse this balancing act requires.
For the owners' perspective, ask a rental company for owner references. Be sure to talk with owners who have been in the program varying lengths of time. The perceptions of longtime and first year clients may be very different.
Before entering into contracts with property management companies, homeowners should be aware of North Carolina laws governing how rents and security deposits are collected, disbursed and accounted for. They should know something about contractual law and performance. They should understand where the legal buck stops when an agent represents them.
In next week's column, we'll look at some of the laws that specifically apply to vacation rentals, rental agents and cottage owners. by CNB