THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, September 16, 1995 TAG: 9509140272
SECTION: REAL ESTATE WEEKLY PAGE: 12 EDITION: FINAL
COLUMN: ABOUT THE OUTER BANKS
SOURCE: Chris Kidder
LENGTH: Long : 116 lines
Outer Banks property managers are busy gathering in the last contracts for their 1996 rental programs. Rental brochures will be going to printers soon. Many will be in the mail before the end of the year. And on Tuesday, Jan. 2, rental reservation phones will begin to ring.
It's a cycle that repeats each year, starting earlier, ending later, gathering up more houses that sleep more people and command higher rents than ever before. Over the last 20 years, the vacation cottage rental business has known only one direction: up.
No one knows how many rental cottages there are on the Outer Banks: The estimate is somewhere between 10,000 and 25,000. Either figure makes its point when you consider that there are fewer than 4,000 hotel and motel rooms in the same market, each room accommodating fewer people and turning over fewer dollars than a cottage.
No ones knows for sure how many Outer Banks real estate agents handle rentals, either. There were 50 listed in the Dare County Tourist Bureau's 1995 Vacation Guide.
``It's a competitive market,'' says Jackie Myers, rental manager for Twiddy & Co. in the village of Duck and the leader of the Outer Banks Association of Realtor's property management division.
She didn't use the words ``feeding frenzy'' but I will. Those 50 agencies are out there trolling among the thousands of owners. Agencies want more listings, more high-end rents; cottage owners want more rental weeks, more service for their money. You can bet the water boils.
First-time rentals represent a little over 10 percent of an average season's pool of cottages. (An estimate for new rentals this year is 1,500). Property managers say that, across the board, about 10 percent of all cottage owners jump ship and sign with a competing program; some cottages will be lost to year-round rentals or to family use.
The number of owners who handle rentals on their own is tiny. That's one hook rental managers don't have to bait. Most owners realize that using property management professionals is easier and more profitable than drumming up renters on their own.
The challenge for rental companies is to persuade the rest of the cottage owners - that 90 percent of the pie - to use their services.
Money - how much rent can be charged and how much annual income will be generated - is one deciding factor for most owners. Myers says her reading of rate trends right now is that management companies are ``trying to be aggressive on prices for the summer months, when everyone wants to rent, and are encouraging moderation for the shoulder and off seasons.''
But owners often want more. Dissatisfaction with rates or weeks rented is a key cause for owner defections. Property managers can't win in those cases, they say. If they let owners set the rates high, the cottages won't rent for enough weeks. Then owners sign with other agencies anyway.
Most turnovers are mid-priced cottages, says Myers. Most real estate companies tend to focus on high-end properties; low-end property owners don't expect much. It's the guys in the middle who feel neglected.
The rental brochure is a big thing for the owners, says Myers, and rightly so. ``It's the biggest piece of advertising any of us do,'' she explains. ``Everyone is going to color books. The books are getting more elaborate. As homes get bigger, the books have to do a better job of selling them.''
``Nothing succeeds like success'' is an old French proverb that certainly applies to rental management on the Outer Banks. The big companies - one, at least, with more than 1,000 cottages in their 1995 brochure and several closing in on that mark - keep on getting bigger.
Small companies, meanwhile, must find a special niche to make being in the rental business worthwhile.
Unfortunately for small property management firms, there are obvious reasons why renters and owners often think big is better. Renters like choices and more renters translates into more rental income.
Big companies usually offer more services for both owners and renters; they are more likely to have their own repair and cleaning services. Big companies have more money to spend on advertising and rental brochure distribution. Their increased visibility means more ``word of mouth'' recommendations.
But small companies can capitalize on personal service and service - or lack of service - may be the biggest reason cottage owners switch rental management companies. The staff of a small company can be acquainted with every property in the rental brochure. They know every owner by name.
Smaller companies can specialize in selected neighborhoods or in specific price points. They can be more flexible, more willing to work with owners of hard-to-rent properties.
No matter what size a rental company is, they will typically require a one-year minimum contract. 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 to the owner.
Beyond those basics, owners should consider three things in making a decision, says Myers. She recommends asking other people in the neighborhood who use the company. ``Getting a recommendation by word of mouth is a good indication of customer satisfaction,'' she says.
Myers suggests looking carefully at a company's rental brochure. Make sure it is attractive and easy to use. The more appealing the book, the more likely renters will use it. Find out how many copies the company prints and how they are distributed.
The final consideration is really the bottom line, says Myers. How does the company treat its guests? Property managers are agents for the owners, but providing more guest services pays off for everyone. ``Repeat guests. That's our goal,'' she says.
If possible, owners should be renters first to learn how a company handles its guests. At the least, suggests Myers, visit a company's office and call on the phone to see how renter inquiries are handled.
And always, before entering into any contract with a property management company, a homeowner should be aware of North Carolina laws governing how rents and security deposits are collected, disbursed and accounted for. It's wise to know something about contractual law and performance and to understand where the legal buck stops.
For more information about North Carolina real estate law, contact the North Carolina Real Estate Commission, P.O. Box 17100, Raleigh, N.C. 27619, 919-733-9580. MEMO: Send comments and questions to Chris Kidder at P.O. Box 10, Nags Head,
N.C. 27959.
by CNB