1.1 What is VRP?

CHAPTER 1

investment homes, he built a clubhouse with picnic tables outside and a little grocery mart next to it. He also opened a seasonal malt shop for his summer renters. Everybody congregated there.

What did Alan ultimately accomplish, all those years ago? He literally created one of the fi rst VRP communities in the United States. And the remarkable thing is, he did it using a factory worker’s income. He lived in the area, saw the opportunity, and bought that fi rst investment property. He marketed his rentals by sending out mailings and by relying on families who returned year after year. This was before it was possible to market vacation rentals online.

Alan is a good example of a man who had a day job, a working guy who lived near a vacation destination, bought one home, and then started buying more because the business model worked. Where did his ability to buy those additional homes come from? It came from the revenue and the income from the fi rst home, and then the fi rst and second, and then the third.

Alan didn’t get giant pay raises at any point; he was able to do what he did because of the equity he had in his homes. Alan from Okoboji was able to gain that equity quickly because of the higher revenue he generated from the rentals, which is part and parcel of the short-term rental model. In other words, he made so much money on that fi rst property in one year that he was able to buy another one the following year—instead of waiting fi ve years to purchase an additional investment property.

1.1 What is VRP?

Vacation Rental Property (VRP) is simply the renting out of a furnished house, townhome, or professionally managed resort-condominium to tourists. A VRP is an alternative to a hotel room—a great alternative. Travelers around the world are participating in a massive shift right now, beginning to actively seek out and prefer VRP over hotels thanks to the promise of full kitchens, multiple bedrooms, and great locations in unique properties.

WEALTH AS A VACATION

The term vacation rental is mainly used here in the United States. In Europe, the term “villa rental” or “villa holiday” is more commonly used for rentals of detached houses in warmer climates. Other terms you might hear (that refer to essentially the same thing as VRP) include “self-catering rentals,” “holiday homes,” “holiday lets” (this one is unique to the United Kingdom), and “cottage holidays” for rentals in rural locations.

Throughout this book, we will be using the generally accepted term Vacation Rental Property, or VRP, and in some cases Short Term Rental or STR (mostly for business travel rentals).

VRP has long been a popular travel option in Europe (especially in the UK) as well as in Canada. Today, these types of accommodations have become explosively popular across the world. A VRP can range from a small studio apartment in the heart of a city to an amazing luxury private villa in the world’s most beautiful vineyard. Some VRPs charge visitors an ADR (Average Daily Rate) of many thousands per night. These off er all the amenities you would fi nd in any world-class accommodation, meaning they are fully staff ed, and off er luxuries such as private beaches, boats, chefs, and even cooking lessons to cater to elite guests.

VRP usually occurs in privately owned vacation properties, so the variety of a visitor’s experience is wide ranging and mostly inconsistent. However, one commonality among every VRP is the property is always fully furnished. The client or traveler arranges to rent the vacation rental property for a booked amount of time, as they would a hotel. Some rent on a nightly basis, although the more prevalent vacation rental industry practice is typically weekly rentals. Farmhouse stays, a unique subset of the VRP concept, can encompass participation on a working farm.

Some vacation rentals, particularly condominiums or apartments, off er many of the same services hotels off er to their guests, e.g., front desk check-in, 24-hour maintenance, in-house housekeeping, and concierge service. Many premier independent resorts that until now have been primarily hotel owned now provide private buyers access