Paradise for Rent

For some, short-term renting is enough to save the farm

Type in “Crested Butte area” on a VRBO.com search or find it on the website’s interactive map and page after page of listings come up.

Type the same into a search on Homeaway.com and there are 71 properties to choose from, and according to Jill Lindros, who keeps an eye on rental properties in the town of Mt. Crested Butte, new sites offering the same service are popping up all the time.
The Internet has changed the way people find a place to stay when they travel. The research firm PhoCusWright reported in 2009 that the web accounts for an expanding 17 percent of vacation rental sales.
Whether they are vacation rentals on Travelocity or VRBO, competition is fierce—and in your face—when looking for a home away from home. More and more, the option of staying in someone else’s home exists just about anywhere you want to go. Besides offering a personal space with more privacy and room to stretch out than a hotel room, the price per night isn’t much different, either.
Elizabeth Smith and her husband, Don, have been renting the First Street Guest House short-term to out-of-town guests since 2000 and business during that time has been steady.
“It’s been good,” Smith says of the vacation rental business. “But it’s getting saturated. More and more people are getting into it. When we first listed our house on VRBO, there were seven or eight, just a handful. Now there are easily more than 200.”
According to a 2009 estimate by PhoCusWright, between 2007 and 2010 sales of vacation rentals grew to $26.4 billion, or about 9 percent. An unreleased follow-up to that study notes, “Once a relatively uncharted, underestimated market often considered a segment of ‘alternative lodging,’” vacation rental has emerged as a major marketplace in its own right. It is an increasingly mature online category that is competing directly with hotels for the leisure traveler.”
It could also be an indication of how many ways people are trying to find a little extra income. Due, in large part, to a slow economy, Smith says she has even seen families move out of a home for a period of the peak tourist season, taking all of their personal effects with them, to help pay the mortgage.
Others are renting out previously family-only vacation properties to avoid being forced to sell. According to a report on CNBC.com, median sales prices of vacation properties dropped 26.5 percent to a record low of $150,000, leading people to put houses up for rent instead of taking a loss after selling.
The same report said listings on the online vacation rental service Homeaway (including Homeaway.com, VRBO.com and VacationRentals.com) jumped nearly 22 percent last year, to 527,535. The Homeaway website says homeowners earn more than $35,000 on average in annual income by renting their properties.
“People are hurting and they’ll do what’s necessary,” Smith says.
In Crested Butte South, VRBO #329096’s owner, who asked to remain anonymous, doesn’t have a family, but he does find a new place to stay when he’s able to rent out his house and the attached apartment, where he usually stays.
“For me, as a single guy, it’s easy to move out,” he says. “I don’t know how people do it with a family.”
But after listing the house for a little more than six months on VRBO, he’s wondering if the monetary incentive to stay away from town for a little savings is enough to overcome a visitor’s desire to be close to the action.
“It’s pretty expensive to rent a place in town, so I thought people wouldn’t mind driving six or seven miles,” he says. “I’m wondering if because I’m in Crested Butte South it has some sort of deterrent effect. I mean, I’ve gotten quite a few inquiries, but not as many people renting as I thought.”
The home’s owner has tried to get more notice on the VRBO site, buying into a package that allows him to post more photos than what the basic deal allows. So far he’s tallied some 2,700 people looking at his post. The ones who came couldn’t have been better guests, he says. There just weren’t enough of them; however, he adds, “I’ve made my money.”
When he is able to rent, the Crested Butte South man says he just goes camping or stays with a friend. “In the winter it totally sucked,” he says. Still, despite the struggles, the rental arrangement takes away some of the financial burden of home ownership.
But with all of the interest in vacation rentals, there’s one party in the mix that is sometimes being ignored: the towns where properties are being rented.
Both Crested Butte and Mt. Crested Butte have people dedicated to finding rental properties and making sure the appropriate taxes have been paid. In both towns there is a $10 per bed per year “pillow tax,” along with an overall lodging tax 13.5 percent in Mt. Crested Butte and 12.5 percent in Crested Butte, both of which include a state and county share.
Tina Curvin started tracking vacation rentals in Crested Butte last year and has more than 130 properties on the record as available for short-term rental. She says 97 percent of the people renting houses in town are good about paying their taxes.
In the first quarter of 2011, Curvin says more than a quarter (27 percent) of the lodging tax paid to the town came from individuals renting their property.
Jill Lindros, who tracks rental properties in Mt. Crested Butte, says most renters are good about paying the taxes due to the town. So far there are 834 listings for this year and 92 percent have paid, with just 10 or 15 owners who aren’t compliant.
Mt. Crested Butte has so many properties to check on, in part, because large condo complexes have a different owner in each condo. For example, Lindros says the Grand Lodge has 250 rooms and 250 owners, many needing reminders around tax time.
“Sometimes they are new owners and sometimes they are owners that have just started renting. But once I find them, they get an annual notice. So once they’re on the list, it’s pretty easy to keep up with them,” Lindros says. “Some are clearly deadbeats but they’re not the norm. Most people attempt to become compliant.”
Smith, who rents a house in Crested Butte, says she understands that the town needs the money almost as much as the people do and has always been diligent about paying her taxes.
But the sums being collected by the towns aren’t providing a windfall. In Mt. Crested Butte, Lindros says, “It’s not monster-big for us. We collect $10,000 or $15,000 every year in back taxes.”
However, for area property owners renting their homes, paying the mortgage is monster-big.