Top ways to take payments from guests for vacation rentals
The average vacation rental owner in the United States grosses$28,000 a year from renting out property and space. This might look like a modest return until you consider the fact that this owner only spends around 10 hours week advertising, confirming bookings and keeping the property in shape. This roughly translates to $54 an hour return, which is impressive by any standards. Small and middle sized vacation rentals are always about convenience and cost, and this is why owners must always consider accepting payment options that work for all types of customers. The mode of payment you choose must make sense from a fiscal perspective and at the same time be easy for your customers to use.
Here are a few good options to mull over;
Most vacationers love to use credit cards because they are easy to work with and have fraud limiting features, but as an owner in the Orlando area, you will have to think about how this works. As a business, you will have to look at the fees involved and see if the math makes sense. Most credit card companies will charge you a 2-3% processing fee. Depending on your provider, there may be additional costs related to applications or transactions. Some owners see this fee as quite over the top, but there are long-term gains in there; vacation homes that accept credit cards see significantly more bookings than those that don’t.
Checks have always been the favorite for small rental property owners. This is a very simple mode of payment, but no business should everconfirm a booking until the customer’s check clears. If you have a checking account with a particular bank, then you can always cash for free. However, if you do not have an account with the issuing bank, you will have to pay a fee of either a flat rate, mostly between $3 and $10, or a percentage (1-3%) of the check amount. You will however need to keep in mind that checks are not very secure and can be used as a gateway to committing fraud. In addition, the waiting period imposed by various banks may not always work for a business that runs on a thin budget.
3. Online money transfers services like PayPal
This money transfer service is ideal for both local and international payments. It is secure and allows for both client and business to keep their banking information private. It also protects your business as well as its customers from fraud as transactions can be traced, limitations placed and payments reversed. It is a good property management policy to register a business account on PayPal. Doing so means that your customers won’t have to pick up a tab for fees whenever they want to pay you. If you are on a personal account, then a financial burden is placed on the customer. The fees here will range from 2.9% for residents of the US to north of 5% for those booking from abroad.
4. VRBO and HomeAway
These two rental companies work to bring renters and owners together in a hassle-free manner. The two services have a basic modus operandi; you simply receive bookings and send payment prompts to customers. The most common business model is to have people pay 10% upon booking a space and then have them pay the rest the moment they check in. There are other owners that require customers to pay the full rate at booking. Of the two methods, the former is more convenient because the owner is guaranteed at least some of the money even if cancellations are made and the renter is guaranteed a place, courtesy of their down payment. HomeAway and VRBO are extremely cost-friendly to the owners.
A Vacation rental management report put out in 2011 indicated that in that year, 3.3 million vacation properties were rented out to people who stayed in these premises for at least 2 weeks. In total, 3.9 million vacation homes went to renters that year. 43% of them were run by professionals while the remaining was the preserve of small owners in their private capacities. Seeing as the real estate industry has continued to recover from the 2008 crash over the years, current figures are significantly better, which gives owners the impetus to cut costs and take advantage of payment options that place a small burden on both business and customer.