An investment in a vacation villa* in Jamaica can generate a steady cash flow and provide you with an ideal holiday getaway whenever you wish. In this article, I will offer you some guidelines of how to locate, market and manage your way to financial success of your vacation property. Here are the three most important secrets to make your vacation villa a profitable investment.
Good Location and Attractive Amenities
Like any other ”brick and mortar” business, the location of your villa is a major contributing factor of its success. If possible, select a location for your villa close to the beach areas of the Island in order to benefit from the large traditional market of vacationers who want to be near the beach. Beach area properties are more easily marketable and attract higher rental rates.
Provide amenities that offer an abundance of comfort and relaxation.
- Air condition attracts higher rentals and adds a stamp of modernity to your villa.
- A swimming pool or outdoor Jacuzzi – although guests seldom use them- increases the marketability of the villa.
- A reliable supply of hot water, cable television, internet, free wi fi are amenities that make your villa stand out from the crowd.
Be Sure the Figures Add Up
Your yearly occupancy rate is perhaps the most important factor of determining a profitable cash flow for your villa.
- Set a target occupancy of a minimum of 22 weeks per year . As you get more returning customers you should succeed in getting thirty to forty weeks per year eventually.
- Set a weekly/nightly rate that will attract the number of guests to achieve at least this minimum occupancy level.
With the nightly rate and occupancy level set, you can now calculate the income projection.
The operational expense will account for approximately 66% of your revenue. These figures are broken down as follows:
- Wages, utilities (electricity, water) and household supplies 18%
- Advertising, marketing and commissions 30%
- Public liability insurance, government taxes, repairs and security and property management 18% .
Mortgage interest payment and capital expenditure are additional variable expenses that are not included here.
Marketing and Management
Decide what age group and interests of visitors would enjoy your villa. Target your marketing to that segment of the population local and overseas.
- Always offer an introductory discount of 30 – 40% off the regular price for first time visitors. This reduced price will pique the interest in many would-be visitors.
- Sign up with villa agencies such as Flipkey.com or Tripadsvisor.com. to market your property for a fee.
- Enroll your villa with discount outfits such as Groupon.com, or Ownerdirect.com
The aim at offering these discounts is to build up traffic to your villa. The more visitors who are introduced to your villa and come away satisfied, the more recommendations it will receive.
Utilize a competent villa management company to repair equipment, supervise staff and upkeep the property.
With the right location, proper marketing and efficient management you can enjoy a profitable vacation villa rental property.
*These steps and guidelines are also applicable to strata/apartment/condo properties.
About the Author
Sydney Davis is the Managing Director of Sydney Davis and Associates. He is a member of the Realtors Association of Jamaica and licensed by the Real Estate Board of Jamaica as a dealer, and property manager. His office is located at 80 Constant Spring Road, Kingston 10, Jamaica.