Do it Yourself to break even on a villa

The owner of Sundancer, a three-bedroom villa in Fish Bay, says he treats his villa rental business like, well, a business.  You have to pay attention and be willing to get your hands dirty.

Bob Faucett says he does that.  From doing his own maintenance on the property to "outsourcing" marketing to his daughter, Faucett keeps his costs low to make a profit.

In the second part of our conversation, he talks about the costs of
owning a villa and, frankly, why if he had to do it today, he doesn’t
think it would work.  With the cost of mortgage money, the chances of
breaking even by renting your new villa are slim and none.  "Psychic
income", he suggested, is likely to be the best return.

To listen, click the "Play" button below.

If you own a villa, are building one … or are a dreamer … listen to this.

You can also download or hear the conversation by clicking here.

7 thoughts on “Do it Yourself to break even on a villa”

  1. I have been waiting all week for part II. I joked to my husband that both parts will be required listening before our next trip. The men in the group think it would be just so easy to go in together on a house. The women know better!

  2. Part II was as good, if not better than Part I.
    Coming from a real estate/construction background, learning about operating in different locations is interesting to me.
    I have no desire to do it on STJ, I just like learning about it.

  3. We have been renting from the Suttons for the past five years. Both he and his daughter are very lovely people…there has never been a “problem.” Perhaps the “problem” is that we don’t treat others as we would want to be treated. “nuff” said!

  4. From my experience as a new villa owner, Bob is absolutely right: the only way for the dream to work is to do most of the work yourself. I would add however that if you buy a newer house or a house in good shape it really is not too much work, and it can be an enjoyable (tax deductible) excuse to spend time on the island a couple times a year.
    Below, I will share with you how our dream turned into a short-lived nightmare before we then awoke to a pleasant reality. I will not include the name of our villa nor our former management company as the point of this story is not to promote our villa nor to rant, but rather to share with your readers what we learned the hard way about running a rental villa business on St John.
    I bought a brand new villa at what must have been very close to the most recent peak in the market back in winter 2005. I then placed the house into the care of a property management company, thinking that all parts of the dream were in place and that we could fly down to enjoy the house a couple times a year while realizing long-term appreciation.
    Over the next year and a half I lost plenty of money. On top of loosing money on operations, the “maintenance” that the management company preformed on the house caused more damage than good – I was being charged ludicrous money for what amounted to a slow destruction of the house. As a final sling of mud – the guests consistently complained that the house was not clean upon their arrival, or that the greeter at the dock had been rude, or numerous other complaints. The company did not generate a single repeat guest over the year and a half period. Last winter, after the management company’s refusal to pay for some of the damage they had caused to the house, I took the house away from them.
    On my next trip to the house I discovered the company’s “maintenance log” under the shelving rack in the maid’s closet. It was blank – not a single entry. The title page of the log gave instructions: “the time allowed for maintenance on this villa is one hour per month”. For this I had been paying 5% of gross. No, I take that back, they had not even put in the one hour. Toilet seats were loose and sliding back and forth, a drain grate was missing in one of the showers, the handle on the brand new stainless steel refrigerator was loose with a half inch of play (5 seconds to turn a screw), none of the locks had been sprayed with WD40. As the log showed, they had done nothing at all, not even the one hour per month they claimed was all the 5% of gross inflow warranted. On top of all of this we discovered why the cisterns were very low despite lots of recent rain. The clean-out / fill connection valves on the downspouts had been turned to bypass the cistern and empty into the yard (what you would do when cleaning out of the gutters or when connecting the hose from the water delivery truck). The management company had charged me for water delivery three times over the previous two months. The next day the neighbor came over and reported that despite the fact that no one has been in the house over the past week both of the AC units had been running night and day non-stop.
    After my wife calmed me down and reiterated the same advice that she had heard me council friends – that it would cost more to sue them then I could recover – I decided to take matters into my own hands.
    I hired an on-island manager who I trusted to handle all contact with guests while they are on the island, to clean house between guests, and to oversee general maintainance issues. I directly hired a landscaper, pool maintenance, and put all the bills into my name and my mainland address. I took over marketing the villa and pre-arrival logistics myself.
    Since personally taking over management we have had almost a dozen renters stay at the house. Each guest has raved about the house and their experience on St John. Three guests have made reservations to return to the house again this winter and next spring. My cost of doing business literally dropped by 50% (and the work I am paying for is now actually being done and done very well). Best of all, by the end of this past June we have more reservations booked for next season than the management company had generated by the END of the 2005-06 season or the 2006-07 season.
    As a lawyer, I am accustom to keeping up with billable hours, and I have tracked my time to ensure that I am not spending so much time on the investment to render it functionally unprofitable. Thus far I have spent on average just over 8 hours a week on the house. This time includes (in order of the amount of time spent): setting up and maintaining marketing, answering phone and email inquiries, paying monthly bills and taxes, and maintaining contact with the on-island crew. I expect that the weekly average will drop further as details become more streamlined. I have not included my time on the island (two trips a year).
    This season we will generate revenue despite our mortgage. Most importantly, our guests will now return to St John and rave about the island and the house while back home on the mainland. The lesson we have taken away from this experience and hope to share with others considering the purchase of a villa, is that you can make the dream work (even at today’s prices), but it will not work unless you are willing to do much of the work yourself (but it’s not really that much work). Real estate prices and rents on St John are not going to drop (it is simply too desirably unique a place). St John is and will be for a long time an excellent investment. It is a very rare thing to make (very much) money on operations of a vacation home anywhere in the world during the first years of business, but when it comes time to sell, you will have realized significant increase in value. In the meantime you get to ENJOY your investment and support the good people working on St John.

  5. Excellent Part 2. Maintaining a house rental is not as easy as it looks. It’s great to hear the owners get to enjoy the fruits of their labor. They also have family to count on even if they pay them. I think finding some one to trust with your investment is the hard part if you are not on island. You need reliable people to do the work correctly. Good for Bob Faucett. He found the key to making an investment work and be successful.
    Thanks for the interview, good work.

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