Owners Morph Into
First-Time Landlords

Aug. 13, 2003 -- For years, Carl Maybin imagined building a beachfront retreat on the Hawaiian island of Oahu. And last year he finally did it, spending more than $800,000 on things like marble floors and crystal chandeliers. So why does Mr. Maybin feel as if he's living in a 40-year-old bungalow?

Because he is -- now that tenants enjoy his dream house while he rents a tiny place inland. "You just have to make the best of it," says the recently laid-off telecom executive.

Meet the new landlord -- you. In a little-noticed shift in the world of vacation homes, a record number of owners have put up For Rent signs this summer. According to the National Association of Realtors, 37% of second-home shoppers are buying to rent out, almost double the number in 1999, while in hotspots like North Carolina's Outer Banks, newcomers have raised the number of houses for rent by 15% or more.

So many new rentals are on the market, property managers say they're turning down owners pleading for help. "We just can't handle it all," says Pam Ortiz y Pina, a vacation-rental manager in Santa Fe, N.M., who has been saying no as often as twice a week.

It's all a bit of a comedown for homeowners, of course, who've had to swap swimming in the pool for cleaning it. Many gripe about the tedium of dealing with summer renters who these days expect fully stocked gourmet kitchens -- and high-speed Web access. (Mr. Maybin soothes his soul by slipping into his own house to watch TV and soak in the Jacuzzi when the home's empty.) But tenants say renting from a newbie is no vacation, either, because inexperienced landlords have a tendency to forget the basics (you need towels?).

Sand on the Court

For Peter and Cathy McDonald, the tipoff they weren't dealing with a pro was the ad for the six-bedroom house in Corolla, N.C., which supposedly came with a volleyball court. It turned out to be a grass-covered sand dune as high as the net in some areas. "We were really disappointed," says Mrs. McDonald. The new homeowner, Michele Metcalfe, says she didn't anticipate that reaction, though she concedes that shifting sands sometimes make one side of the court as much as 10 feet higher than the other. "We never said you could use it for regulation play," she says.

Until the past decade, it was relatively rare to own second homes, let alone rent them out. Then during the '90s, Americans flush with stock-market gains made having a place at the beach or in the mountains a must-have marker of wealth. By 1999, vacation-home purchases were running at a record 400,000 annually -- with second-home prices jumping 27% from 1999 to 2001, twice as much as homes overall. In most cases, buyers actually planned to use those houses themselves, says Walt Molony, spokesman for the NAR. But in the past year or so, everything from falling stocks to slimmed-down bonuses to layoffs has made the idea of several thousand dollars in rent too appealing for many homeowners to pass up.

But that was before the tenants showed up. Doug Kieffer, a former defense-industry executive, now spends his days managing his six vacation cottages in Orlando, Fla., dealing with things like the 7 a.m. call from a renter who'd just put her foot through the floor (the badly installed air conditioner had leaked and rotted it out). "All I think about these days is how to make people happy," he says. And Kelly Steele recently rented her North Carolina mountain home to a wedding party, only to have the group take over the house, record a new answering-machine message inviting all their friends to an open house -- and then refuse to leave for hours after check-out time. "They wouldn't even let the cleaning lady in," Ms. Steele says.

Extra Hand-Holding

Even property-management companies that are thriving on the surge in rentals aren't all happy, as inexperienced landlords mean extra hand-holding. That fancy Victorian couch in the living room? It's got to go, says Monterey, Calif., broker Jan Leasure. (The rule: If you can't fall asleep before the third inning of the ballgame, it isn't comfy enough.) As for "personalized" decor, like the African motif in one first-time landlord's Destin, Fla., condo, complete with masks, real animal skins and spears, it's been replaced with rattan furniture, coral-colored walls and "beachy" pictures. "You have to stop thinking about what you want and think like a tenant," says Jim Olin, chief executive of big property-management firm ResortQuest.

But, for some people, at least, business has been good. Web-based rental services have been booming, with some owners listing their houses on as many as 50 at a time -- at as much as $150 a pop. Doing even better: property managers, who charge up to 30% of the rental fees. Indeed, Michael Sarka, executive director of the Vacation Rental Managers Association, says its 500 members expect revenue to increase more than 8% this year, in large part because of the jump in the number of new landlords.

And there are some upsides. In the two years he's been renting his place out, David Booth has had to deal with everything from a woman who built a wood fire in his gas fireplace to another renter who rearranged all the furniture in the house ("we were a little insulted that she didn't like our taste," he says). And he does miss not being able to use the place during peak summer weeks. Still, the San Francisco consultant says there's been one surprising benefit: He no longer has to invite his entire family over for the holidays. "All told, I'd do it again in a heartbeat," he says.

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