Rates for long-term rentals are based on the rents for comparable properties in similar locations. Since approximately fifty percent of residential property on the Monterey Peninsula is non-owner occupied, this is relatively easy to accomplish. We take a look at not only the properties that are managed by our company, but those managed by other companies and owner-operators.

Rates for short-term rentals are also based on comparable rentals, but there are fewer properties to which to compare, and the rents are much more dependent on location and condition of property. Rates are also dependent on the time of year and whether any special events are taking place. Owners of vacation rental properties should be flexible on the rates for short-term rentals, since there are times when they will be able to get more than the customary rate for their properties. At the same time, they should be prepared to lower the rate under special circumstances as an alternative to allowing the property to sit empty.

Some vacation rental owners make the mistake of thinking that their three-bedroom home should rent for the same rate as a similar number of hotel rooms. This is comparing apples and oranges. The vacation rental home is a different product than the hotel room, and it attracts a different clientele. A client who is looking for accommodations is shopping for either a hotel room or a vacation rental, but will rarely be comparing the two options. Therefore, to compare the rates between the two options does not give us a number we can rely on.

Rates are not set by totaling your mortgage payment, your taxes on the property, and your expenses! While it might seem reasonable to attempt to set your rate in this way, keep in mind that there is no correlation between what a property costs an owner and what it will generate in rent. The market sets the rates in our free-market society!