Purchasing a vacation rental house at Deep Creek Lake has several benefits. Unlike other areas of the country, our four-season resort allows rental income to be generated year-round. The biggest benefit of owning a vacation rental house is the financial flexibility it can provide to offset expenses with rental income. It also provides you and your family personal use and enjoyment of owning a vacation getaway. Another great benefit is the ability to use a 1031 tax-deferred exchange to defer capital gains taxes when you sell or buy another rental home. Below is a basic guide on how to own a vacation rental house at Deep Creek Lake.
Generally, the property management fees at Deep Creek are 17.5-20% of gross rents. The management fee covers everything related to the renting and management of the property, including, but not limited to; all marketing and a listing on vacation rental sites including VRBO, answering all rental inquiries, booking reservations, collecting the deposit, processing the payments, providing check-in/check-out instructions, and 24/7/365 renter assistance should any problems arise. Linens, cleaning, and hot tub service fees for each reservation are generally added to the management fee.
Rental houses currently for sale will have a rental history that can be shared with you. If the house is not currently a vacation rental, a rental projection can be obtained that will give a pretty accurate estimate of the yearly gross rents broken down by each season.
Summer is still the busiest rental season at Deep Creek. Most vacation rental houses will rent for an entire week from mid-June to mid-August. During spring, fall, and depending on the location in the winter, most rent on weekends and holidays. Houses located closer to Wisp will generally do better over a full year because they more easily rent during the ski season. A general rule of thumb is about half of the yearly gross rental income will be generated during the summer and the other half will occur the rest of the year.
Newer houses with newer furniture and décor usually generate better rents and overall more income. The houses with an indoor pool generate the most rent, regardless of their location, as the pools are very appealing to families renting.
If the property is located in the Deep Creek Lake Watershed Zoning District, a TVRU license will be required in order to rent the house. TVRU stands for Transient Vacation Rental Unit. Garrett County issues these licenses and they are good for 2 years. To obtain a TVRU license, the property must have 1 parking spot per bedroom, the required window egress, a bear-proof trash container, an emergency exit escape plan, and a posting that quiet hours are between 10 pm and 8 am.
If the property already has a TVRU license, it can simply be transferred to the new owner after closing. If the property is being converted to a TVRU and has 5 bedrooms or less, a simple change of application is required to transfer the license.
If the property has 6-8 bedrooms, a special exception variance hearing is required.
The formula for maximum allowable occupancy in a vacation rental house at Deep Creek is 2 people per bedroom plus an additional 4. For example, the maximum occupancy for a 5-bedroom house would be 14 = (5 bedrooms x 2 people) plus 4 additional people.
You might come across some rental houses that advertise their occupancy higher than the formula above. Those certain houses were rental houses prior to the enactment of the 2006 TVRU ordinance and are grandfathered from this occupancy formula.