September 4, 2014
Hatteras Island Real Estate:
By TOM HRANICKA
I recently checked with the Dare County appraisal department, there
were more than 9,000 real estate parcels on Hatteras Island. About 70
percent of these were improved (built upon), and it is estimated that
around 2,400 of the residential properties are used as vacation rental
cottages. Most of these homes are professionally managed by property
management companies, while a smaller percentage are managed directly
by the owners.
If we took all of the rental cottages from the
smallest to the largest and made the assumption that the average rental
income was in the range of $1,900 per week for 21 weeks each year, you
can easily see that rental homes are a major contributor to the
island’s economy. In addition, rental income makes it financially
affordable for many families to realize their dreams of owning a home
on Hatteras Island.
Somewhere in the course of talking with
prospective buyers, real estate brokers are usually asked
about the property management process and how it works.
are a number of real estate firms on Hatteras Island that for a fee
will provide a comprehensive property management program for
homeowners. Services include advertising the cottage, scheduling
rentals, cleaning, maintenance and all necessary accounting. In its
simplest form, once you decide to make your property available for
rental, the company you choose will take care of just about every
aspect of the rental process for you, according to your personal
preferences and instructions.
When homeowners desire
professional assistance in managing their property, they engage the
services of a property manager. In North Carolina the property manager
must be a licensed real estate broker. The roles and responsibilities
of both the property manager and the owner are described in a document
called the property management agreement. This contract between the
homeowner and the real estate company addresses such things as the
property manager’s fee, the process for handling reservation payments,
the payment of rental income, and the extent of the property manager’s
authority. On Hatteras Island there may also be a clause which reviews
property management issues specifically related to hurricanes.
fees that homeowners pay for property management services vary among
companies. There is no industry-wide standard for property management
fees. As a general guideline, property management fees are usually
related to the amount of rental income that a cottage generates. The
higher the rental income, the lower the property management commission.
When evaluating property management fees, it is important that owners
understand how the fee for their cottage was determined and what
services, if any, are subject to the payment of the property management
Let’s explore in more detail some of the services that property managers provide.
of the first things that homeowners usually want to know is what rental
rates they should charge for their cottages, and how much total income
they can expect. Working together, the property manager and the
homeowner establish the weekly rental rate for the house with
variations in the rates for seasonal fluctuations in the number of
visitors to the island.
The property manager then makes a
projection of rental income for the entire year. This estimate takes
into account the rental histories of similar properties, the location
of the cottage, the number of bedrooms, its condition, any special
amenities it may have, such as a private pool or game room, and whether
or not pets are allowed.
Once the rental income starts flowing,
deposits are sent directly to owners’ bank accounts, or checks are sent
to the homeowner by mail on a monthly basis. Homeowners also receive a
statement which lists the rental income by tenant, expenses that may
have been deducted and any other accounting transactions that have
occurred since the last report. Most of these reports are now made
available online. In addition, the property manager provides year-end
summary statements and 1099 forms to document rental income for tax
Homeowners may also express an interest in the
advertising exposure that their cottages will receive. Historically,
the most visible advertising source for the majority of property
management companies has been their rental brochure. This catalog
displays the properties that are available, rental rates for the
various seasons and a brief description of each cottage.
still a very important promotional vehicle, rental brochures in recent
years have started to fall behind Internet exposure on company websites
as the main source of reservations for rental homes. Advertising in
newspapers and magazines is also in some cases quite extensive.
Companies advertise in publications in both the United States and
Cleaning of the cottage and maintenance are two
other services provided by property managers, although payment for
these services is handled in different ways by different companies.
Weekly cleaning after a rental guest departs is either included as part
of the property management fee, or it is a charge paid by the rental
guest. Fees for linens when they are provided in conjunction with the
rental of a cottage are handled in a similar manner. Special services
such as spring cleaning, winterization, and pest control are billed
directly to the homeowner.
Maintenance on the cottage is
coordinated by the property management company. However, the homeowner
is responsible for these expenses. For example, if the air-conditioning
system breaks down, the rental firm would have the problem fixed, but
the owner would be responsible for paying the cost of repairs.
expenses are customarily paid directly by the homeowner to the utility
company. Owners also pay their property taxes and insurance on their
homes either directly or through their mortgage companies.
of the questions that prospective buyers frequently ask their real
estate agents is, “How does it work if we want to personally use our
cottage when it is not being rented?” When homes become part of
property management programs, the owners are not precluded from using
their cottages for personal use. All they have to do is place an “owner
block” on the times they plan to use the property for their personal
It is my impression that the quality of property
management services on Hatteras Island is quite good. The rental
management companies are staffed by folks who diligently look after the
interests of their homeowners and care about the needs of their rental
guests. When you look at the benefits to be derived from property
management and the important role it plays in providing relatively
carefree ownership of vacation homes on this unique and beautiful
island, property management is in many ways synonymous with peace of
mind for owners who choose not to manage their properties themselves.
Hranicka is an associate broker with Outer Beaches Realty. Questions,
comments, or suggestions for future articles may be sent to Tom
Hranicka at P.O. Box 237, Avon, NC 27915, or e-mail to
Copyright © 2014 Tom & Louise Hranicka. All rights