The Daily Globe - Serving Gogebic, Iron and Ontonagon Counties

Vacation rentals stall in pandemic

 

May 9, 2020



By TOM LAVENTURE

[email protected]

Ironwood — Hundreds of short-term, vacation rental homes in the western Upper Peninsula and northern Wisconsin are facing a drop in anticipated early summer bookings from the coronavirus stay-at-home orders, but owners say the impact is not the same as on other small businesses.

Most of the rentals are privately-owned homes or cabins that owners rent by the day, week or month when they are not present. They are marketed through online rental agencies, such as Airbnb, Vrbo or with a local management company website.

Jackie Powers, an Ironwood resident who rents out a single-family home as a short-term rental property in town, said she was fortunate to have had a good winter rental season before the pandemic. Her last renters left in the first week of March and she is using the time to continue a three-year rehabilitation project for the property.

“I’m not really too upset about it because I want to finish my rehab project this summer,” Powers said. “I painted the house last summer and I will be out there painting the garage this summer, with the hopes that we’ll see a turnaround somewhere down the line.”

The house just off Douglas Boulevard is popular with visiting skiers, construction workers and people visiting local families, she said. Some people prefer staying in town close to restaurants and the main roads.

“I don’t know when I will get up and running again with the Airbnb that is available for a month at a time,” Powers said.

The Michigan stay-at-home order forbids travel to short-term rentals and Powers was hoping the city home would appeal to nurses or other essential workers coming to the area in support of the COVID-19 response. But the idea of demand disappeared as staff furloughs were announced, she said.

“Perhaps that will turn around as the governor changes the orders and maybe when we will get those elective procedures back,” Powers said.

What Powers did not expect was that the shutdown would impact her long-term rental property. Her renters took advantage of the drop in real estate prices and very low interest rates on mortgages and decided to buy their own home, she said.

There isn’t a support package for short-term rental properties, she said. Her personal $1,200 stimulus check will offset the lost March rent but that hasn’t arrived yet, she said.

There is still the lost rent from April and May and potentially June and for the foreseeable summer, she said. She is prepared to go without a winter for a year and keeps the bills as low as possible by canceling cable, internet and other things not needed without occupants.

“It’s just the risk of being a short-term rental,” Powers said. “You just don’t know and I feel that’s just kind of how it works and so I am not really looking for any help.”

There is also the summer competition of many area cabin rentals, she said. There are relatively fewer winter rentals when she is booked solid with people who prefer the city.

“I’m looking at it as a long-term investment and I am going to try and hold out and keep it as an Airbnb until things get back up and running,” Powers said. “I don’t imagine that is going to be everybody’s situation but that is where I am at.”

Eagle Bluff Condominiums in Hurley is a management company for homeowners who want to rent as vacation dwellings while they are at other properties at certain times of the year. Wisconsin allowed short -term rentals to operate under the stay-at-home order with special guidelines for cleaning, said Charlene Mussatti, an Eagle Bluff board member and former property manager. 

“We’re all in a learning curve,” she said.

Rentals have dropped considerably during the pandemic, she said. Some of that was intentional.

County health departments urged out-of-state residents not to come during the pandemic to prevent community spread and so the management discouraged rentals throughout April, she said. The Memorial Day weekend, typically very busy with an ATV/UTV rally and all the graduations, is expected to be down with these events canceled, she said.

“We kind of discouraged our homeowners from making these treks north because Ashland County and Iron County had requested these people to please not come to their summer home,” Mussatti said. 

Some of the property owners here are wintering in Florida and other warmer states, and the urge was to return to the isolated northwoods during the pandemic, she said. Those who did were good about the self-quarantine rule and stayed put, she said.

It’s a financial loss but it’s not an emergency when the rental revenue is a secondary source of income, she said. The condos are privately owned, and typically a second home for owners and not what is considered a small business.

“I am just suspecting that we are going to be way down for business this year. It’s just the way things are going,” Mussatti said.

Tom Bergman, director community development for the city of Ironwood, said that vacation rental owners who establish a limited liability corporation as a separate business model may have lines of support during this time. An LLC is typically eligible for idle business loans through the Small Business Association, or could be eligible for unemployment insurance with a self-employment status.

The loans or assistance that are specific to lodging are designed for the multi-unit hotel and motel businesses, he said. That assistance is not really designed for the individual short-term rental.

There are sometimes lines of support through the industry, Bergman said. The owner could research the various assistance and subsidy programs with the corporations that work with their business.

 
 

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