Short Term Rental 101 Series #4 – The Number One Limitation in Marketing Short Term Rentals

In articles one, two, and three, we examined some big-picture considerations when analyzing potential vacation homes. The next significant upfront consideration may surprise some; however, it’s the size and type of the septic system that dictates our capacity that wea re licensed for.  As of February 2024, Morrison County has implemented a short-term rental license requirement, meaning a licensing process is now mandatory in all areas where MN real estate and management operates.

As a broker, I’ve been amazed over the last several years at how many lake homes have septics that are undersized for the current number of bedrooms. In most situations, the seller’s agents catch this and do their best to clarify during the sale. In other instances, homes have even been sold with compliant septics, but the volume of those septics is simply insufficient for the number of bedrooms. Anecdotally, I would dare to say that as many as 20% of the lake properties in the area have more bedrooms than the current septic size and flow can support.

Currently, we have multiple properties on the market that are actually three or four-bedroom homes, but we are limited to marketing them as tour three-bedroom properties due to septic size restrictions. Many vacation homeowners never notice this difference when using the home for their personal use. The truth is, a septic system that has a water flow acceptable for two bedrooms can often handle four bedrooms without issue. For example, one property we manage was a five-bedroom property that had been using a 35-year-old two-bedroom septic for over 20 years. The sellers were astonished to learn this, and the buyer in that situation agreed to install a new septic upon purchase.

All counties require an updated septic inspection to obtain a license, and we encourage prospective owners to get this done as soon as possible to determine their septic’s capacity, as it directly influences the license granted. To be specific, the requirement is 150 gallons of flow per day per bedroom. This may seem like a considerable amount of water use; however, in Crow Wing, they allocate three people per bedroom, equating to 50 gallons per day per person. It’s still a significant amount of water, much more than would likely be used, but that is the requirement. So, for a four-bedroom rental, we need 600 gallons per day water flow capacity.

I will mention that I am very excited about some new technology we are involved with that can actually take a current septic sized for two or three bedrooms and upgrade it to accommodate four to six bedrooms using the current septic system. I think this is going to be an absolute game-changer in real estate in the coming years, and we are in the process of working with an advanced designer and utilizing that process as a tool in our vacation management as well as seller listing services! Although we don’t have that official rolled out yet, call me if you would like to discuss that new technology.

Usually, one of the first things a potential owner wants to do is call the county and double-check the size and capacity of the septic so that when we are analyzing a property, we can be realistic about its potential occupancy and nightly rates. I felt that septics deserved a separate article; while it may be a simpler subject, it’s a very important one to understand upfront.

As always, contact MN Real Estate and Management with any questions. It is through years of experience, developing over 50 vacation homes, and analyzing a few hundred that we have gathered our systems, processes, and learned to appreciate all the aspects that go into analyzing a property.

About the author