Things to consider when buying a vacation rental property.
Have you been dabbling with the idea of owning a vacation rental? It sounds great, and there’s a potential for making money out of the deal, but are you fully prepared for what lies ahead? What do you need to keep in mind when making this type of investment?
Not to worry! We’ve put together a list of things that you should consider if you’re looking at buying a vacation rental property.
Location, Location, Location
The very first thing you should consider when buying a vacation rental property is the location. An easy way to decide if the location is right is to put yourself in the shoes of the tenant. Is the location easy to get to? What are fun things to do near the property? Is it in a safe area? All these questions and more are things that you should think about when choosing the location of your vacation rental property.
Another factor to consider with location is seasons. Even in the slow times, do you still think you’re going to be able to find people to rent the property? Try not to just focus on what the property will be like during the peak season. Think about when the weather turns colder, or it gets rainy, or even hurricane season. Will people still be in that area who are looking at renting, or will you be missing out on income during some months of the year?
Check Out the Laws and Regulations
Another thing to consider before buying a vacation rental property is laws and regulations of that area. Some areas have rules in place against short term rentals, meaning that to have a legal rental property, the property would have to be rented out for a certain amount of days.
Regulations and laws like these can all play a big role in buying a vacation rental property. Make sure that you know what’s going on in the area and if there’s anything in the works that could become an issue. That way, when you decide to take the plunge, there will be no surprises.
Financing a Vacation Rental Home
As with most investments, the finances and budgeting can be a little different then what you’re used to. For example, if you are planning on taking out a loan for a second home (aka your vacation rental property) the rates can be higher and much more complicated. You’ll want to make sure that you have a good understanding of what you’re getting into, so make sure you speak with an accountant and know all of your options for financing a vacation rental home.
Insurance can also be tricky with rental properties. There are lots of different policies and clauses out there that can make it hard to find the right insurance for vacation properties. Make sure you read the fine print before agreeing to anything. When in doubt, have a professional look it over and help you determine if it’s the right insurance plan for you.
Finally, think about all the odds and ends costs that come with a vacation rental property. Do any repairs need to be made? Do you need to buy any furniture, dishes, or other living items to help make your guests feel comfortable? These are small costs that can add up quickly, so before investing in a property make sure you consider what type of things you will need and factor that into your budget.
How Will Maintenance Work?
Lastly, think about the maintenance of owning a vacation rental. Especially if you live away from the property, how will you respond if there is an emergency maintenance issue? Do you have a contact on site who can go and fix the problem? What kinds of procedures do you need to put in place in case something goes wrong?
Our advice: Use vacation rental software and a housekeeping app to manage your property’s maintenance. It’s also a good idea to put a certain amount of money aside each year specifically for maintenance and upkeep. This way you already have it budgeted if something should happen, and you’re prepared to handle it.
So, now you’ve got some things to think about as you start the journey of buying a vacation rental property. If you can keep these things in mind, you’re on the right track towards a successful investment!