With the rising popularity of websites like Airbnb, buying a vacation rental is a great investment for most landlords. When thinking about investing, it’s essential that you consider what, where, and how you want to buy a vacation rental property.
Do Your Research
Before doing anything, you have to make sure you do your research on vacation rentals. You may be tempted to start scrolling through homes right away, but you have to focus and make a plan. If this is your first time buying a property, familiarize yourself with the different steps towards getting those keys. Vacation rentals are a bit different from traditional rentals, as tenants will only be there temporarily. The space will require much more maintenance and attention. Also, dealing with tenants might be more difficult. You’re going to be interacting with different people all the time and you can’t really screen them beforehand.
Choosing a Vacation Rental Property
There are a lot of elements you need to consider when choosing a vacation rental property. You want to choose a property that is alluring to tourists and offers a great atmosphere for fun and relaxation.
Type of Property
The first question you want to be asking yourself is, “What kind of property am I looking for?” Typically, vacation rental properties take the form of beach houses, cottages, cabins, lake houses, boat houses, and trendy apartments. The type of property you choose will make an impact on the guests you attract. It will also affect guests’ activities and the amenities they need.
For instance, if you’re looking for a beach home, you’re going to have a lot of tourists looking to soak up the sun, play in the ocean, and enjoy cold drinks in lounge chairs. Your rental business would probably benefit from offering a close proximity to the beach, extra beach towels, floaties, and an outdoor shower area. A cabin would be most enticing with a secluded, wooded environment, a fireplace or fire pit with extra wood, lots of cozy blankets, and a hot tub. In essence, the kind of property you choose really impacts the dynamic of your rental business.
Once you know what type of property you want to buy, it’s time to think about where you want to buy it. You know what they say, “Location, location, location!” Some places attract more tourists than others and different areas have different kinds of attractions. The main component you want to focus on places with great investment potential that will see high occupancy rates. You should try to look for properties located in the best cities to buy vacation rentals in 2018. Having a good influx of guests is essential when managing a vacation rental.
Also think about what kind of people are visiting that area — you should look up local demographics and see who is frequenting that city. Accommodations that families are looking for are going to contrast to those that groups of young friends are looking for. Popular restaurants, nightclubs, bars, parks, museums, historic sites, and other cool hangout spots nearby are really helpful when deciding on the right location.
It is essential that you figure out your budget for a vacation rental and stick to it until you’ve found the right property. Calculate all of the costs involved with buying and managing a vacation rental property. As mentioned previously, being a landlord for a vacation rental is much different than being one for a traditional rental. You will have to have a much more hands-on approach and the property will incur more costs for guests checking in and out constantly. The space will most probably need more maintenance and you will have to have it cleaned on a regular basis. You’ll also have to think about furnishing the rental unit and providing different amenities to make your guests feel welcomed. At the end of the day, you want to be making a considerable profit with your new real estate investment.
Start Searching for Properties
The best way to look for a vacation rental property is through a multiple listing service (MLS) online like Zillow, Cozy, Realtor, Redfin, or Trulia. Most of these MLS sites usually have all the same listings with varying amounts of information. For this reason, you should contact a local real estate agent to help you find out more about the properties you’re interested in. Since real estate agents usually work for the sellers, their services are free for home buyers. You should try to find a real estate agent that has experience working with investors, as they will have more knowledge of rental properties. This way, you can be sure that you are getting the right property for your rental business.
Negotiate and Finalize the Purchase
Always stay within your budget and think about the profit you are trying to make with your rental. Also, the price isn’t the only thing you need to worry about. Consider these elements as well:
- Closing date
- Down payment
- Property inspections
- Why the house is being sold (foreclosure/bankruptcy, problems with the home, etc.)
You should talk to the seller and the real estate agent about what you’re looking for and make sure that’s what you’re getting. You’ve already made a clear and concise plan, so it’s important to follow it and focus on your goals. After that, you have to finalize the purchase. Hire a building inspector and make sure that the property is in tip-top shape and there are no hidden problems. Then, it’s time to “sign your life away” and finally get your hands on those keys.
Start Looking for Guests
Once that property is finally yours, you can begin your vacation rental business. Start by furnishing the rental property and getting it ready for guests. You should also ensure that you prioritize vacation rental safety and prepare for any emergencies. After that, take professional photos of the interior and use them in your advertisements/listings. You can use a website like Airbnb or HomeAway to showcase your property and attract guests. Using one of these services will be immensely helpful with managing guests’ stays and maintaining a good line of communication.
In your property’s description, make sure to mention nearby attractions and the property’s amenities, perks, and vibe. Advertising your rental property is extremely important when striving to attract guests to your rental. For more help on managing a property on your own, read this guide. And, if you’re ever in need of some help, consider hiring a property manager to take care of everything.