You have read about ways people are now using second homes for extra income. The idea of owning a vacation rental might seem too good to be true, but it is not. If you want to purchase a second home to start investing in rentals, this is the guide for you.
Before you invest, take a few moments to look over these six steps to lead you down the pathway to success when getting in the real estate investment game.
1. Find the Location
The location will be one of the most important aspects to consider when investing in a vacation rental. There are so many areas within and outside of the United States that this part can be time-consuming. So, your first decision will be which state or country most appeals to you.
There are quite a few challenges that come with looking for places outside the United States to purchase rental properties. A few of the most significant downsides are how difficult it would be to make sure the property is maintained correctly. Screening potential renters would be nearly impossible. Even if you did get a property manager, there is no way to know the condition of the vacation property unless you went there yourself.
2. Purchase the Property
Now that you have chosen the right location, it is now time to purchase the property. There are different types of loan companies out there, so be sure to select one with a program specifically for vacation rental investments. With the many types of loans available for investing in real estate, you want to make sure you have the best-suited one to assist you.
There are some qualifications you should consider before applying for a loan. Your credit score is one of the most significant factors when banks are figuring out your downpayment and interest rate. You will also need to bring proof of income with you. Like other types of loans, you will need two years of tax returns and W-2s.
3. Declutter the House and Property
You want to create a pleasant, relaxing environment for your short-term renters to relax in. Get rid of anything that makes the house look cluttered. When people see clutter, they see messy. A messy place is one sure way to get a bad review, which will hurt your reputation as a property owner.
When decorating the home, you want something comfortable but still looks attractive. With the amount of traffic you get in your vacation rental, you want inexpensive but functional furniture. The kitchen should come stocked with bare essentials, especially enough for the first night. Make sure there is enough toilet paper. People get angry when they have to buy toilet paper.
4. Hire a Great Photographer
Amazing pictures are essential when advertising for renters. No one will give your place a second glance if the pictures do not catch their eye. You want to make sure that the photographs capture the unique features and central focal points.
The outside is as important as the inside. People want a nice area where they can relax at the end of the day. If the yard is unkempt or has many messy areas, people are less likely to stay there. Make sure to get pictures of the areas of your yard that encourage relaxation.
5. Hire a Management Company
It may sound fun to manage your vacation rental yourself, but there are a lot of headaches involved. A management company will be able to take late-night complaints, handle the bookings, maintenance, and answer any questions potential guests may have.
6. Decide How Much to Charge
This one may be a bit difficult if you do not have much practice in this area. You do not want to charge too high because people won’t want to book with you. At the same time, you don’t want to charge too low where you lose money. To find a happy medium, the first thing to do is to research how much people are charging for similar homes in the area. Once you have chosen a price, get ready and list it.
There are a lot of pros to short-term vacation rentals. You make extra cash, get tax breaks, and do not have to spend your days in an office. The most important thing to remember is to reach out for help when you need it. There are people with more experience that can help you along the way.