Investing in a vacation home is a great way to earn extra money and can add to your passive income. Baby boomers are jumping on the investment opportunities presented by holiday rentals in hot spots like Florida, driving up property prices as well as the rental market. If you are thinking of investing in real estate that you can rent out, now is the perfect time to pounce — before prices ramp up even further! Find out how to find and buy the ultimate vacation rental in your area of choice with this quick guide.
Choose an Attractive Yet Affordable Location
There is no point buying a beautiful vacation home if it’s in an area that attracts zero tourists. So, keep geographic appeal in mind when pinpointing a location. Are there attractions nearby? Are the surroundings safe? If it’s metropolitan, are there links to public transportation services? If it’s by a beach, is it along a body of water safe for swimming?
The cost of buying a vacation home will also vary significantly depending on the desirability of the location. So, research home prices online for an idea of how much you will have to spend when targeting diverse areas.
Calculate Your Potential Profit Margins
Once you have your list of potential properties narrowed down by area, calculate how much of a rental fee you’ll need to charge to turn a profit. Unless you have a nice nest egg saved up, odds are you will have to finance your vacation rental purchase with a loan. Ideally, the rental income will cover your mortgage and operating expenses — and then some.
There are also tax considerations. Rental income is taxable and needs to be declared. However you can deduct expenses related to your vacation rental, such as advertising costs, property management fees, insurance, and repairs, Bankrate explains. You may want to find a skilled tax professional to figure out how to make the most of your vacation rental, at least for the first few years; use this online search tool to find a certified expert near you.
Make Your Vacation Rental Appealing to Future Guests
Unfortunately, you can’t just buy a house and put it on the market. Some effort needs to go into creating the perfect vacation rental. People want a “home away from home” when they choose a house over a hotel. So, outfit the property with basic amenities like kitchen supplies, bedroom linens, towels, and even cleaning goods and toilet paper. This guide to outfitting a vacation home includes many useful ideas, from a coffee machine (available for under $50 on Amazon) to a television.
If you want to increase your property’s value, consider adding some luxury touches to the house — a barbecue, hot tub, sauna, or steam room are all possibilities. The right addition depends on your location: It makes more sense to add a fireplace to a vacation rental in the mountains of Colorado than it does to a rental in balmy Los Angeles, for example.
Once the property is ready for guests, you can start marketing it. Creating an account on online platforms like Airbnb and HomeAway is an easy option. Before posting your home online, you’ll need to stage it properly and take some professional-looking photos. Consider hiring a decorator to help stage your home (these services run $1,068 on average).
If you’ve taken the steps above to research locations, invest in an appealing property, and prepare it for guests appropriately, you should see success. While it may take some grunt work at the start, the research and effort will pay off. Once you have your perfect vacation rental set up, you can enjoy a largely passive income.
By Henry Moore @ Fit Well Traveler // firstname.lastname@example.org