One of the universal methods that you can use to generate additional revenues is investing in a vacation rental property. As the middle class continues to grow and the economy expands, more people are able to save more and ensure their families can go on vacation. As a result, a vacation rental property can be a lucrative investment opportunity if you get it right.
If you are thinking about investing in a vacation rental property, below are five easy steps that could help you to make the right decisions.
1- Determine the financing options available to you
If you want to invest in a vacation home, you will need to get it right when it comes to financing. Just like buying any property, purchasing a vacation rental property requires vast financial investments hence the need to determine the amount you are willing to invest in such a property in advance. You can ensure that you do not face financial hurdles in future by determining the amount of finances you have, your credit score, the amount your lender is willing to provide, and determining the price range of the property you should buy.
2- Decide on the ideal location
The location of any property is essential, and you will need to determine where you want yours to be located. Remember that once you have purchased your vacation rental property, the location is fixed, and it will determine how attractive the property will be to renters. Choosing the ideal location will require you to decide on the state, city, and part of the city where your property should be located. When choosing the location of your property, be sure to consider relevant factors such as market conditions, weather, employment rate, proximity to social amenities, demand for vacation homes in the area, and other attractive features that excite tourists.
3- Conduct research on available properties in the area you have chosen
Once you are satisfied that you have the ideal location for your vacation home, it is time to research on available properties in the area. Carefully analyze the market to get an overview of the vacation rental property business in the area. Some of the issues that you will need to look into include the type of homes ordinary in the region, how much do existing homes levy, and what are the high and low seasons for home rentals in the area. Ensure that you gather as much information about the vacation rental property in the area as you possibly can. The gathered information will give you insights into what to expect if you purchase a vacation home in the area. Conduct a research on the sites that provide data on vacation homes.
4- Calculate the expected income and expenditures
Once you have made up your mind on the property that you will buy and the area it will be located, consider estimating your expected weekly incomes and expenditures. You should consider the 10 to 20 percent guideline that requires your weekly rental rate to be about 10 to 20 percent of your monthly mortgage payment plan. Make sure that you are flexible in terms of pricing to enable you to change the rates during peak and off-peak renting seasons. Remember not to set weekly prices that will scare away prospective clients but ensure the rates allow you to reap sufficient incomes from the property. When setting the price, note that you will incur an extra cost in the form of property management fee.
5- Purchase your home and consider staying in it for one or two weeks
Once you have bought the property, you should use it for some time, preferably a week or two. This allows you to identify any areas that may need improvement before you rent the property. If you decide that it needs refurbishing, do it immediately and make any changes that you think could increase the property’s attractiveness to clients than those of competitors.