Owning a vacation rental property can provide a steady source of income, if things go well. However, real estate ownership isn’t without its pitfalls. Don’t jump at the first home you like; take your time to find the perfect property to get the best return on your investment.
Do your research
Select an area that you love to visit yourself. Keep a close eye on Airbnb, VRBO, and other rental sites. Create a spreadsheet or ledger to track rental homes in the area you are targeting. Figure out which types of homes are consistently sold out and which rarely get rented.
You need to determine what the renters in your chosen market really want. Is it a small romantic place for couples or a large family home with plenty of space?Amenities such as a nice kitchen are always important because many travelers with kids prefer cooking their own meals. Another feature that many renters prefer is having access to amazing views from the property.
Hire a trusted professional
Buying a rental property can be tricky. Hire a broker or agent in the area that was personally referred to you. You should also consider purchasing a fixer-upper rather than a turnkey property. If it needs a few repairs or upgrades, you may be able to get the place at a deep discount. In a hot seller’s market, you'll probably have to make an offer at or close to asking price. However, if the properties you are targeting have been for sale for 60 days or more, start with a much lower offer. If the seller wants to sell, they will make a counter offer, even if they think your opening bid was way too low.
Once you’ve purchased your place, it’s time to get it ready to rent. After buying all the primary pieces of furniture, consider hiring someone to arrange the furniture and add special touches to make your property stand out from the rest. A professional designer can help stage your vacation rental and suggest other changes that could make a significant difference in the appearance of the home.
Set the right rates
When you set your rental rates, you need to keep them competitive, yet also be able to cover your expenses and make a little profit. Expenses include property tax, rental income tax, and occupancy tax, as well as the cost of property insurance, utilities,and HOA fees. You may also choose to pay a property management company and/or a cleaning service to maintain the home. Get professional photos taken and market your property on the aforementioned rental sites, as well as through social media networks, local newspapers, and other publications.
Go the extra mile
The key to keeping your vacation rental booked at a high occupancy rate is getting great reviews. You can't fail in this area because it's very difficult to make bad online reviews go away. Do all the extra things for renters that you'd want if you were renting a vacation home. For example, stock the pantry with baking supplies, oil, coffee, etc., so they don't have to go to the store for every little thing. Make sure the bathrooms are spotless with plenty of towels (which you can buy as a four-piece set on Amazon for under $25), and that the beds are cozy and comfortable. Provide a detailed manual about the home, as well as visitor pamphlets, guidebooks, and local menus for the area.
One of the best ways to garner positive reviews is to hire professionals to handle your vacation home. A property management company can take bookings online, maintain and clean your home, provide extra security, and be available at all times to support your guests. When you put in the extra effort, your renters will appreciate all the extras and reward you with positive reviews.
Purchasing a vacation rental home can be a nice way to diversify your investment portfolio. The right property can provide you with an appreciating, tangible asset that produces a constant stream of income. However, you need to arm yourself with the knowledge to choose a quality home in an attractive location with coveted amenities. All your research and efforts will pay off when your rental becomes a hot commodity.
Credit to George Miller