A vacation rental can offer both a relaxing getaway for you and an opportunity to make a smart investment. While you won’t see fast returns and a vacation rental shouldn’t be your main form of investment for the future, there’s a lot to be said for it. You’ll have a home away from home and gain equity over time, with the potential of bringing in a little supplemental income.
Thinking about buying a vacation rental? Before you do, make sure you’ve given it some very thorough consideration so that you buy smart and enjoy your new investment for a long time.
Calculate The Costs – All of The Costs
There are lots of mortgage calculators online designed to help you determine what you can afford, but as any homeowner knows, the mortgage is only part of the story. Make sure you calculate in property taxes, insurance (it may be more costly in a beachfront house, for example, due to the risk of water damage), association fees, and that sneaky part of home ownership – maintenance.
A vacation rental may have very different maintenance needs than your house in the city. Beach houses face a lot of wind and moisture damage and may require more frequent painting and repairs. Renters are often not as easy on a place that isn’t their own, so you may find things becoming damaged or worn more quickly. Make sure you’re allowing for extra costs when you decide what you can afford to buy.
Get to Know The Area
You’ve just spent the week in the most beautiful beachfront town, and you’re enamored with it – but before you decide this is the location where you’d like to buy your vacation property, do a little more research. It may have been paradise during your week there, but you need to know what it’s like during the rest of the year. Look into weather patterns throughout the entire year, including anything that might affect access to the home.
Find out about annual events, like festivals, that could affect the kind of renter you’re likely to get in your home or that might affect how your renters enjoy the home.
Narrow Down the Location
When it comes to beach rentals, waterfront is always a plus, and you’ll be able to charge higher rates for these prime locations. If you can’t afford beachfront, though, give the location of the home a lot of thought. Most beach vacationers want to be able to walk to the beach at a minimum. Walking to the local ice cream parlor, restaurants, and shopping are a big plus as well. At the same time, they might not want to be right next to a local nightspot that plays loud music into the early hours.
Consider access and parking as well, since renters frequently share a vacation home with more than one person and may have multiple vehicles to park. Make sure you’re choosing a home in a location that you will enjoy, but that it will also appeal to the broadest audience, so don’t be too particular in your taste.
Choose the Right House
Homes that make good rentals are easy to access and can sleep a lot of people. If you can afford it, buy something a little larger with that extra bedroom. Look for a home with plenty of room to add extra sleeping space, such as a loft or even a closed-in porch.
Although building to your specifications can sound like a great way to get a dream vacation home, buying an existing house is almost always a smarter investment. There can be all kinds of stumbling blocks and hidden costs when you choose to build – from difficulty with permits to association rules. Instead, choose a house that needs a little cosmetic work, and you can quickly improve on your investment with a few coats of paint and other minor upgrades.
Ready to buy that vacation rental? Your first step should be to contact a local realtor who knows the area and the market. You’ll get expert advice specific to that area, allowing you to be confident in your purchase and find that special place to make family memories.