The real estate industry is an industry where those who aren’t real estate agents can also make a profit. Many people have invested in real estate and have seen great returns on their investment(s). With real estate prices currently being at an all-time low, now is the perfect time to consider investing in real estate. You can choose to invest in residential real estate, which includes single family homes, duplexes, and quadruplexes; or you can choose to invest in commercial real estate, such as warehouses, malls and shopping centers, office buildings, industrial buildings, hotels, and restaurants. You can also choose to invest in vacation rentals, which are just as profitable as residential and commercial rental properties.
Vacation Rentals Must Adhere to Certain Rules
Vacation rentals are considered short-term rentals, which means that tenants renting the property will typically only do so for no more than six months. Anything longer than six months isn’t considered a short-term rental. Keep in mind that there are state-specific rules for all types of short-term rental properties (that change every so often), and vacation rentals may not be allowed everywhere in the United States and abroad. Some states will also allow you to stay in your own vacation rental for a certain amount of days (i.e., during a vacation) throughout the year. Make sure you look into the rules and regulations on vacation rentals in your area, or the area you plan on purchasing a rental property.
Several Things Determine if Your Property Will Be Profitable
The main goal of investing in a vacation rental is to make money from it. Even though vacation rentals are short-term rentals, there’s still the possibility of generating a steady stream of income from them. The key is to make sure that your rental property is desirable in order to constantly attract tenants.
1. The Location
In real estate, location is the most important thing to consider. Depending on the type of property you’re going to invest in, the best location will look different for each type of rental. For example, the best location to invest in residential properties is in a low-crime area with a great school district and opportunities for economic growth. When choosing a location for commercial real estate, you’ll want to go with an area that sees a lot of foot traffic.
Vacation rentals might be the easiest to determine the best location, but there are still some factors to consider. Some of the best locations to invest in vacation rental properties are areas that attract a lot of tourists. Florida is one of the top destination spots in the United States, as well as a state that sees a lot of new residents every year. Florida has some of the most scenic beaches, and it’s also home to several amusement parks, making it a great place to invest in a vacation rental.
2. The Look
Once you’ve settled on a location and purchased your vacation rental, it’s time to incorporate some basic interior design concepts. You don’t have to go overboard on the decor of your vacation rental— in fact, the phrase “less is more” is something to keep in mind. You don’t want to have your vacation rental crowded with unnecessary furniture and decor pieces. As far as furniture goes, you should have the basics, and you should also have all of the basic amenities available for your tenants.
3. The Listing
The perfect location and the coziest decor won’t mean anything if your listing description doesn’t capture potential tenants. Your listing should be descriptive and alluring, but don’t oversell— keep it accurate while also highlighting the best features of your property. Some things that attract tenants are wifi access, cable TV/streaming services, small kitchen appliances, hair appliances, and a washer and dryer. Though vacation is a time for luxury, your tenants will appreciate some of the necessities much more.
Most listing sites allow for pictures, so take pictures of the property in the daytime with natural lighting. Highlight your property’s best feature: if your property has a pool, make sure to take pictures of it and make sure it’s available for your tenants to use during their stay.
Understand That You’re the Landlord and Your Reputation is on the Line
On listing sites, there’s usually a place for your former tenants to review their experience while staying on your property. Bad reviews mean that people are less likely to rent from you in the future, while good reviews will get you more renters and maybe even a steady stream of income. Being a good landlord means that you clean the property (or have it cleaned by a cleaning company) thoroughly between tenants, you ensure that your appliances and other amenities are in working order and that you are responsive and keep an open line of communication with your tenants. If you feel that you won’t be able to keep up with the maintenance of your vacation rental (especially if you live in a different city or state), then you can always hire a property manager to help you out.
There are Financing Options Available for Vacation Rentals
Some people can afford to purchase a rental property straight out, while others will need some sort of financing. It’s easy to find financing for residential properties and even commercial properties, so you may think that it’s harder to find financing vacation rental properties. Sometimes vacation rentals are considered to be residential rentals because they’re similar to single-family homes. However, VisioLending offers a loan program specifically for vacation rentals. You can check their site here.
Vacation rental properties are a very sound investment and can be a secondary or even a primary source of income when you put the time and effort into it. It’s important to do your research on the real estate market and even consult with seasoned real estate investors. Remember that not seeing a profit right away doesn’t mean that your property can’t be profitable. A return on investment in real estate takes time.