Timing matters in real estate investing.
Those looking for vacation rental properties in which to invest should act now to find the best deals and best properties. Late summer and early fall are ideal times to purchase your future Airbnb or weekly rental vacation property. Here is why this time of year is ideal for acquiring a new vacation rental property, how to find the best ones available, evaluate the properties, and how to close the deal before you miss your opportunity.
Why Late Summer and Early Fall Are Great Time To Buy Vacation Rental Property
My family has owned and rented vacation properties for generations. One thing we have learned is that the best time for investors to purchase a vacation rental is late summer or early fall. There are multiple reasons why this is the ideal time to shop and purchase a vacation property.
If you are shopping for a lakefront or waterfront vacation rental property in which to invest, you need to see the area in all its glory. Sure, winter skiing’s great, but most rental properties earn their money from May through October. The only practical way to see what you are getting is to see it when the property is in use during the season.
Most rental properties are rented to vacationers during the peak summer months, and few owners sell during this period. The temptation to earn a few more dollars or to enjoy the property oneself is just too great to pass up. Hence, many sellers place their vacation properties on the market around Labor Day. As an investor, you need to be ready for this short selling season.
How To Find Vacation Rental Property In Summer and Fall
Unlike the general real estate or rental property markets, the vacation rental property market is very limited. This isn’t new, but the pandemic has made vacation properties an even hotter commodity. With so few listings and investment opportunities, you need to be prepared to act.
Mashvisor is a great resource for any rental property search. Our heatmaps can help you see where the opportunities are at a glance. You can even do custom searches quite easily. A savvy vacation rental property investor will be searching actively during this period.
In many vacation areas, for example, the New England Lakes Region and in coastal towns, vacation property properties can sell in a day or so after they are listed. A weekly or even bi-weekly search isn’t going to be enough to capture all of the rare gems that may be listed. By the time you find a listing, it is likely to be under the agreement.
Therefore, it is important to have help. We suggest two strategies. First, phone all of the local realtors who specialize in rental properties. Give them your name and phone number and ask that they contact you if they have a listing being prepared. Most realtors know a week or more in advance before a listing will be created. By contacting them in advance, you may be able to find out a listing either just before, or the day of its listing.
Second, work with a local, experienced realtor who handles vacation properties as their focus. Do so formally and don’t hesitate to sign a buyer’s agreement with fair terms. Local realtors have the pulse of the region, and they all network with one another. By using a buyer’s agent you ensure that you are now tapped into that network and can find out about new listings quickly.
How To Evaluate A Vacation Rental Property
Mashvisor has great tools to help you to evaluate a property’s value as an Airbnb or weekly vacation rental. Use these tools to calculate your cash on cash return and return on investment. We also suggest going further. Learn the local market. What are the attractions? Which lakes offer which activities? Which parts of the coastal area are most desirable? Can your future tenants boat directly from the property, or will you need to belong to a communal beach and recreational area?
Most importantly, be certain that the type of rentals you hope to provide is allowed by local regulations. If there is a condo community or homeowner’s association, speak to the administrator and get a copy of the rules and regulations. If the local beach is for “residents only,” determine if that includes tenants on weekly rentals or Airbnb guests.
How To Close A Deal On A Vacation Rental Property
Vacation rental properties differ in many ways from traditional home purchases and even from general rental properties. In many ways. Paying cash is always helpful to closing a deal, but for a vacation property, will have greater importance. One experienced New Hampshire Lakes Region realtor told Mashvisor that most of her listings are cash sales. If cash is not an option, ensure that you are pre-approved for a mortgage and have a substantial deposit available. Offers with a financing clause may be ignored.
Similarly, a formal home inspection may not be practical or possible. However, we urge any vacation property buyer to always carefully check how the property’s water and wastewater are handled. This is a critical part of the evaluation that cannot be ignored. For example, the most recent property I purchased had neither potable water nor a working septic system. It cost over $40,000 to upgrade the property to livable. Be sure you know what you are in for.
Prepare For An Off-Season of Renovations
Those investors who purchase a vacation rental property in the fall can act fast to upgrade the property over the off-season. That window may be shorter than you realize. Many rural areas restrict trucking in winter and spring, and outside work can be impractical. As soon as you begin the purchase process, also begin to find contractors. Your goal after closing on a vacation property is to have it ready for a full rental season starting in late May the following year.
The Bottom Line
Late summer and early fall are the ideal times to purchase your vacation rental property. Purchasing a vacation property to rent can be an exciting and rewarding endeavor. Check out Mashvisor’s toolkit and see how it can make your search and evaluation process much easier. To get started click here.