Making money in real estate as well as having a place to spend your vacation are the two main reasons for buying vacation rental property. Yet, many Airbnb investors make serious real estate mistakes when financing a vacation rental property. Consequently, buying an investment property may bring huge troubles to Airbnb investors if not tackled with care. To help you in the process, we are presenting 7 of the most common real estate mistakes when buying vacation rental property. So, if you want to go through the process of finding rental property like one of the expert real estate investors, make sure to read this blog.
#1 Real Estate Mistakes: Making an Emotional Investment
Let’s begin with one of the most important real estate investing for beginners tips: DO NOT make rushed decisions. Many future Airbnb investors decide that they want to own a vacation home after having a great holiday in a certain spot, for example. Unluckily, decisions based on emotions might cause serious troubles in the future.
A well-thought-out decision of buying vacation rental property should be based on a valid real estate market and investment property analysis. Finding rental property is not easy as there are many underwater rocks. Make sure to consult expert real estate investors. However, always start with asking yourself “Do I really need all this?”
#2 Real Estate Mistakes: Not Sticking to a Budget
Covering the monthly mortgage payments is not the only cost you will have when owning vacation home rentals. We can use this to provide you with yet another tip for real estate investing for beginners. You should always plan ahead every expense you may have. Expert real estate investors know that with vacation home rentals, certain costs come along. For example, various repairs and renovations are likely to be required. In addition to that, you can add expenses such as restocking goods and monthly bills.
Moreover, many new investors forget to include the cost of furniture. You may not think about it right now, but furnishing vacation home rentals may cost you a pretty penny. Therefore, consider buying vacation rental property that is already furnished and requires minimal repairs.
Create a budget and try to stick to it as much as possible. In order to do this, you can assess whether or not a repair/ renovation/ décor change is worth the money. This step is of crucial importance as not sticking to a financial scheme might quickly spiral out of control and harm your business.
#3 Real Estate Mistakes: Underestimating the Effort of Managing Vacation Home Rentals
Finding the best place to buy vacation rental property and buying it is only half of the job. When Airbnb investors plan on making money with vacation home rentals, they should be prepared for hard work. First of all, if you want your Airbnb properties to prosper, after buying an Airbnb investment property, you should create a marketing plan. Having your Airbnb occupancy rate high is proof that you are doing everything right.
Second of all, you should be constantly online in order to provide fast and accurate answers to your tenants’ questions. Consequently, your tenants will reward you with positive Airbnb reviews. The latter is supposed to increase your Airbnb bookings.
Finally, you should ensure that your place is clean, tidy and well maintained. To keep vacation home rentals in great shape takes a lot of effort. It is good to be prepared for this when buying vacation rental property.
#4 Real Estate Mistakes: Buying an Investment Property Without Checking Laws and Regulations
You should know that not every seller will tell you the truth when selling investment properties. Consequently, we come to another real estate investing for beginners tip. You should always check the rules and regulations of a certain city or state before investing in it. Let’s explore one situation. You are buying an investment property with the purpose of renting it out as an Airbnb rental property. However, the rules in the city state that renting out short term is an illegal activity. Thus, you end up in a bad situation where you need to pay the mortgage, and yet, you cannot place your investment as an Airbnb rental property.
Additionally, there is another situation where short term rentals are allowed. Nonetheless, there are tons of restrictions that will negatively influence the rental income. Consequently, you should always double check if a certain location is Airbnb friendly before buying vacation rental property. Interested to know what the top three cities with strict Airbnb regulations are? Make sure to read “Top 3 Cities in the US with Strict Airbnb Regulations.”
#5 Real Estate Mistakes: Forgetting to Research the Neighborhood When Buying Vacation Rental Property
It is true that it is easy to fall in love with beautiful vacation home rentals. Yet, before buying vacation rental property, make sure to research the neighborhood. You should have a clear understanding of whether it is a paradise for spring breakers or a quiet residence for retirees. Of course, Airbnb investors should always base their decision-making process on the main target group they are trying to attract. Interested in learning how to do neighborhood analysis? Make sure to read “How to Do a Neighborhood Analysis in Real Estate.”
#6 Real Estate Mistakes: Not Using a Coastal Home Inspector (for Coastal Vacation Home Rentals)
With vacation home rentals, many Airbnb investors imagine a beautiful beach house like in the most famous TV shows. However, in order to become an owner of this type of vacation home rentals, you need the help of a proper inspector, who will see the unseen. When we are talking about coastal vacation home rentals, you need a coastal inspector and not your friend from the town, for instance. The thing is that coastal inspectors know how to check beach houses. Consequently, they will pay close attention to such aspects as the strength of the wind, wind-driven water, salt air, etc.
#7 Real Estate Mistakes: Not Doing Your Homework
The last real estate mistake on our list is not doing the homework properly. This actually is one of the most serious mistakes. A real estate investor should know how to research and find the best place to buy vacation rental property. Consequently, he/she should use real estate investing tools when doing the research properly. For example, Mashvisor’s Airbnb profit calculator is a great tool when it comes to buying vacation rental property. This Airbnb profit calculator will present you the best place to buy vacation rental property based on the results of predictive analytics, return on investment analysis, investment property analysis, etc. Curious to learn more about the Airbnb profit calculator? Make sure to read “How to Use an Airbnb Profit Calculator to Make the Most Money as a Host.”
Finding rental property for the purpose of renting it short term is a great way of making money in real estate. Nevertheless, it is not as easy as it may look. This is due to the fact that there are many real estate mistakes that the investor could make. However, buying vacation rental property can become a pleasurable activity if you use the right help! To learn more about how we will help you make faster and smarter real estate investment decisions, click here.