There are numerous ways of making money in real estate. This is due to the fact that there are many investment strategies the house investor can adopt. When becoming a real estate investor, it is of high importance to properly choose from the available investment strategies. You need to pick a strategy that would suit both your personality and your business plan. It is important to mention that the best real estate investments are the ones where the chosen investment strategies correspond to the property type. Further, whether you are becoming a real estate investor or being a professional in the field, it is good to seek low risk investments in order to optimize your profits and avoid any losses.
Logically comes the question: “Is there such a rental strategy which allows making money in real estate with low risk investments?” Certainly, there is! You just need to learn how to make money in real estate with vacation home rentals. This is exactly what we will discuss today- the Airbnb rental strategy, more precisely vacation home rentals. If you are interested in further exploring the matter, check out “Vacation Home Rentals: All You Need to Know as a Real Estate Investor.”
#1 What Are Vacation Home Rentals?
Vacation home rentals are real estate investments that fall into the category of low risk investments. This is because vacation rentals are properties investors buy with the intention to use as their second or holiday homes. However, a typical rental strategy is to place vacation home rentals on the market of short-term rentals while they are unoccupied. This scenario is perfect as it will help you pay the mortgage on your property and help you in making money in real estate.
However, when becoming a real estate investor by financing vacation rentals, there are certain things you need to pay attention to. Interested? To learn more about this type of property, you can visit “Vacation Home Rentals for Real Estate Investing: The Pros and Cons.”
#2 Are Vacation Home Rentals the Right Rental Strategy for You?
When exploring how to make money in real estate with vacation rentals, be sure you check all the potential tasks you might need to do. Short-term rentals, in general, and vacation home rentals, in specific, require a lot of work in order to be turned into profitable real estate investments. This is because the guests of your Airbnb rental expect to have a holiday and not worry about their accommodation the whole time. This implies that your short-term rental should provide all the features a hotel room will.
For example, the property needs to be cleaned before and after every guest. Additionally, you need to make sure that your short-term rental has a nice, relaxing and welcoming atmosphere. Provide your guests with fresh and clean towels, blankets, sheets, toiletries and everything else they need to enjoy their stay.
Further, many people prefer vacation home rentals over hotels due to the fact that they feel more homey and comfortable. That is the case when guests are able to cook their own meal, make coffee, etc. Because of that, you need to make sure you have all the appliances needed. It is also a good idea to restock on supplies (coffee, sugar, salt, etc.) regularly. Last but not least, remember you are competing against all types of short-term rentals in the area. Consequently, you need to be on the top of your marketing skills to attract tenants.
Do you see yourself as an owner of vacation rentals? If “Yes”, let’s see how to make money in real estate by finding the best places to buy a vacation home.
#3 The Best Places to Buy a Vacation Home
The best places to buy a vacation home are locations which have a high demand for short-term accommodation properties. Additionally, such places should have some special feature that attracts tourists. This might be a large event that happens yearly, a beautiful beach nearby or many popular tourist sights. Regardless of what the feature is, the best real estate investments are the ones situated at a convenient distance from it.
This also means that connection to public transportation is always a plus when it comes to managing a short-term rental property. Imagine that you buy a vacation home by the beach. If you are the only one using it, you might decide to cut some expenses by buying a property further from the beach line. However, if you plan on renting the investment to Airbnb guests, this might influence your business project negatively. Tourists appreciate the view and the convenience of properties closer to the ocean.
#4 How to Buy a Vacation Home
Before you buy a vacation home, there are a couple of things to do. This is to ensure you are truly getting one of the best real estate investments on the market. The steps to follow are conducting real estate market analysis along with investment property analysis.
Real estate market analysis, as the name suggests, deals with studying the market- its current condition, future trends, supply and demand of real estate investments. Investment property analysis, on the other hand, explores various real estate metrics. This is done to identify if the chosen property is a good investment opportunity. Even though real estate market analysis and investment property analysis are a must, they are hard to complete manually. That is why most successful real estate investors use the help of the rental property calculator.
The rental property calculator is one of the real estate investing tools on the market. It computes all the metrics you might need in no time. Besides that function, Mashvisor’s rental property calculator will reveal the optimal rental strategy. Additionally, the tool will present detailed neighborhood and property analysis. If you are interested in learning more about this tool, make sure to read “How to Use Mashvisor’s Rental Property Calculator.”
#5 Owning an Airbnb Rental: Things to Consider
Here are a few things to consider before jumping in and investing in vacation home rentals:
Airbnb Rentals: Laws and Regulations
Different laws and regulations apply for every zone/ city/ state/ country. Be sure your vacation home rentals are consistent with the local requirements in order to operate your business successfully.
Airbnb Rentals: Reviews and Ratings
As previously mentioned, an Airbnb host needs to make sure his/her guests are satisfied and have a nice stay. This is of key essence as the online platform operates on the basis of Airbnb ratings and Airbnb reviews from your guests. This means that future visitors base their opinion on the reviews of previous guests. This is a “make it or break it” kind of situation. So, make sure you are the best host you can be.
Airbnb Rentals: Taxes
There are specific taxes that will apply to you. They might depend on how long you rent out your property, for instance. Other factors are if you live in it from time to time, your rental income you make, etc. It is advisable that you check and pay the taxes that apply to your situation. This is the way to prosper in the real estate investing business.
To learn more about all aspects of real estate investing, continue reading our blog.