Real estate investing needs a little bit of wit, some savvy, and a whole bundle of hustle! Establishing a real estate business can help you enjoy life through a steady income. Does that sound like something you desire? If it is so, the real estate business is one built within a changing world, things constantly change, and skyscrapers are constantly getting taller! Accordingly, real estate investors have found that a diversified investment portfolio can protect their investments even when the market is low. Therefore, real estate investors buy different types of properties, such as condos, apartments, houses, studios and, most importantly, vacation home rentals.
Vacation home rentals are the perfect addition to every investment portfolio. There is a large demand and a constantly increasing supply to meet it. Real estate investors are usually hesitant to enter the vacation home rentals market as it can be more unpredictable than the usual long-term traditional rentals. However, the rental income generated by vacation home rentals is significantly higher and is considered to be a huge advantage to this real estate investment strategy.
Whenever you’re making any type of investment, you must take the proper measures to protect your investment and ensure it’s a successful one. There are two things you can do to ensure you are getting the most out of your real estate investment.
Steps to take before you buy vacation home rentals
Analyze this and that
Buying vacation home rentals as investment properties is no different than buying any other type of real estate. By considering your vacation home rental property an investment, you automatically must analyze everything that surrounds it. This includes conducting an investment property analysis and a real estate market analysis to make sure you’re getting your money’s worth. Additionally, you can find the real estate comps of the property through a proper real estate market analysis. Doing so can give real estate investors a clear idea of the market value compared to other similar properties and what property appreciation to expect.
Another important tool to use is a rental property calculator. It can be endlessly beneficial when you’re renting out your rental property as a short-term rental or a long-term rental. A rental property calculator can help you get approximate figures of what rental income to expect. Whether you’re buying a house or an investment property, an investment property analysis conducted through Mashvisor offers great accuracy.
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Study the location
It’s nothing new to emphasize the importance of an investment property’s location. Real estate investors who are buying vacation home rentals can spend months looking for just the right one. Here are a couple of points to consider that make a good location for vacation home rentals:
- The neighborhood
The neighborhood is so important whether you’re buying a vacation home rental or a traditional rental. Real estate investors always go for a vacation home rental in neighborhoods that offer many amenities and proximity to attractions. It’s always good to remember that the nicer the location, the more you can charge for the property.
- Area attractions
The area attractions are everything when buying vacation home rentals. It’s your duty as a real estate investor to ensure that your property will be satisfactory to whoever uses it. Assuming that you buy a rental property near the beach, you must ensure that the beach in that location is desirable enough to attract bookings. On the other hand, it’s not recommended for real estate investors to buy vacation home rentals in a location that’s rural. However, in some situations, a secluded location can be an exceptional experience that’s remarkable enough to drive constant visits towards it.
Dig deep into the condition of the property
If you’re buying an investment property, you don’t want to buy a fixer-upper unless you’re intentionally doing so! Conduct a proper home inspection to make sure everything is in good condition. If there are any issues with the potential property that can cost you money, the home inspection will point it out. Investors must be going through the nooks and crannies to find every detail about the property. As a result, you might be able to find things that can help you negotiate the price.
Steps to take after you buy vacation home rentals
Market your property through many channels
Most real estate investors stick to one vacation rental site when it comes to listing vacation home rentals. By doing so, the investor can be missing out on many potential bookings and many visitors that can be easily turned into bookings.
There are multiple booking channels available for real estate investors. This may not be the case if you choose to lease your vacation home rental as a long-term rental. This can result in missing out on a larger sum of rental income.
There are multiple worthy channels to advertise vacation home rentals through, such as Airbnb, HomeAway, VRBO, and Hotel Program.
Lower your rates during low season
This is a pricing strategy designed to boost your business by comparing what you offer and what competitors offer. During a low season, it’s recommended that you browse and adjust your prices accordingly. This may not be the case during high seasons for vacation home rentals, but it helps the real estate investor to ensure that rental income is constantly generated.
Maintain a high response time
If you’ve ever rented an Airbnb rental, then you know that a quick response from an Airbnb host can increase the chance of you booking the rental property. Make sure to provide complete information and establish a personal but professional connection with the potential guest.
Consider hiring a professional property management firm
While hiring a professional property management might sound like someone is slicing a piece of your profit away, it can be valuable for many investors. By hiring a professional property management firm, you will be free to relax and cash the checks. Meanwhile, they take on most responsibilities with the guests for you without having to deal with almost everything firsthand. Keep in mind that hiring professional property management transforms your investment into passive real estate investing.
Vacation home rentals offer a lucrative opportunity that real estate investors can capitalize on. It’s up to you to find the best property and the best real estate investment strategy to utilize it. Just make sure to carefully adjust your expectations to the local market of the vacation home rental.