Buying a vacation rental property has always been a lucrative real estate investment. Despite their seasonal nature, the cash flow that they can generate in peak season guarantees a good return on investment. Moreover, real estate investors can choose between several types of vacation rental properties with varying levels of profitability and management requirements. One type of vacation home that is particularly interesting to real estate investors is snowbird rentals. This article will focus on snowbird vacation rentals and will go over all the pros and cons of investing in one.
What Are Snowbirds?
Snowbirds are renters that prefer to spend the summer in warm areas. Generally speaking, these are elderly couples that choose to leave their primary homes in the north and head to the more mild climate of the south. The most common destinations for snowbirds include Florida, Arizona, and New Mexico. The Florida real estate market seems to be leading the pack when it comes to attracting snowbirds. As a matter of fact, recent data from the University of Florida revealed that around 800,000 elderly snowbirds flock to the state every year. Needless to say, this has made snowbird rentals in Florida extremely profitable. Wondering where to buy a snowbird rental for investment in Florida? According to SnowbirdsDestinations.com, some of the top cities that welcome snowbirds in Florida are Daytona Beach, Fort Lauderdale, Key West, and Lake City.
Now that you’re familiar with snowbird rentals, let’s get into the pros and cons of investing in one.
The Pros of Investing in Snowbird Rentals
There are numerous advantages to investing in snowbird rentals. Furthermore, some of the selling points of these rental properties are entirely unique and quite compelling. Here’s a brief overview of the essential ones that you should know about.
1- Snowbirds are ideal tenants
This is one of the main reasons why a lot of real estate investors prefer snowbird rentals. Snowbirds are typically older and have more disposable income than other types of tenants. As a consequence, they are less likely to cause problems for the landlord. Owning a vacation rental property that caters to snowbirds decreases the likelihood of tenant-related issues such as rental property damage and delayed payments.
2- Snowbird rentals allow for a more aggressive pricing strategy
Like we mentioned above, snowbirds tend to have significant disposable income. This is the reason why they prefer to go for quality rather than cheap bargains. As a real estate investor, this is an ideal situation for you. Making your investment property as attractive as possible and marketing it to the right audience allows you to set high prices. As long as you get your investment property analysis right, you will be able to generate positive cash flow in the first year.
3- Snowbird rentals can generate rental income year-round
Snowbird winter rentals can generate income outside of peak season. Even if your sole focus is on snowbirds, areas with temperate climate can attract visitors year-round. This is especially the case in ocean-side states like Florida. Investing in snowbird condo rentals in such real estate markets will yield rental income throughout the year.
The Cons of Investing in Snowbird Rentals
There aren’t many drawbacks to investing in snowbird rentals. After all, these are rental properties that generate consistent cash flow and are occupied by ideal tenants. However, there are a few points that might discourage some real estate investors from relying on snowbirds.
1- The success of the investment strategy depends on marketing efforts
Tenants aren’t just going to flock to your investment property the moment you list it online. Snowbirds have a clear idea of what they expect from a short-term rental property and are not prepared to settle for less. Furthermore, the Southern real estate market is highly competitive. Investors who don’t know how to market their rental properties the right way will simply lose out to the competition.
2- Attracting snowbirds can be expensive
The most effective real estate marketing strategies tend to target high net worth individuals. This can prove too costly for many investors. Besides ad campaigns and other forms of paid advertising, making the vacation rental property itself attractive to snowbirds can get expensive if you don’t understand your audience. This is why it’s important that you study the demographic you’re targeting before setting a budget.
So, are snowbird rentals a good real estate investment? The answer is a resounding yes. The pros outweigh the cons by quite some margin and the return on investment that they provide to the real estate investor makes them a no-brainer option.
Let’s now delve into how you can get a snowbird rental strategy working for you by winter 2019-2020.
How to Get Started in 3 Simple Steps
If you want to get a vacation rental property up and running by winter, then you should start implementing a strategy right now. Snowbird rentals require a lot of preparation and delaying the process can cause you to miss out on peak season. In any case, here are the few simple steps that you should implement right away.
1- Start looking for the perfect snowbird investment property
Getting this step right is crucial. The type and quality of the investment property play a determining role in its ability to attract tenants. When searching for a property, you need to factor in all conveniences and amenities that your target demographic needs. Here are some examples of what snowbirds look for in a rental property.
- Proximity to golf courses
- An area with multiple shopping options
- Tennis courts and other sports facilities
- Good restaurants
One way to look for snowbird rentals is by using the Mashvisor Property Finder. This effective tool can help you zero in on the ideal investment properties for this strategy.
2- Get the rental property ready
Once you have acquired the vacation rental property, start getting it ready as quickly as possible. Do a general inspection of every area of the property and make sure to fix any issues that you find. As for the decor and furniture, try to opt for a style that appeals to older adults. This includes everything from comfy reading chairs and high beds to classy dining table sets and bright shades.
3- Market your property
Marketing snowbird rentals should start months before winter. The best way to go about this is through paid advertising. There are several options to pick from, but two of the most effective methods are Facebook ads and guest blogging. Starting this process early will allow you to do split tests and figure out what works best.
The Bottom Line
Snowbird rentals can be extremely lucrative if marketed correctly. The key is to start as early as possible and to stick to a well laid out strategy. Learn as much as possible about the housing market you intend to invest in and check out the Mashvisor blog to read up on more valuable tips.