First-Time Real Estate Investors - Consider Purchasing a Vacation Rental Property
Vacation rental homeownership rose 16.4% in 2020 according to the National Association of Realtors. The hot market for owning a vacation rental has exploded due to more people working remotely. If you’re thinking about buying a vacation rental, here are the steps you should take to ensure your property turns a profit.
Choose the Right Location
It’s important to find a location that visitors flock to if you want to invest in a vacation home rental. Places that see lots of tourists include the beaches of North Carolina, ski resort areas in Colorado, Central Florida with its many theme parks and easy access to both Florida Coast lines, the mountains in Tennessee, and the islands of Hawaii. Look for places that have a healthy mix of attractions, restaurants, and natural scenery.
Find a Profitable Property
Once you’ve chosen the location and neighborhood, then work with a real estate agent to choose a property. Look for a property that is close to transportation hubs and restaurants or attractions. Ideally, choose a unit that has a history of successful rentals as a vacation home, so you don’t have to start from scratch.
Set Yourself Up as a Business
Real estate investors also have to treat their property management plan as a business. Instead of running the business as a self-proprietorship, consider filing your new venture as an LLC. Doing business as an LLC instead of in your name may help you keep your personal assets protected in case of a lawsuit. There are different ways to get started with filing, such as contacting a corporate lawyer to help or using a filing service. Creating your LLC in Florida with a formation company could help you save money on startup costs.
Invest in Projects That Pay Off
Next, take on some home improvement projects to help make your investment home more attractive and marketable to renters. Update the kitchen and bathroom if needed and invest in clear, spacious parking for your rental home. Boost the home’s curb appeal with a fresh coat of paint and gorgeous landscaping.
Furnish Your Vacation Rental
Another essential is to furnish your vacation rental with items that look great but are also durable. Invest in a quality mattress for your guests so they don’t leave bad reviews after a poor night of sleep. Pick furniture and decor that reflects a certain theme or style, so your vacation home stands out from other rentals on the market. The best choice is likely to hire a company with track record for success to do it for you.
Attract Quality Renters
After you have remodeled and staged your rental, next, it’s time to start marketing your property to potential guests. Renting out a property starts with professional photos, a listing on a rental site, and a solid rental contract for you and your guests. Other tips for renting out your property include investing in insurance, equipping your home with Wi-fi and electronics, and collecting guest feedback.
Manage Bookings and Stays
Finally, make sure you have a way to manage your guest bookings and track payments. You may want to use a rental listing service or a property management company. Price your vacation rental according to amenities, the home’s size, and the rental market in the area. Understand tax requirements from the IRS when you get rental income from a vacation home.
Starting a new business as a vacation homeowner is a big step into entrepreneurship. You can find success if you focus on these elements of the vacation rental business.