The Ins and Outs of Investing in a Vacation Rental
Investing in a vacation rental home has gained a lot of popularity over the last few years. Vacation rentals are an alternative to hotels that are generally rented out between a couple of days to a month. Due to increased activity of using the internet and social media to find vacation lodging, opportunities have opened for real estate investors. If you are interested in investing in a vacation property, get in touch with broker associate Eileen Kedersha of ONE Sotheby’s International Realty, and look to the below information to help get you started.
When considering where to buy a second home, you’ll want to find a place that will attract guests more than a couple of months out of the year. For instance, vacationers are drawn to Fort Lauderdale for a variety of reasons, according to Turnkey, including easy access to the beach or inland waterways. A waterfront condo or townhouse are a hot commodity and should be relatively easy to rent out.
Find a vacation rental that can start out as a dual-use property. This means a vacation rental where you can stay for a portion of the year and rent to guests for the rest. Not only will you get the tax benefits for the time you’re using it, but the house will be continuously occupied.
The return on your investment will all depend on how much you spend and how much work you put in. Of course, you can adjust the rent based on demand and peak seasons, but the base rent and how often it’s rented out will depend on your efforts.
Whether you get a rental-ready house, a fixer-upper, or a brand new construction, there will be expenses that come with purchasing the property, designing it, adding security measures, installing strong WiFi, and installing smart features. Also, there are other amenities you will probably want to set up. To ensure you have the house rented out enough, you’ll want to use all options available to you, such as: Social media
- Travel agents
Investing in hiring a good photographer to take pictures of the home and show it in its best light is essential to bringing in renters. Develop a hashtag that you can use and your guests can use when posting pictures of their stay (note: this is free publicity). Use every avenue you have to actively promote your home; how much you get out will reflect how much you put in.
Managing the Property
Initially, you may find it is easiest for you to manage the property. As you get started, you’ll want to pay attention to the details and keep expenses low wherever you can. As you notice a steady stream of income and managing the property is feeling like a second job you don’t have time for, you may want to consider hiring a property management company.
A property management company can charge anywhere between 20 to 50 percent of the rental amount, but they will take care of your needs and serve as a point of contact for your guests. It’s also an option to hire part-time managers or people to handle various aspects of your rental.
If you’re willing to put in the time, effort, and money, vacation real estate can turn out to be a great investment. Do your research and carefully select your location, and consider staying there yourself for part of the year. When you’re figuring out your budget and base rent, factor in all the expenses it will take to bring the property to its potential. Finally, make sure the property is managed sufficiently, whether you do it yourself or hire a company.
Take the first step of investing in a vacation rental by contacting Eileen Kedersha 954-462-3600 today!
Contributing Editor: Brittany Fisher