Follow These Tips to Make Sure Your Vacation Rental is a Smart Investment

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By Janet Campbell of Elder Spark
*Check out her other articles: Leaving Your Senior Loved One With a Caregiver: 4 Essential Tips and

Follow These Tips to Make Sure Your Vacation Rental is a Smart Investment

Vacation rental properties are in high demand, which is why getting into this market can be such a smart way to grow your wealth. But for first-time property investors looking to change up their investment strategies, there is a learning curve. There is a lot to consider, like getting a mortgage, financing your down payment, and the location and type of property you want to purchase. You don’t have to be an expert, but you want to start out with some basic dos and don’ts to avoid making critical mistakes. Use these tips to make wise decisions every step of the way.

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Why Jump Into the Vacation Rental Market?

Buying a vacation rental is a smart way to get into the market for several reasons. For one, you get to enjoy the benefits of owning a vacation home that you can use when you want but that also generates income. The real value is in building wealth as a long-term investment, but that additional source of income is nice to have too. Another advantage is that the high turnover of vacation rentals (as opposed to long-term rentals) allows you to learn quickly and adapt to improve your rental rates (and your bottom line).

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What Do Investors Need to Know?

Even though you will learn as you go, there are a few key factors to consider during the planning and home-buying process.

Business Entity

When purchasing a rental property, many homeowners choose to set themselves up as a limited liability company to protect themselves from possible litigation. To create an LLC, you can hire a lawyer, but the cheapest and most efficient option is to use a formation service.

PRO TIP: About half of U.S. states charge between $200-$800 per year in annual report fees (due every year) while the other half charge less than $100. We recommend doing research on the annual report fees in the state, or country, that you plan on having your vacation rental in. Additionally, to save money on the service fee for setting up the business, we recommend using this site to register your company.

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Location

When you buy a property to use as a vacation rental, the ultimate goal is to keep it rented consistently and for top dollar. This is why it’s important to choose a location that’s in high demand no matter the season. Whichever neighborhood you land on, USA Today recommends finding a property that’s easy to access and convenient to nearby amenities. This is especially important for urban vacation rentals because tourists want to see the sights without going through a lot of trouble to get there.

PRO TIP: Research the market using www.Airdna.co to find the most profitable areas and find affordable properties using sites such as Padmapper, Facebook marketplace and Craigslist.

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Features 

Along with location, you will want to think about the features that guests will want when choosing a property. Start with the basics like deciding on the right number of bedrooms (are you catering to families, groups, or individuals?), a well-equipped kitchen, plenty of space for guests to relax, sunlight in the main living area, and outdoor spaces so guests can make the most of the beautiful weather. Besides the basics, be prepared to outfit the property with all the comforts of home, including plenty of nice linens, toiletries, WiFi access, and potentially a high-chair or crib if you’re catering towards families.

After purchasing your property, it’s worth spending a little time and money on décor that will wow guests. For example, if you’re buying in a coastal area, browse the internet for coastal design ideas. Another easy way to get ideas is to look at other vacation rental properties, like these featured by Good Housekeeping, to see what kind of décor is popular.

PRO TIP: EatWanderExplore generally searches for 2-bedrooms, 2-bathrooms, full kitchen, washer, wifi, dedicated workspace, crib, high chair, and (if public transportation isn’t easily accessible) free parking on premises. Depending on the weather that we are traveling in, we’ll also look for an air conditioner or heater. Many Americans also desire a dryer as well. Pictures speak 1,000 words, and we definitely look to see if the places are stylish. APT2B has some amazing decor and furnishing options that’ll really “wow!” people!

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The Nitty Gritty

Even when you’ve found the perfect property, you can’t expect it to market, rent, and maintain itself. This isn’t an investment you can just buy and forget about. You have to look at it as a business - and be sure to treat it like one. Go ahead and look into strategies for handling maintenance, listings, and supplies. You will also need systems for keeping records of everything from cleaning and maintenance to tracking tenants.

If you don’t have time in your schedule to take on these responsibilities or if you live a long way from your rental, hiring a property manager is an option well worth considering. Not only can a property manager help maintain your property, but some management companies allow guests to book online, and they offer professional cleaning services and round-the-clock in-market support. The more your guests enjoy staying in your home, the more likely they will be to book it again and leave positive reviews for other renters.

PRO TIP: You can also easily rent out your property by becoming a host on Airbnb or VRBO. We recommend finding a cleaning team that will turnover the property for you so you don't have to lift a finger by using turnoverbnb.com.

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Vacation Rental Summary

Owning a vacation rental isn’t a full time job, but it does require a little effort. These crucial details will factor into your budget, which is why they should be part of your plan from the start. The good news is that most of the work is done upfront, and once you’re up and running, your hard work will start to pay off.

By Janet Campbell of Elder Spark
*Check out her other articles: Leaving Your Senior Loved One With a Caregiver: 4 Essential Tips and Tips On Traveling With Grandparents And Other Seniors

More Information on Rental Income Properties

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