With the rise of online platforms and property number around the world, more and more people are acquiring vacation rental properties. Not only can they be utilized as a home away from home, the rental aspect can offset the costs of owning the property. So, it’s really a win-win situation.
But, if you want to maximize your investment and create another income stream from it, you’ll need to do some serious research. It’s not as easy as just finding a property that captures your heart, because that’ll only lead to money loss more times than not.
To help you out, we’ve put together some vital steps that you can follow…
- Find a property
The first stage is to actually find a property; one which is located in an attractive area that receives plenty of visitors each year. But, also a property that is the type that you’re looking for. If you’ve done your research and due diligence, then you’ll have a pretty good idea in your mind, so you can go ahead and search online listings for that particular area. But, it’s suggested that you also seek a realtor, because they’ll be able to give you some further insight.
- Understand the costs
Just because it’s a solid investment, doesn’t mean it isn’t accompanied by an array of costs. So, before you commit to the venture, you should assess the costs and ensure that you can afford them. Some of the general costs include property taxes, occupancy tax, insurance, utility bills and financing costs. Plus, if you don’t have time to manage the property yourself, you’ll need to allocate money for management fees. But, taxes and enforcement vary depending on where your property is located in the world.
- Determine the earning potential
Simply put; the property needs to make financial sense, as you won’t it as a vacation home if you’re facing money problems. That’s why it’s imperative that you calculate the earning potential first. Once you’ve figured out all of your costs, you’ll need to research your area and find out what sort of nightly rate you can charge and the typical occupancy rate. Multiply the nightly rate by the occupancy rate percentage and then by 30 (monthly days). Following that, take away your costs to come up with a monthly income figure.
- Purchase the property
If you’ve found an amazing property that you absolutely love, and it makes sense financially, the natural progression is to actually purchase the property. Most people won’t have the ability to buy a vacation rental outright with cash; if you do, then go down that route. But, the majority will need to secure a loan to finance the property. Explore your options and find the best possible mortgage.
- Rental platforms
Once you have ownership of your property, you then need to forge a rental strategy that will make you as much money as possible. Nowadays, the best method by far is to list your property on established platforms, as that way you’ll receive the most exposure and visibility. Airbnb is arguably the most well-known, but there are excellent alternatives such as HomeAway and VRBO. It can become hectic to manage multiple listings and boost your rankings on each site, which is why many choose to opt for a management service.
- Manage your property
That leads us on nicely to that last step, which is actually managing your property. It’s all well and good sprucing up your listing and growing your visibility on the rental platforms, but the most important factor is the guest experience. With great reviews, your business will quickly expand. So, you need to take care of the cleaning, maintenance, repairs, as well as customer service. Of course, you can outsource most of that.
Why is a vocational rental such a great investment?
- It’s a wonderful form of supplemental income that will allow you to enjoy life even more.
- Most vacation rentals actually end up appreciating in price which equates to superb investment.
- You can benefit from an array of tax deductions.
- If you’re extremely interested in investment as a whole, it will allow you to get your foot in the real estate niche.
- When your property isn’t occupied by guests, you can then take a break and relax by staying in it.