A vacation rental is not just an investment, it can also be an escape. Some people enter the vacation rental market purely for profit, others to diversify investments, and some are currently trying to leverage rental income to make the dream of owning a second home in a desirable location a reality.
If you are thinking about purchasing a vacation rental, here are some key things.
How much house can I afford?
If you can purchase the property for cash, that’s great! If you plan to use financing, it’s important to keep a realistic budget. Many vacation rentals are seasonal and even peak seasons can be disrupted.
To help pinpoint what you can afford, create an annual budget with some cushion. This way you’ll be able to pay the basic expenses out of pocket even if you have a few bad months.
Will I be able to keep a steady flow of rental bookings?
The most successful vacation rentals have something that isn’t easy to replicate so that you may just have to get creative. That special something is often the main factor that keeps your property rented in the off season and allows you to demand top dollar during peak season.
Properties with a view amenities, and a location that’s close to traveler destinations will inherently help keep your rental booked while others lay vacant.
Is there a Homeowners Associations (HOA)?
Some states are considered vacation rental friendly states, but many properties are accompanied by a Homeowners Associations (HOA) that can greatly restrict rental capabilities in your community.
Before you buy, carefully review the rules that govern your property. Understand what it might take to change the governing rules, and if any CC&Rs (Covenants, Conditions, and Restrictions) exist for your neighborhood that can also restrict rentals even when there isn’t a Homeowners Association present.
How much should I budget for home maintenance?
Every home requires maintenance. How much depends on the age, amenities, and structure. If you have a private yard and pool, carefully consider the cost of keeping these amenities looking great year-round.
For all properties, think about the day to day of what may require repairs. We advocate a proactive maintenance schedule to help prevent last minute emergencies, lost bookings, and negative guest reviews.