Most rental real estate investors are buying, fixing and renting to long term tenants on six month or one year leases. But consider this; a vacation rental can go for 25% – 50% more per week than your regular long-term monthly rental rate in only 1 weeks’ time. Intriguing right? It’s become easier than ever to list and keep rental properties full with sites like homeaway.com and vrbo.com where vacationers find you.
The income potential of buying an investment property in a vacation-friendly area – say lake front at Lake Tahoe or near a beach on the Southern California coast opens up huge opportunities for constant income. Pick the right location, update the home with the right amenities and hire the right property manager to oversee the coming and going of each group and you could have that property full most of the year (weather and vacation trends for the area permitting).
Here are a few things to keep in mind when shopping for the perfect vacation rental investment.
- Pick a location you know or have traveled before. If you’ve been there you are already familiar with the amenities, types of travelers that frequent the area, attractions, restaurants, Etc.
- Make sure the property is accessible for novice travelers. Let’s say you chose a gorgeous cabin in the mountains but it’s off the grid (only on solar power) and it’s a treacherous road to get to even in your 4×4 pickup. It will likely not be accessible and therefore vacation-friendly for a broader spectrum of traveler.
- Buy cheap, renovate and then rent out. Most top value vacation homes are already too pricey to bother with –the post-renovated price tag on them will keep your profit margins too low for too long. Assess how much time you want to spend to recoup your losses on the initial investment, and then hunt from there. And keep in mind- sometimes ‘shabby chic’ is in so survey the area and only make the appropriate level of renovations.
- Location is the MOST important piece of this type of investment. Unlike most fix/flip investments where any decent neighborhood with a diamond in the rough will do- for this type of venture, the location is the most critical piece to ensure long-term success.
- Have professional photos taken of the property once it’s renovated, staged and ready to list for vacation renters. People house hunt- even for vacation homes with their eyes so make it really stand out.
While this track of investment may not have been at the top of your mind – it’s a hot market to get into with more and more families opting for group road trips instead of flying somewhere far away and exotic. There are many popular US locations that need more well maintained and manage privately owned rental properties – and you may just be the right investor to take on the challenge! Good luck.