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Vacation rentals are all the rage these days, and it’s no wonder why. The booming industry is generating billions of dollars and growing. These days, you can make a profit by renting your property to strangers throughout the year.
Although vacation rental properties can generate income, it takes effort and responsibility to maintain them. Before diving into property rentals, you’ll need to consider all the logistics to determine whether a rental property makes sense for your unique situation.
If you’re a first-time real estate investor, here are some smart tips for how you can start growing your wealth through a vacation rental:
Can You Afford to Take the Leap
Real estate purchases are some of the most significant purchases you’ll ever make in your lifetime. Even if you plan to use the property for rental income, it’s crucial to weigh the pros and cons before investing.
Trulia offers an easy, user-friendly tool to help you decide whether a vacation rental property is an affordable option. Plug in the numbers and Trulia will provide calculations to help you determine if it makes sense for you to buy an investment home in your unique situation.
Location, Location, Location
If you’ve decided to move forward with purchasing a vacation rental property, it’s time to consider some other logistics like property size and location. Although you might initially want a single-family home, you might want to reconsider. Many short-term rental customers book multifamily units like condos, duplexes, or townhomes. Meanwhile, millionaire investor Grant Cardone says multifamily real estate is “the best investment” for building wealth. If you’re trying to earn money rapidly, it might pay off to invest in a few condos instead of a larger house.
The location also factors into how much money you’ll earn. Some of the best locations to invest in real estate or rental properties include Arizona, Nevada, and Florida. Meanwhile, it might be best to avoid cities like Louisville, Cincinnati, or St. Louis, all of which made the Yahoo! Finance list of worst cities for property investment.
If you’re purchasing a property close to home in Scottsdale, you may be tempted to handle everything yourself. However, unless you’re an experienced property manager with plenty of free time on your hands, it’s usually better to hire someone.
Professional property managers handle everything from daily upkeep to unexpected emergencies. Hire a qualified agency that offers 24/7 local support, a professional-grade cleaning for in between guests and even keyless entry. Entry codes can be automatically updated between bookings to keep your property safe and secure and eliminates the potential for random keys to your house floating around.
Staging is something many homeowners overlook, yet it can significantly improve your chances of renting your home. To increase your chances of a fully-booked property, invest in some relaxing decor, then take some well-lit photographs. Before capturing your rooms on camera, open the curtains and turn on all lights. Hang colorful artwork on the walls, invest in some comfy bedding, and add some texture to a room by draping a throw across a bed or couch.
Vacation rentals can be a lucrative way to start building your wealth, but only if you take the time to consider the logistics. With careful planning, proper maintenance, and thoughtful decor, you can start earning some extra income. Choose a property and location that makes sense for your guests and your wallet. It’s also a good idea to stay overnight in the unit yourself sometimes, too. By seeing the property from the angle of a guest, you’ll get a fresh perspective on what maintenance and final touches to add. Although there are no guarantees in real estate, consistent care and commitment will help you get the best return of investment for your property.