Monday, 7 October 2019
Purchasing a vacation home can help you accomplish two goals at once—securing a special place to get away from it all, and serving as an investment property that will earn you rental income in the meantime.
But before you can start reaping the benefits, the first step is to find the perfect vacation home in the perfect location for your enjoyment and your investment. According to a recent survey, 65 percent of people who are in the market for a vacation home haven't decided where to buy.
If you're looking for the perfect spot to purchase a second home, ask yourself these five questions to help narrow your search.
If you want your vacation home to double as an income-producing rental property, it needs to be the type of place that other travelers want to visit. That starts with the location, so think about what would draw people to the area. Is it close to the beach, mountains or a lake? Is it in an area that's popular for sporting events or other activities that draw visitors?
In addition to the geographic location, think about whether the property itself would be attractive to guests. Today's travelers are increasingly interested in renting vacation homes, but you'll have more luck renting a home that offers updated amenities and unique charms.
While some of the best vacation spots are off the beaten path, today's travelers usually expect to have conveniences available close by. Find out how far the home is from the nearest gas station or general store. If there are restaurants in close proximity, even better.
If the home is in a city location, how close is it to restaurants, theaters, shopping, museums or other attractions. Homes that are close enough to walk or close to public transit can demand higher rents.
If you plan to use the property for your own family getaway, you may want to make sure it's within easy travel distance of your home. There's always a possibility you may need to go check on something—storm damage, a leaky faucet, a broken window—so close proximity can simplify your life.
Also, consider whether potential tenants can travel easily to the vacation property. Think about whether there's an airport or major highway within close proximity.
Of course, the price of the home must fit in your budget. But you also need to determine how much you may need to spend beyond the home purchase to make it ready and enticing for guests. Do you need to make repairs or updates? Do you hope to add a screened porch or an outdoor fire pit to make the place more homelike? Take time to figure out all the costs you'll incur and how much you'll be paying on a monthly or annual basis to keep the home in good shape.
Investigate other vacation rental properties nearby to determine how much you should charge in rent and how many nights each month you can expect to keep the home rented. Consider talking to a local real estate professional or real estate management company, especially if you plan to outsource the management of your rental. These professionals should be able to help you make income projections for the property. When you have a monthly income projection, subtract your monthly projected costs to determine the bottom-line income you can count on.
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