Many buyers are interested in purchasing a vacation rental for passive income or to fund their second home purchase. Vacation rental property owners have a direct impact on the income received from rental properties. Having comfortable furnishings, location-appropriate decor, updated appliances, and housewares are just one step in the right direction.
Here are 10 tips when buying and establishing a vacation rental:
- Do Your Research – ask for rental history, search local management websites to view rates, and search VRBO and AIRBNB to view rental information such as seasonal rates, cleaning fees, resort fees, and remember to look at calendars to see what is renting. Sometimes smaller homes do just as well as the larger homes when compared to purchase price.
- Location, Location, Location – Most important words in real estate, proximity to the beach versus sales price – what works for you!!
- Realtor – Work with a REALTOR familiar with the area, preferably someone that has managed personal rentals, and collect as much information as you can.
- Lender – Identify your lender and get preapproved. Ask your REALTOR for a referral, they know what lenders successfully close in the area.
- Insurance – Rental insurance is higher priced than primary and second home insurance policies. A Realtor that knows the area can refer you to agencies to collect quotes.
- Existing Furnishings and Décor – if currently a successful rental, ask for furnishings, décor, and housewares to be a part of the sale. Ask for Refrigerator, washer, and dryer, those are large ticket items and are currently on the now infamous COVID backorder.
- Property Manager – determine if the local area property manager works for your interest and your budget. Property manager fees usually range from 20% to 30% or you can elect to Self-Manage.
- Have time to Manage Your Own Property? Find the investment property, prepare home, identify local cleaning and maintenance services, take high-quality pictures, set up your guest-friendly home on sites such as VRBO, AIRBNB, Bookings.com, Travelocity, etc. and be responsive.
- Update your home – LINENS, keep nice LINENS and buy extra as they disappear or get damaged. For example pillowcases, not sure what the guest would do with pillowcases, but they disappear and towels will disappear at the beach. Don’t forget the cooking appliances and utensils, wine openers, strainers, soup pots, and salt and pepper. Amazon has hotel-size items such as soap, shampoo, sunscreen, toothbrush and paste, and other items available for purchase. Also, beach chairs and toys are a nice touch.
- Friends and Family – if you share your vacation rental, always have the cleaning service clean after your guest. Your definition of clean may be different than your guest. Tell family and friends, “I am happy to share my income property with you, and to make your last day more enjoyable the cleaning service will arrive shortly after your 11:00 am check out time and the fee is XXX.XX”
Buyers must do the due diligence and research pricing, surrounding area, competitors, target customers, lenders, insurance carriers, furnishings, and develop a property support system. If you are interested in purchasing a coastal vacation rental call Carter Coastal Realty. 979-341-9293