How To Run & Own A Vacation Rental

The idea of owning a seasonal rental property is very intimidating for some investors. Instead of having to deal with one tenant a year, you are now forced to turn your tenants over weekly during peak seasons. In reality, a vacation rental may be a little more work, but it is not nearly the burden that some investors think it may be. Like any other property, you need to have a good system in place and focus on household items that can stand the test of time. The reward, in many cases, will be an income producing property that you can lean on for many years down the road.

Before you consider making an offer, you need to have a solid team around you. In most cases, a vacation rental will be outside of your investing area. This means that you need to reach out to local contacts before you move forward. Everyone from your realtor to a contractor, and possibly even a property manager, need to be lined up so you can quickly reach out to them in the event you need them in a pinch. If you buy the property and have to scramble to find a plumber, you could waste valuable time or pay much more than you have to. The property may be everything you want out of a rental, but if you don’t have a strong team in place it may not be worth the time and headache to deal with.

One of the common mistakes with rental properties is assuming that everyone will like the property. Just like any other investment you make, you need to have an idea of the market and the demand. Where will you find renters? What is the average monthly rental? What is the demand like in off seasons? Because it is out of your typical investing area, you need to spend more time researching it to make sure you know what you are getting into. Talk to as many local people as you can and find out everything about the area. Read as many local newspapers and go to as many local websites as possible. The area may be jumping in the winter or summer, but if there is no demand in the other seasons, you may be disappointed after a few months.

Renters for a vacation rental property will look more at the location than anything else. Amenities are always nice, but they are not nearly as important as they would be for the rental property in your local area. This means focusing on furniture, flooring and appliances that will get more use and be more durable. Instead of wasting money on expensive countertops or new carpeting, your money would be better spent on hard wood floor and furniture that fit the area and usage. If you have to constantly replace the couch or anything else in the property every year, it will eat away at your cash flow and impact your view of the property. A vacation house will typically have many more people in the house and the useful life of items in it will be much shorter. Focus on the location of the property and not the items in it.

You may have had a great time staying in the property or in the area, but are you buying the property for you to enjoy or as a part of your real estate business? You may think that if you buy a property you won’t have to worry about finding somewhere to stay next year and you will have somewhere you can go forever. The problem with this thinking is that you may sour on the area after a few years and be stuck with a property in a location that you really don’t want. There is a big difference between vacationing in an area one week out of the year and thinking a property will be a good acquisition in your portfolio. You may love the beach or love to ski, but will you feel the same way in five years? Don’t buy a vacation property strictly because you want an excuse to go back there every year. You may see value and opportunity in a location but treat each property objectively and like the investment that it is.

Because of the nature of vacation properties you need to be ready to turn them over much more frequently. This often calls for a strong property manager to find you qualified tenants and to keep your property booked months in advance. If you rely solely on the internet to find tenants only when you need them you are asking for an awful lot and hoping everything breaks right. The offset is typically a much higher rent total at the end of the month but to get there you need to constantly stay on top of the property.

Vacation rentals can be a great source of monthly cash flow and long term equity. These properties often come at a higher price tag and carry a much heavier work burden. Evaluate each property on its own and know everything about the market you are buying in. Keep your personal feelings and emotions out of the equation and look at the property on its own merit. Vacation properties can be hit or miss, but if you take your time and know what you are getting into, you will find much more hits than misses.