Buying a Vacation Home for Income Purposes? Here are 5 key items to be aware of when buying an income rental property.
A lot of times after purchasing your primary home, you may get the urge to buy another one such as a vacation home.
With companies/websites such as VRBO, AirBnB and HomeAway renting a vacation home and listing it for rent has never been easier. A lot of times, the thrill and fun of it can cause home owners to overlook potential issues. Here are 5 key items to be aware of when buying a home for the sole purpose of generating income via rents.
- Check local regulations for renting
- Don’t buy to please yourself
- Take it Seriously
- Hire a Management Company
- Know your numbers
Areas such as Santa Barbara, have actually come together to ban any kind of short term rentals i.e AirBnB, VRBO and HomeAway. The main concern being that short term renters tend to be noisy and disruptive. A regulation like this can absolutely kill anticipated potential income expected to come in from these websites. Your home can go from a cash cow to a money pit.
It’s key to remember that the home isn’t necessarily for you if it’s an income property. Therefore, make sure that the home appeals and fits the decor of the area. This will widen your customer base vs appealing to a smaller demographic with similar design taste to yours.
Once again, with so many websites out there making it easier to rent out vacation homes, it can easily become something that feels more like a hobby than actual business. Therefore, it is important you take your time assembling your listing, make sure to follow up with leads and most importantly set up your management company. Having everything in place from the start and done correctly can save you a lot time, headaches and make you more money.
Renting your vacation home can become a job in itself, especially around busy seasons. Therefore, it is important you hire a management company who will take care of all the details for you: cleaning, listings, lead follow up, etc… But don’t just hire any management company, be sure to do your research. Time and time again there has been horror stories regarding management companies. Don’t have your own story to tell. Ask around, ask your realtor, locals and even go visit the company if you’re in town visiting. Also, simple things such as looking on Yelp for reviews and recommendations can go a long way.
This may be the most important thing. You have to know your numbers, know what the area is renting for, know your desired break-even point and desired monthly/annual profit, and your overhead costs. Jumping into an vacation income property without this information can hurt your bottom and potentially put you in the hole. By knowing your numbers your chances for high profitability increase tremendously.
If you’re ready to buy your first vacation income property, our Luxury Real Estate team of Jason Barry can help. We will help you understand the market, look at your potential ROI and most importantly get you in to a home that you will love and will make you money. Contact us today at 858.756.4024.