Vacation Homes as Investment Opportunities
Finding a vacation property to buy is a little more complicated than just picking a place you find appealing enough to use as an occasional getaway and possibly as a retirement home. There will be many months that you won’t be inhabiting the home so you want to be sure it is in a location where there will not be problems attracting short-term renters.
This means your priorities are somewhat different than if you are simply investing in long-term property rentals that you don’t plan to occupy.
Here are some tips when looking for a vacation property investment:
- Work with a professional real estate agent who specializes in second home and vacation rental properties and who knows the market.
- Make sure your Vacation Home rental plan is in line with your overall goal. Do you want to profit, break even, or simply help fund the property's mortgage with occasional renters?
- After you buy your vacation rental, we can often advise how to best promote it. In vacation areas, your property faces competition not just from other rentals, but from every hotel and resort in the area.
- You should use every possible resource to market it including the Internet, a listing agency, and print publications. It takes some research to find the best ways to market. For instance: if your vacation rental condo is in Florida, focus on attracting the winter visitor market (commonly called snowbirds) by advertising in publications and on online sites in the Northeast and in Canada. If your property is a luxury home, you should consider advertising in magazines that attract an upscale readership. Search engine Internet advertising is also crucial with more and more people booking their entire vacations online.
- Special touches can make your rental stand out from the masses. Short-term renters say some of their favorite touches are when information on local attractions and activities is waiting for them along with restaurant recommendations and menus and local discount coupons. And you can really create excellent word of mouth advertising by having a basket of snacks, coffee and teas waiting for your renters and having a DVD or CD player with movies and music selections available.
- Word of mouth fills many vacation rental properties. You will want to encourage repeat rentals and referrals by offering incentives like discounts, referral fees and off-season specials.
If you do not live near your rental property, you’ll need a local contact – preferably a property management company to handle rentals, clean-up and ongoing maintenance. Depending on their services, they may also be able to refer potential renters, for a fee. Your local Real Living Professional can help refer you to a reputable firm.
Short term vacation rentals offer many opportunities, but they do create special tax considerations. It’s a good idea to consult with a tax accountant about the tax implications of short-term rentals.