Buying a vacation home is not something you do on a whim. It is a significant investment that can be extremely profitable if done correctly. However, the perfect vacation home doesn’t just appear out of nowhere. It requires careful thought, planning, and patience to be successful. If you think you’re ready to jump into the exciting world of vacation home ownership, consider these things first:
Location, Location, Location
It’s no secret that in real estate, location is the most important factor for success. You can have a beautiful home with all of bells and whistles, a rock star marketing plan and excellent customer service, but if you are in an area that nobody wants to go to, it is all for nothing. When picking a location, consider areas that are popular travel destinations and ideal for vacationers. Also, keep in mind the areas that you would like to visit since you’ll be able to use the home for personal use when it’s not being used by guests. Keep in mind that not all beaches, mountain ranges, and theme parks are created equal. Just because an area is popular with tourists doesn’t mean it is suitable for vacation rentals. For example, Martha’s Vineyard is a popular tourist destination, but high property taxes and rental regulations make it difficult for vacation homes owners to be successful. Instead, owning property near a southern California vineyard will enable guests to explore the area like a local, while also proving profitable for you.
If you’re considering buying a property in an area that is unfamiliar to you, rent first before you buy. Get to know the area to make sure it’s a place you can see yourself coming back to again and again.
Balance Your Budget
Just as you did when buying your primary residence, you have to make sure the vacation home you are buying fits in with your financial plan. It’s not just buying the house and furnishing it that you need to consider. Consider all the factors such as maintenance, property management, property taxes and insurance that you will be responsible for.
Calculating exactly how much the property will cost you each month will help you determine a rental rate that will cover these expenses as well as generate a profit. When repairs or maintenance issues pop up at a vacation rental, you don’t have the luxury of getting to it when you can. These issues need to be taken care of immediately so you can continue to provide guests with a quality experience. Not having the money to fix a problem is not an option, so before you buy, make sure you’re aware of what it’s going to cost in the long run.
Estimate Your Rental Income
Some vacation homeowners are planning to use the income from their rental property to cover expenses and hope to have a little money to “play” with left over. Others have big plans for their passive income, such as traveling or investing in another property. Determine exactly what your expectations are for your rental income to help you set realistic rental rates. Do your research to see what other similar rental properties in your area are going for and price competitively. If this part of the vacation home ownership process seems overwhelming, a professional property management team like Gia can help you break it all down. In the beginning, keep your rental income estimate conservative, as the first few months are all about trial and error. Once you get a few months of rent under your belt, you will be able to reevaluate your rental rates to stay consistent with your goals.
Think About Safety
Before you buy, take the safety of the local neighborhood into consideration. Check into the local crime rates and talk to neighbors about the overall safety of the community. Since you won’t be at the property all of the time, it is essential to put precautions into place to keep your property safe while you’re away.
Gia Can Help You Find The Perfect Rental
Southern California is a popular tourist destination and one of the best places to own vacation property. If you don’t live locally, hiring a property management team is vital for the success of your investment. The Gia team is made up of California locals who love the area and can guide you step-by-step to find (and manage) the perfect vacation home for you and your family. Contact Gia today to get started!