Pick a Popular Area
Just like the experts say, it really is all about location. You can own the most fantastic property in the world, but if it’s not located in the right area, you won’t get the bookings you want. When investing in a vacation rental property, choose a place that’s proven to be an in-demand destination. Many owners are tempted to choose a location based on where their family and friends like to visit, but it’s important to do some research and consider the big picture. Make sure that you’re choosing a spot that’s popular for other travelers as well.
Create an Area Revenue Analysis
To find out how much potential an area has, it’s best to conduct an analysis of short-term rentals in the area. You’ll want to see how a typical one, two, three, and 4 + bedroom property performs to help you decide which size is offers the best return on investment. It’s also important to find out when the high, low, and regular seasons are, and to look at the average nightly rates during the various seasons. Looking at popular amenities in the area is also essential for determining a property’s potential. Fortunately, you don’t have to do it yourself. We can provide you with a free area revenue analysis. Simply contact us to request one.
Focus on ROI
You may be able to rake in plenty of vacation rental income in Miami, Florida, but if your mortgage payment is too high, you may barely break even. Fortunately, there are affordable housing markets that are also popular destinations. Calculating the difference between your investment cost and potential income is essential in determining your ROI. Make sure to do your research, because sometimes the most unlikely of destinations can offer an excellent return on investment (like Ogden, Utah).
See a list of other markets that offer a great ROI on Mashvisor’s list here.
Research Local Legislation
With the growing popularity of vacation rentals, there is more regulation in some areas than their used to be. Before buying a property, find out if there are restrictions for short-term rentals in the area. It’s also important to find out what the local tax laws are so you can avoid be taxed to heavily.
Buying a vacation rental is becoming a popular way to invest, because ultimately, it’s a sound financial decision. As more travelers choose vacation rentals over hotels, the demand continues to grow. It’s also a low risk investment, because when it comes down to it, you have a second home that you are able to vacation in for free. If you choose the right property in the right area, it’s a smart investment that you can enjoy for years to come. Fortunately, it can also be a low maintenance investment. If you have a great property management company, you can sit back, relax, and enjoy the income.