Avoid These Mistakes When Buying a Vacation Rental Property
Want to enter the vacation rental industry with a property you already own? While this may all sound like a good idea at first, you’ll soon realize that there’s more to buying vacation rentals than what’s been shown on the surface. Covering the initial costs is only scratching the surface, as it may add up when it comes to remodeling, refurbishing, and redecorating.
Plus, with vacation rentals projected to give the hotel industry a run for their money, it’s imperative now more than ever to buy vacation rental property and do it right. Therefore, here are 5 common mistakes to avoid when buying vacation rentals.
1. Not Familiarizing Yourself With The Area
First, you must be familiar with the area that your property is situated in terms of price and value for your money. This allows you to make the best decision when buying a vacation rental. To help you make a good decision, ask yourself if the potential property is many times cheaper than other homes (especially the neighbors’).
Plus, be aware of any trends or any competition, when it comes to buying the rental property. Chances are, your competitors might be looking at the same area as you. So, you may want to do your research on any trends to get ahead of any possible competition.
2. You Doubt That The Rental Is Worth Investing
So, is a vacation rental worth investing in? Well, that all depends on the following:
Do you have a financial plan for it?
What does your budget range look like?
Can you afford all the expenses?
Many experts will tell you not to take out a loan that’s higher than 30% of your income. In addition, you have to expect the unexpected – leave room for any problems that could occur or things that weren’t in your calculations. Set aside extra money to put towards emergency situations involving your vacation rental.
3. Not Being Able To Calculate Property Value
Many factors can determine the value of your property. Therefore, make it your job to analyze these factors, when doing your calculations. Not only should your calculations involve the price, but they should also involve said factors – location, points of interest, public transport, the crime rate, etc. Once you compare the different buying options and analyze them all – while keeping said factors in mind – you’ll get a better sense of what you’re buying, or what’s being asked of you if you’re considering it. In addition, it is very important to pay attention to these features of a profitable vacation rental property.
4. Emotions Drive You To Buy
It happens all the time – many homeowners fall in love with a property or a specific area, because they look at the appeal of the place, rather than look at the whole picture. They fall in love with a home… only to regret it later.
So, avoid buyer’s remorse by looking at the whole picture. Understand the possibilities and limitations of buying a certain property. And, make sure that you can ACTUALLY afford it. In other words, much like shopping for anything else in life, don’t buy on impulse.
5. Not Consulting An Expert Before Buying
Finally, it would be devastating for you, if you don’t get a second opinion on buying a vacation rental. Not getting a second opinion is like going into the vacation rental industry blindfolded. If you’re not an expert in the tourism and real estate industry, or if you’re not sure what the prices and mortgages in the area are, or what kind of prices you should offer, then seek out a professional – someone that can help you during the whole process. An expert will help you see things that you might have overlooked, and they can advise you on the decisions that you should consider. And, they can teach you how to negotiate, set a price, and how to make appropriate counteroffers.
As you can see, finding a vacation rental property is more than just making money in real estate. In fact, many beginner realtors have made the mistake of buying right away or made the mistakes mentioned above.
The good news is, buying vacation rental property can be a great experience for novice realtors if they know what to do beforehand. Remember: buying a vacation rental isn’t just looking at houses and crunching numbers. As long as you do your research ahead of time, and avoid these 5 common mistakes, then you too can join the ever-growing vacation rental industry and sell like a professional!
About the Author
Kristin Herman is a writer and editor at Write my paper. As a marketing writer, she blogs about the latest trends in digital advertising and social media influencing.
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