Guest article provided by: TedKnowsMoney.com
Because the real estate industry is stable and growing, a rental home is one of the best investments you can make. Purchasing a vacation property and renting it out is a good way to get started in the industry. Here are five things you must do to make money with a vacation rental.
Find the Right Investment Property
Not every vacation property is a good investment. Those in less-desirable areas or those that need significant renovations may not give you a decent return on investment. If you want to be a successful real estate investor, look for vacation rental properties that meet the following criteria:
- Rentals that are structurally sound and need only minor cosmetic repairs.
- Rentals that are in prime vacation destinations.
- Rentals that are reasonably priced.
It may take several months to find a listing that fits your budget. Search for new listings regularly and check for price reductions on properties that interest you but are too expensive. Fortunately, there are many sites online that can help you search for properties in your area.
Make the Properties Appeal to Renters
Collecting rent allows you to make a profit on your investment property. As a vacation rental, you’ll primarily have short-term guests. You must make renovations and add amenities that make people choose to rent your property over others. Consider upgrading your property with some of the most popular amenities, such as free wi-fi, a pool or hot tub, and/or a game room. One study suggests that 60% of vacationers prefer to pay more for a rental that has smart-home features, so this is also a good upgrade to consider.
Protect Yourself From Liability Claims
Renting out a vacation home opens you up to liability lawsuits from your guests if they get hurt on your property. Forming a limited liability corporation can protect you from legal responsibility. Every state has individual regulations regarding LLC formation, so check with your locality to ensure you meet all restrictions. You may choose to hire a formation service to do most of the legwork for you.
Set a Rental Price
You must set a rental price before you can place your investment property on the market. Finding the right price can be challenging because you must make enough to cover your investment expenses yet keep the cost affordable for your guests. It’s best to look at similar listings in your area. You can choose a price based on how much it costs to rent other vacation homes with the same amenities.
If your nightly rental price is affordable and you have great reviews, you may not have trouble booking your property. You may consider running short-term deals on price for last-minute renters if you have open availabilities to maximize your profit. Your goal should be to set a price that allows you to consistently book out your property without costing you money because the rental fee is too low.
Market the Property
Your investment property must be visible to a wide audience if you want to have consistent bookings. Marketing your vacation rental is essential for making your investment successful. You can use social media to make your friends and family members aware that you have a vacation rental. You can also list your property on vacation rental websites so guests can easily find properties that meet their unique needs.
Buying a vacation rental is a great opportunity for first-time real estate investors. To make your endeavor successful, find the right property, upgrade your home, set your price, and start marketing!
The Innovative CPA Group offers assistance with everything from tax preparation to retirement planning. Learn more about the services we offer by calling our office at (203)-489-0612.
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