If you are looking to add a second source of earning to your current income stream, investing in a vacation rental property is a great idea.
After the rapid vaccination drives, the ease in travel restrictions has seen a surge in international tourism once again, making it a great time to make money from vacation rental spaces.
However, buying a vacation rental property might seem intimidating for first-time buyers. But it's something that pays off well. If you are a prospective vacation rental buyer, here's what you should do.
1. Make a calculated move.
Making an investment or spending a sizeable amount of money on anything requires due diligence and detailed calculations. Real estate investments should especially be made with extra vigilance.
That being said, before investing in a vacation rental property, you need to be sure of the following few things:
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Your total investment (including refurnishing cost)
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\Expected monthly rent
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Your monthly operational cost
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Net income and break-even period
Also, keep in mind that if you are financing your purchase through a mortgage, you must know how much and for how long you would have to repay it. For example, if you’re in Australia, you can easily calculate it here online using a local bank website.
2. Find an appealing location.
This is no secret that the real estate and vacation rental business, in particular, is all about the location. Since your aim is to generate rental income, choosing a site that appeals to the renters (tourists) is essential.
It needs to be easily accessible through private or public transport because your property might stay vacant if it's too far. Also, if it is near popular travel attractions such as beaches, lakes, shopping malls, or a national park, it is likely to remain occupied all-round the year.
This will obviously make your investment amount high, but it will also increase your income at the same time.
Remember, location, amenities, and attractions are important while considering where to buy your first vacation rental property.
3. Make it beautiful.
When you're just getting started with vacation rental, it's tempting to cut corners to minimize your costs, but this is a terrible mistake. Instead of saving money, spend generously on the beauty and interior design of your apartment or flat.
Creating a comfortable and beautiful space for your tenants not only makes for an amazing guest experience but it's also crucial for great marketing – if your guests are posting images of your place on social media profiles, your job is well done.
4. Hire a property manager.
The best advice you'll get from seasoned investors is not to attempt to own every aspect of your vacation rental business (and the truth is you just can't).
When you have guests checking in and out every other week, your apartment or property would need cleaning and maintenance accordingly. You would also have to hand over keys to arriving guests and collect them from departing ones. It can be a lot of work and particularly challenging if you live in another city.
That's why a good property management company or an individual manager can be a helpful resource and a great relief for you and your business.
5. Market your property.
The vacation rental business is highly competitive, and you would need to make your property stand out from the competition. If you choose to work with a property manager or a company, this will most likely be taken care of.
However, if you choose to do it yourself, there are plenty of websites and portals where you can get your property listed. The process is fairly simple: make an account, upload great pictures, write some good copy, and voila! Your property will start attracting visitors.
Alternatively, you can work with local real estate brokers who will take a small commission and ensure your property doesn’t remain vacant for long!
