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Finding the perfect vacation rental property takes time and patience on the part of investors who want to make the most of their funds, but careful consideration will ultimately pay off in the end. Thinking about location, doing some research on trends in the area, and learning what renters are looking for will help you figure out how to get started and how to get the most return on your investment. If you need funding, there are many different types of loans available; the key is to thoroughly understand which type will be right for you.
Keep in mind that a home that requires updates or upgrades may seem like the right choice if it’s at a lower price than others in the area, but the types of changes required are important. After all, replacing appliances, painting, and adding lighting are relatively inexpensive tasks when compared to putting on a new roof, fixing the foundation, or replacing the flooring. Don’t be seduced by a home that comes with a cheaper price tag, as the cost of repairs or updates could go well beyond the amount you saved in the purchase. With that in mind, here are a few tips on how to find and buy the right rental investment property for your needs.
Find the Right Funding
When buying a property, it’s essential to do some homework and find the right loan for your needs, as there are many different options available. A conventional loan is one of the few that is specific to investment properties and second homes, so talk to your lender about the qualification requirements. Conventional loans are available in either fixed-rate or adjustable, and if you put down at least 20 percent on the property, you won’t have to worry about mortgage insurance.
Make Location a Priority
The location of your rental property will determine many factors, including the number of renters you can expect and how much you can charge per stay, which is why it’s so important to find the right spot. Educate yourself on instances of crime in the area, the average cost of homes, and how many restaurants, bars, and attractions are nearby, as all of these things could potentially affect your rental income. Find out what renters are looking for so you can address their needs.
Look for Room to Improve
While you don’t want a property that will cost a lot to maintain or update, it is a good idea to look for one that will allow you to make some improvements based on the area it’s in. The right vacation rental property varies according to the owner, but you might look for one that has room for added amenities, such as a pool. Do some research on whether you’ll need to obtain a permit for such additions, as well, and add that into your budget.
Consider Hiring Some Help
Maintaining a rental property can be a very big job to manage, and if your year-round home is far away, it might be more than a little difficult for you to make repairs or take care of guests yourself. So, consider hiring a caretaker or property manager who can help you keep an eye on things. Not only will this give you peace of mind, but it might also lower your insurance to have someone who can stay in the home when it’s not being rented. If your budget won’t allow for a full-time caretaker, consider hiring a cleaning service to help with upkeep.
Finding the right property and learning how to manage it can take some time. If possible, talk to someone who has already been through it to get some advice or guidance about the process. Keep in mind that planning your budget carefully is one of the most crucial steps, so give yourself plenty of time to prepare financially before making any decisions.
