Are you considering purchasing a vacation rental in one of your favorite destinations? A vacation rental gives you a great way to visit your favorite spot on a regular basis and possibly make a little extra income when you're not there. Of course, vacation rental ownership can be complicated. You may find that you don't visit as much as you expected, or it could be possible that the property's costs are higher than you anticipated. You can avoid these issues by doing your due diligence and research before you make a purchase. Here are a few good questions to ask yourself before you buy a property:
What are all of the costs? Obviously your vacation rental will come with mortgage, insurance, and tax payments just like any other property. However, there may be other expenses that you need to consider. You will likely need a management company to care for the property while you are absent. There may be marketing costs for your efforts to find renters. You will likely need to have the unit cleaned between renters, and you may need to pay for regular maintenance. Also consider that your property may come with hefty homeowners association fees. Make sure you consider all of these costs to determine whether the property is in your budget.
What's the demand like in the off-season? In many vacation spots, it's not hard to keep your rental filled during peak season. However, peak season may only last a few months out of the year. What happens during the off-season months that make up the rest of the year?
Spend some time browsing listings for other rentals in the area. Look at their availability calendars to see how full they are during the off-season. If they have trouble staying full, consider whether you can really afford to carry the rental during the off months if you don't have tenants. If not, the purchase may not be a good idea.
How often will you really visit? It would be nice if you turned a sizable profit on your property. However, reality is that many vacation rental owners make just enough to cover their expenses. The real benefit is being able to stay in their own property when they visit.
However, you lose that benefit if you don't visit that destination on a regular basis. Consider whether you're really comfortable visiting the same spot every year. Are you happy with that vacation plan? Or would you rather explore other locales? If you won't be visiting the property at least once or twice a year, purchasing a property may not be a wise decision.
For more information, contact FrippVacation or a real estate agent in your desired destination. They can help you decide whether vacation rental ownership is right for you.Share