If you’re considering buying a vacation home that will also earn income from short-term rentals, you’ll have to think about a whole lot of factors. Is the home very secluded? If it is tucked far away from civilization, you might want to reconsider. Many people who are searching to rent a vacation home want to be near the attractions that they are visiting for.
You should check into the local rental rates for that area. Look at all the available rentals. What do they charge? What does a home of a similar size and area rent for? How often is it usually rented? You’ve got to realize that you have major competition when it comes to vacation rentals, and be sure that the rent covers the cost, as well as enough extra for you to actually make money off of it. Don’t be afraid to ask other landlords in the area what they charge and the experiences they’ve had. Once you purchase the home, they know they’ll have competition anyway, so its not a shock to them.
You’ll need to figure out how much rent in the area has increased or decreased over the years. This is important because you’ll get to see the fluctuations, so that you can have a good idea of what to expect. If the rental market has been climbing the past two years, it is safe to predict that it will be a good rental investment. Search through past listings online on websites like Trulia and Zillow to see what past rentals have gone for. Be absolutely sure to keep a close watch on the local and national news, too. When the economy is not doing well, generally the first thing families hold back on are vacations.
If you do not check the standard vacancy rates, you won’t have an idea about how many months of the “on” season that you’ll be able to have your house rented. A very strong rental market should have a vacancy rate of 11% or lower during the “on” season.
If your home is surrounded by the local activities, it will definitely increase the likelihood that your house will rent, as well as your ability to charge higher rent. Are you close to shopping centers and restaurants? Are you smack-dab in the middle of the ski resort? These things make a difference.
Find out the local crime rate. You can bet that when renters are searching for a place to stay, that they’re doing the same thing. Safety is everyones primary concern when renting or buying a home. Plus, if there are major crimes that have occurred in the area recently, you may even have to inform them, which probably won’t go well. The bottom line is that before signing a purchase contract, you need to do careful and thorough research. Happy house hunting!