Start small or go big?
After you’ve selected the location, the next decision is what type of property do you want to buy? Condos can be a good choice for first-time vacation rental investors. They tend to be less expensive than single family houses, and less maintenance. They can include resort-like amenities that draw potential guests, such as on-site staff, spas, pools, exercise facilities, and and a concierge service.
A study done by Rental Advisor found that when investors restrict a property to 2 guests per bedroom, there is a reduction of 40% in profits and rental visibility. Rental Advisor suggests one bedroom units accommodate groups of 4 or more, with two bedroom units accommodating up to 8 guests. For added sleeping space, include multi-purpose furniture such as a sleeper sofa, futon, or two full size beds per bedroom. Doing so with significantly increase bookings and thereby increase your return on investment.
A word about property that needs improvement…
If your goal is to maximize income with vacation rental, you will want to look at properties that do not require drastic improvements. Fixer-uppers require additional investment dollars and lost time on the rental market. It may make more sense to buy a property that has little to zero need for improvement. That allows you to start earning cash flow immediately without having to expend additional funds on an investment that may not be profitable for weeks, or possibly months. That said, new paint and decorations with new professional photographs can greatly enhance an underperforming rental property. (Staging can make a huge difference)
Followed by location and size of the property, travelers will choose to book a rental property based on its upgrades and amenities. If it is possible to find a vacation rental property that already has all the amenities and updates you could image – Great! If not, buy the best LOCATION and look for potential. If a property has some challenges, find out how much it will cost to fix them. Improvements and upgrades can be the next step after the property becomes profitable. Of course, you may not be able to do that right away. Just make sure that prior to investing in any upgrades, you research the competition. What do those other properties have that your vacation rental doesn’t? Be sure you know what your potential renter wants, the improvements are in your budget and what they mean for your bottom line!
April 12, 2018