Last fall I bought my first vacation rental property and my mind has been blown by how booked it stays. So much so that I am under contract to purchase another property similar to the first one in the same area. Based on the number of friends asking about my experiences, there are a lot of other folks thinking about purchasing a vacation rental property as well. Here are some things for you to consider if you are one of those people.
Number 1 – A vacation rental is a business. Fortunately I already had an LLC set up for my real estate business and was using QuickBooks for bookkeeping so it just became another part of my business. I will say, however, that adding one vacation rental property has tripled the amount of time I spend with bookkeeping.
Number 2 – Don’t expect a vacation rental to add to your current income. In fact, owning a property could possibly cost you money every month. I got lucky and my property stays booked about 95% of the time but that’s higher than the average. The payoff is long term. My goal is to have any property I purchase paid off in 10 years and hopefully they will appreciate in that time by 25% to 35%.
Number 3 – You must use either a management company or have reliable cleaning service to take over some (or all) of the property management. My property is located about an hour from where I live so I can’t be there all the time but it’s close enough that I could be there for something urgent. I found a local cleaning company that offers vacation rental cleaning and so far it has worked out great. Vacation rental cleaning is very different than cleaning someone’s home because they have to be able to work with your schedule. Very often you have a guest leaving at 10:00 am and another one coming at 4:00 pm so they have to be available during that time. That could be on a Sunday or a holiday and regular house cleaners are not going to be working those days.
Let’s get together for lunch or coffee sometime if you’re thinking about purchasing a property and want more information. There’s a whole lot more to know!
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