Purchasing a property that you can use as your own vacation home and that you can rent out to fellow vacationers can be a great way to build your investments and your future. When purchasing a beach vacation rental home, there are a few classic mistakes you are going to want to avoid though.
Classic Mistake #1: Not Budgeting Correctly
When it comes to purchasing a beach vacation rental, you need to make sure you budget properly. With a rental that is going to be located somewhere you do not live year-round, you are going to have more expenses than a mortgage to take care of.
First, you will need to pay regular homeowner's insurance on the property, and if you plan on renting the property out for part of the year, you'll need to pay a special renter's insurance as well.
Second, you are going to need to budget for taking care of the property. Properties near the beach have to battle salty air as well as strong winds. That may require more roof repairs and upgrades to the home, such as the installation of impact-resistant windows, over time.
Third, if you don't live in the area, you will need to hire other people to look after your home. You'll want to hire a year-round landscaping company to take care of the yard and property. If you rent out the property, you'll want to hire a cleaning service to clean up after each renter and, potentially, a company to manage the rental property.
When purchasing a rental home, make sure that you look at the whole ownership pictures.
Mistake #2: Counting on Rental Income
When you purchase a beach vacation home, the hope is to bring in enough rental money to cover the mortgage. However, you shouldn't count on the rental income to cover the mortgage.
The truth is that in most locations, you may not be able to keep your beach rental full every day of the year. You are going to see more bookings during whatever the busy season for the area where your home is located. You may see fewer or no bookings during the off-season. Market conditions and what you can charge for your rental will vary over time.
Additionally, it can take a while to get enough vacationers. Many people rent the same vacation home year after year at their favorite location, and it may take time for your beach house to become people's favorite vacation spot.
Plan to pay your mortgage in full on your own throughout the year. Then, use the rental income from the property to build a fund for home improvements, repairs, and maintenance costs. Once you build that fund, then start using your rental income to make additional mortgage payments so you can pay off the property faster.
When it comes to purchasing a beach vacation home, you have a great opportunity to have a permanent location to go on your vacations and a great way to build your investment portfolio. Make sure you correctly budget for the overall cost of purchasing a rental home and use your rental income to make additional payments on the mortgage and to build up a home fund to take care of all the extra expenses that come with owning a beach rental home.
For more information on beach house rentals, contact a rental company.Share
18 October 2019
I have always been someone who is passionate about making the world around me more beautiful, which is probably why I was drawn to real estate initially. I really wanted to create a place where me and my family could spend a lot of time together in a peaceful, relaxing place, so I started looking for places in my area that were fit for the job. Within a few months, I was able to find an incredible property that was within my price range, so I purchased it as soon as possible. This blog is all about choosing beautiful real estate.