Photo Credit: Roxana Tejeda
Most of us right now are dreaming of that holiday vacation we postponed last year. What, though, are your plans for a housing rental? Wanting a “home away from home” and not just a pricey hotel or resort has gained considerable popularity in the last decade. Something you may not know: Airbnb, founded in 2008, started off when three men decided to rent out a simple air mattress in the middle of their living room. Originally named “AirBed & Breakfast,” the idea eventually became a 3.3 billion-dollar company. This kind of innovation has sparked the minds of real estate owners looking to buy their own vacation property. Is it possible to make a return on investment? Yes. Is it possible to get into mass debt? Yes. Here are some dos and don’ts:
DO: First thing, research the qualifications for a second mortgage loan in your state. Document your income and of course, get ready to show a high credit score. If you’re curious about buying a vacation rental, odds are you are already a homeowner—and your first home will be collateral. If you’re in good standing, this option is less a risk and more of a reward!
DON’T: Don’t be fooled by the low interest that comes with second mortgage loans. Yes, that’s a perk. Though be prepared to pay a larger down payment. More and more, potential homeowners are stepping up to the game with hard cash. Don’t take this risk if your cash savings are depleted after—leaving you without extra spending money for home repairs.
DO: Work on what will make your vacation rental marketable. Not only will you have to consider basic home repairs (new windows, heating, and air, etc.) plus updated interior design but also the amenities people want in vacation rentals vs. hotels. Can you afford an outdoor jacuzzi? A new deck? Great landscaping? Accessories in a vacation rental are not always necessary but worth the expense if want to turn a profit.
DON’T: Don’t, most of all, buy a vacation rental if you’re not prepared for a potential “off” season of no guests. Typically in Florida, the tourist down season is July through August—the hottest months—and then carries over through October when hurricanes are high risk. It’s not uncommon for a vacation rental owner to be booked every single day for three months, and then suddenly their calendar is blank. Understand there will be times of peak income and weeks of potentially nothing.
Owning a vacation rental is a “feast or famine” mentality. Of course, the do’s and don’ts of owning any property are pages long. What matters is if this option is possible and pragmatic for you. Like any great industry—Airbnb or Vrbo—if you’re willing to put in the work, do the upkeep, and adapt to the demands of what guests want, you’re already one step ahead. Think of it like your dream vacation: Stop dreaming and start planning!
—Roxana
