5 Tips on Investing in Vacation Rental Properties

Consistently, real estate has proven itself to be a very solid investment option. Depending on where a property is located, there is always a good chance the property is going to increase significantly in value over any 10 year period. If the property is intended for use as a rental property, there will also be revenue coming in while the property appreciates. That is a good use of investment dollars.

rental property

Have you ever thought about making a vacation rental investment? If handled the right way, such an investment could be lucrative. Assuming you have little knowledge about vacation property as an investment, we would like to offer you five tips on how to do it properly.

(1.)  Location, Location, Location

When it comes to a vacation rental investment, your success is going to depend on your ability to get a property that people will want to rent. Of course, the price of the property will usually reflect the popularity of the location.

If you wanted to purchase a vacation rental in Aspen, Colorado or Paris, France, you are going to pay a big price for the property. Why? These are locations that travelers favor. The offset to the purchase price in the high rent you can collect from renters. 

The point is location matters. If you want a solid stream of rental income, you have to buy where a solid stream of renters will be interested.

(2.) The 1% Rule

Almost any rental property that creates a positive cash flow is going to be a good investment. If you decide on a vacation rental, you want to do a little math before making a decision. A viable property is one that will return an average of at least 101% of the monthly mortgage payment. Obviously, the 1% would be gross profit prior to maintenance costs and management fees. 

(3.) Condition of the Property

Travelers are looking for value during their travels. If they decide to rent a vacation unit, they usually expect the unit to be on par with at least a 3 star hotel. 

The only way you are going to be able to demand top dollar rent on your vacation rental is if the property looks the part. That’s inside and outside. The furnishings matter just as much as the pool and landscaping.

(4.) Access to Amenities

Vacation rentals have more value if they are located close to amenities and special attractions. Vacationers do not want to always be reliant on Avery Car rentals to get to where they want to go. Your vacation rental will have more appeal if it solves the proximity issue.

(5.) Find a Reliable Property Management Company

If you invest in a vacation rental that has more appeal as a daily or weekly destination, you might not have the time to manage your property. You will need to enlist the services of a property management company. A good company is one that will keep your unit clean and actively market your property to prospective travelers. A company that keeps your property filled with renters is worth its weight in gold.

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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