Buying a condo vacation rental in the tourist destination of your choice can really be the best of both worlds: your family has a comfortable home to stay when on vacation, and you can rent the home out the rest of the year to cover the mortgage or even earn a profit. With the vacation rental industry continuing to boom year after year, and more and more families opting for a condo vacation rental instead of a cramped hotel room, this can easily be a great investment as long as you know what to look for. Here are five tips for buying a condo vacation rental:
Work with the Right Local Realtor
When buying a property out of town, you need the guidance and expertise of a local real estate agent who knows the local market inside and out. In addition, you will want to hire a realtor who has experience navigating the challenges of representing an out-of-town buyer seeking a condo vacation rental. By taking the time to seek out a realtor with this combination of experience and qualities, you will have a much easier time finding the perfect vacation rental in your budget.
Research the Laws in Your Destination
Many cities and counties are beginning to place restrictions on vacation rentals, and in some cases, HOA communities have their own regulations as well. In certain rental markets, vacation rentals are only allowed if the owner lives on the property, which often defeats the purpose of buying a vacation rental. You will need to look up the specific regulations for the destination you have in mind, ideally looking for a less restrictive city and county where vacation rentals are popular and perfectly legal.
Consult a Real Estate Attorney
Most states require you to register your vacation rental as an official business, and some cities and counties require business licenses as well. This is to ensure you pay the correct tax on your profits. You will also need special liability insurance to protect yourself financially if someone is injured on your property. For these reasons, it's a smart idea to hire a real estate attorney to double check your paperwork and make sure your vacation rental is legally allowed to operate before you begin advertising your new condo rental.
Working with a real estate attorney who specializes in vacation rentals is an especially good idea, since they will know exactly which paperwork you need to fill out and how to file it.
Plan to Hire a Property Manager
A property manager is a wise investment which will pay off in saved time and reduced vacancies. A property management company can advertise your rental, screen guests, and handle maintenance tasks and cleaning in between guests. They usually charge a small percentage of your monthly profits, making this an easy service to budget for.
Overestimate Your Furnishing Budget
When determining your vacation rental budget, don't overlook the cost of furnishing the condo from scratch. It's wise to slightly overestimate how much this will cost, to avoid the unpleasant surprise of going over budget later. Keep in mind that in addition to beds, couches, side tables, lamps, etc., you will need to provide kitchen supplies, televisions, towels, and bedding.
You may want to include extras like board games, bottled water and snacks, and boogie boards and beach towels if your rental is on the beach. These details will make your guests' visits more special and have a positive impact on your reviews.
Buying a condo vacation rental can be a boon to your family, both lifestyle wise and in terms of building wealth. By following these tips, you will ensure that your investment in a condo vacation rental is a wise one.