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How To Choose Your First Vacation Rental Property

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We’ve all dreamed about it: weekend nights spent by the beach in a cozy second home. For those investing in vacation rental property, the deal is made even sweeter by the fact that, when they are not occupying the house, somebody else is paying for the privilege.

But it can be intimidating to know where to start looking for vacation rental property. The sinking feeling may even come over you that this dream could be too good to be true. So is it possible to buy a rental property and make a profit in 2019? The answer is a resounding yes. In this article, we’ll give you tips on where to buy vacation rentals and how to pick a property that is a good fit for you.

Smaller is Better, At Least At First

The idea of owning a hotel can seem attractive to some first-time vacation rental property owners. However, experts like CEO of Real Wealth Network, Kathy Fettke, suggest first-time buyers focus on single-family homes. A single-family home is a dwelling that does not share water or heating with other units and has direct access to the road. These homes are meant for the use of a single occupant or family.  

“The upkeep [of a single-family home] is easier than multifamily or commercial properties,” Fetke mentions in a recent Fit Small Business article. “With only a single tenant, there doesn’t tend to be as much wear and tear on the property.”

While owners of single-family homes can expect less upkeep than their competitors operating out of a hotel or condo, it is important to remember that many communities have strict regulations on rental properties. The local government or homeowners association may have policies renters must follow. They might even ban renting properties altogether.

Rent Out What You Know

There is a lot potential buyers need to keep in mind before investing in vacation rentals. That is why co-founder of the AE Home Group, Jeff Miller, recommends you buy rentals in a familiar area or with tourist destinations you frequent. “Draw from your previous life experiences,” Miller writes in the same Fit Small Business article, “to gain a competitive advantage.”

If you grew up by the beach and know the best places nearby to surf, then you should find beach homes for sale, because you can serve that niche. If you are a sports junkie, then you should buy a house that would be perfect for someone coming into town to catch a football or basketball game. The more of yourself you put into your rental property, the less research you will have to do later. It will also help your property stand out in a crowded field to potential renters.

Whether you have lived in the area you want to buy property in all your life or have never been there a day in your life, you’ll want to become an expert in the area as quickly as possible. In a recent article, Fortune Builder says that it is not enough to visit the property for a weekend. “You need to look at your location at different times of day, and even during different seasons. A beachside house in the middle of the summer may not hold the same appeal during the winter months.” Make sure you pick an area that you would enjoy becoming an expert in. To be successful, you’ll need to know everything about it inside out.

Find a Vacation Destination with Low Volatility   

Picking the perfect location for your first vacation rental property is understandably difficult. Each year, Rented.com puts together a list of the best places to buy rental property in the United States. For their 2019 list, Rented placed a premium on “markets that are as recession resistant as they come,” according to the report. “They remain affordable family vacation destinations even during an economic downturn.”

Topping their list of places to buy this year are two destinations in Tennessee: Pigeon Forge and Gatlinburg. Also in the top five are two Florida destinations: Panama City Beach (3rd) and Palm Coast (5th). The report considers Texas to be their next best-performing state with nine cities included on the list, most prominently San Antonio (9th) and Rockport (17th).

Rented ranks Tennessee, Texas, and Florida high for several reasons, including the fact that “these states all have mild winters which bring long tourist seasons.” This means vacation rentals are less likely to be collecting dust due to harsh weather conditions. The organization also found that these states “either support vacation rentals outright or at least have a settled regulation that’s easy to comply with.”

Whether you follow Rented’s advice outright or not, the report makes some important points about how to pick the location of your first vacation rental property: look for a stable vacation market, prioritize areas with long vacation seasons due to mild winters, and seek out places that do not over-regulate your property.

There is a lot to consider before buying your first property. But never feel like the dream of owning a second home as a vacation property is not possible. It is within your reach, albeit with the help of a lot of hard work. Happy hunting!

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