Ready to Own a VRBO or Airbnb IRL?
Have you gotten bit by the travel bug? You’re not the only one. The desire for people to get out of the surroundings they have been in pretty constantly for the last 18 months is increasing the demand for short term rentals. If you have ever had interest in owning an investment property, now may be the time to take the plunge and purchase your first. Not sure where to start? We have you covered. Read on for some tips on taking the plunge.
Calculate Your ROI
Obviously the purpose of an investment property is to give you a return on your investment. While your mortgage payment on the property will be a large portion of your costs, there will also be other costs such as maintenance, turnover and unexpected emergencies to consider. Make sure you evaluate all the potential operating expenses of the property as well as the rent you will charge to ensure the property makes sense for your financial goals. You’ll want to pull in the professionals to assist you in pulling nearby rent comps so you are able to more accurately determine what an appropriate rental rate is. It’s important to have a good understanding of how much income the property has the potential to produce each month as well as possible costs to prepare for.
Location, Location, Location
When deciding to purchase a property as an investment, it is important to think about the logistics of the purchase before jumping in. If you are looking to create a property geared toward short term vacation rentals, it is important to make sure the property is in a desirable area that can keep renters interested. Places with access to beaches, lakes, mountains or national parks are great places to start, but don’t overlook other attractions such as sporting venues, bars and restaurants, or the music scene. Make sure the areas you are looking into have pretty consistent demand to avoid more than just the typical ebbs and flows of vacation rentals. You want that property to be booked up consistently.
Along with the location of the property itself, you need to look at where the property is in relation to you and/or the people who will manage it. Are you close enough to the property to be able to handle the needs of the maintenance and turnover between rentals or will you need to hire a third party to manage those pieces? If you need to hire a third party (which a lot of people do) make sure you are factoring that into your bottom line AND ensuring there are companies or people in that location to actually do the work. If you have a remote cabin in the woods it may appeal to a lot of renters looking to unplug, but can anyone actually get out there to take care of it?
Building your Empire
Some of the world’s wealthiest people are involved in real estate investing, why shouldn’t you be? The financial benefits of owning a rental property include having an additional source of income, offsetting the costs of owning a vacation property, potential tax deductions and more. So, what is a good way to get started? Most advise it is best to start small, unless you have unlimited financial resources. Starting with a single property will allow you to get experience with investment properties without too much commitment. Once you feel established with your current property, you can evaluate whether you are ready to expand or what the next steps for you are.
Call Cambria Mortgage
To get started, call Cambria Mortgage at 952-942-0110 or visit CambriaMortgage.com. Our team of professionals will provide personal, hometown service with sound advice and impeccable attention to detail at every step of the process. We’re ready to help you crush your goals, big or small.