Whether you’re on a fixed income or are simply looking for ways to make extra income, you might be thinking about how you can cash in by using your home (or purchasing a second home) as a vacation rental. Perhaps you are thinking about selling your primary residence, but the idea to turn it into a vacation home has crossed your mind. Maybe you’re considering purchasing a second home to use as a vacation home in your retirement and rent it out when you aren’t using it.
Whatever the case may be, read on for helpful tips to enter the world of vacation rentals.
Just Look at the Benefits
You might be on the fence about diving into the rental property business, so consider the benefits. If you’ll be converting your primary residence, you’ll have the added bonus of keeping your old mortgage (and the lower interest rate). In addition, you can update and prepare the home while living there, as well as sell the home without a tax hit if you lived there two out of the last five years. Should you decide to purchase a second home, you’ll enjoy added investment returns via appreciation and reap additional returns on your investment by turning it into cash flow when you aren’t using it.
Launching Your Investment Property Business
Of the many considerations when launching your new business venture, one that is often overlooked is taking the steps to register your entity with your state, a process sometimes referred to as creating a “legal business entity.”
While this is sometimes done as an afterthought, there are a number of considerations such as the amount of flexibility your chosen entity type has, as well as the protection it provides to you personally, as the founder of the business. For this reason, an LLC is often a popular entity type. Another reason for selecting an LLC is that it can generally be set up in about five steps; look up how to start an LLC or hire a formation service like ZenBusiness to handle the important paperwork for you.
For Those Using Current Home:
Make Necessary Updates
Just like you’d update and repair your home if you were selling, the same concept applies to renting out your home. Make affordable upgrades that offer a return on your investment as opposed to upscale changes that are a luxury rather than an added amenity. Impress renters by switching out kitchen hardware, applying a fresh coat of paint to walls, removing outdated carpeting, and adding some curb appeal.
First impressions are huge, so think outside the four walls by sprucing up the landscaping. It’s well worth the investment to enlist the expert help of professional landscapers to both plan and execute a well-thought-out layout around the perimeter of the house. Finding a pro is easy thanks to online service directories; simply visit Angi to read customer reviews and contact a handful of backyard landscaping professionals for estimates.
To make the transition from home to rental as well as increase safety, invest in a combination deadbolt, home monitoring system, and rental insurance. Be sure to stock up on toiletries, and consider hiring a cleaning service to ensure the home is always ready for the next guest.
For Those Investing in a Second Home:
Do Your Research
When you think of a vacation home, resist the urge to immediately think about the beach. People vacation and escape to cities all over the world, so instead think about the potential of the location you are considering. Most importantly, be sure to work with a realtor to help you find a home with rental potential in an area with amenities to attract renters. A realtor can also help you negotiate an offer to get the best deal, as well as handle all the confusing paperwork. Once you have a home secured, see the above tips to get it ready for your first guest.
Getting Your First Guest
Once your home is updated, stocked, and ready to welcome guests, you need to find a way to list your home as available for rent. If you live far away from your home or simply prefer to have a professional help you manage your rental, guests, and the property itself, you might consider using a vacation rental property management company. However, it comes with a price tag, so you may opt to manage the property yourself and list the home on a vacation rental site. Research both options thoroughly before deciding which route you’d like to take.
Both your current home and your second home offer an excellent investment opportunity. By turning them into a vacation rental property, you can allow others to enjoy your home and everything the surrounding area has to offer, all while making some extra cash. Not only can you provide others with vacation memories, but you can create some for yourself too.
Ready to wow potential renters? Trust the pros at Polo Builders for all your new home and remodeling needs! (727) 234-0701
