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Buying an investment property or vacation home

With an increased need for privacy and cleanliness while vacationing, many people chose to stay at a place that felt like home away from their home this past year by renting a short-term property through websites like VRBO and AirBnB.

I recently stayed in one such vacation home with my family that was clearly a second home for the owners. I couldn’t help but think a number of times while we were there that it would be great to have a second home like this while having a supplementary income to finance it. By providing a wonderful vacation home for others, owning a second home comes into the realm of possibility for more homeowners.

But how feasible is it actually to own a short-term rental? There are three important things to consider before taking the plunge:

1. Know the law.

Ignorance of local laws is not defensible in court. Each jurisdiction has specific laws about short-term rentals and you should be aware of them before you purchase. Your Realtor should be able to recommend a good attorney who would have the answers to any questions that you might have. Also, a good Realtor has a network of trusted agents across the country who can help you find a home outside of their jurisdiction so that the purchase of your second home runs smoothly.

2. Only buy a home you would want to live in.

Many areas of the country are wonderful, vacation hot spots for a reason, but if it doesn’t match your style, don’t buy it. If you don’t enjoy spending time at the beach, don’t buy a beach home just because you think other people will like it. Some people are beach people, others are mountain people. There will be other people who find value in your property.

When purchasing, it is best to make a list of positives and negatives about the property that you are considering. Can you picture yourself in this home for years to come? Can you imagine coming back with friends and relatives? What will Aunt Mabel think about this place? Do you know the area and could find someone to look after it for you if a problem arises while the house is being rented? If a home checks everything off of your list, it might be a great option for you!

3. Ease of getting to and from the home and access to amenities.

You may find out that the local laws are amenable to short-term rentals and you love the area, but how easily accessible is the home? We stayed in a vacation home once that was on the side of a very steep hill. There was not much flat space to run or play, and the nearest town and grocery store was a half an hour drive away on sharp, twisty mountain roads.

While you may love the privacy, and it would look attractive to a first-time renter unfamiliar with the area who found the house online, a location like this may deter repeat business.

The best short-term rentals are those that you can rent again and again to the same people. It allows you to develop a relationship with them and know the people who are staying in your home and what state of cleanliness they will leave the home in afterward. Not only that, but repeat business ensures your potential rental income for the future. There was probably a reason that attracted you to the area in the first place — highlighting the features of the home to your renters will make them want to keep coming back.

Of course, there are many other things to consider before purchasing a second home, but with the rise in short-term rentals, low interest rates and ease and convenience of finding renters through online websites, there has never been a better time than now to jump into the secondary home market.



Jean Beatty is a licensed real estate agent in VA, MD, and DC with McEnearney Associates Realtors® in McLean, VA. If you would like more information on selling or buying in today’s complex market, contact Jean at 301-641-4149 or visit her website JeanBeatty.com.

 

 


 

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