Buying Vacation Rental Property

While many investors who purchase rental property focus on residences intended for year around living, there is no denying the fact that vacation rental properties can provide an excellent income. Renting out vacation rental properties however, can be much different than renting out a regular residence. There are numerous items that prospective vacation renters are looking for; so it is worth it to take the time to ensure that your property measures up. 

First, always make sure that the property you consider is in a good location. Most people who consider renting property for their vacation have certain ideas regarding the geographic location that they want. The setting for the property should be relaxing and picturesque. The property should also be quite safe so that renters will know they can enjoy their vacation in peace and security. 

Seriously consider a property that is family friendly. There is an extremely large market for family friendly properties which you can tap into. For a property to be family friendly, the furnishings should be able to easily accommodate children. This means that property should be sturdy and should not include a lot of easily breakable items. Ideally, the property should be in a location that will cater to families. Look for properties near pools with lifeguards as well as playgrounds. 

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Affordable rental prices can also be a great way to ensure that your vacation rental property is booked. A vacation rental property with a reasonable price is always attractive to vacationers because it offers amenities which no hotel is able to compete; including privacy, good views, a full kitchen and more space in which to relax.

In addition, take the time to make sure that the property really does feel like home. Kitchens should be well equipped, furnishings should be comfortable and recreational equipment should be provided.

Keep in mind that it is becoming more and more popular for vacationers to combine their vacation with some other event such as a wedding or family reunion. If you want to cater to these groups, it is important to make sure that your property can easily host groups. One key feature for these types of rental properties is offering a reception room that can easily serve for different functions. 

You might also wish to consider making the vacation property friendly for pets. Many owners are reluctant to do this because of the potential for property destruction. Keep in mind; however, that there is definitely a niche market for vacation rental properties that are pet friendly. Most hotels do not provide this option, so it gives your property an advantage. If this is appealing to you, make sure the property is safely fenced. Consider installing wood floors instead of carpeting. 

To make sure that your vacation property has a wide appeal, set up Internet access. Even while on vacation, most people want to make sure they have Internet access. You can do this using a DSL connection, WIFI or wireless connection.

Insurance For Rental Property Owners

Owning rental investment property can be a satisfying and lucrative operation. However, there are also several areas which need to be carefully heeded in order to make sure that you are not sued and do not become liable for any issues which may arise in connection with your property. Learning how to protect yourself is the first step in ensuring that your investment does not actually become a liability. 

First, you must always make sure that you have adequate casualty and property insurance as well as liability insurance. These three items are not the same and it should always be remembered that property insurance will not typically protect you in the event someone becomes injured on your property. 

Property and casualty insurance will cover you in the event your property suffers from losses resulting from storm, fire or some other catastrophic loss. Liability insurance is intended to protect you if you should be found to be responsible for someone else’s losses. You may also wish to consider carrying flood insurance if your property is in a community that participates in the National Flood Insurance Program. Umbrella insurance, which will provide you with additional liability insurance beyond a general liability insurance policy, is another worthy option you may consider. 

You may ask yourself under what circumstances you may need liability insurance. There are many instances in which liability insurance could be helpful. For example, liability insurance could protect you in the event a tenant or an employee becomes injured on your property. Liability insurance can also protect you in the event you are sued for discrimination by tenants. 

In the event you hire someone to work on your property, it is a good idea to ensure that all repairmen as well as contractors are able to provide their own certificates of insurance indicating they carry both workers’ compensation as well as liability coverage. 

You should also make sure you review your insurance coverage with your insurance agent on a regular basis. Many people make the good intention of taking out adequate insurance coverage; however, they fail to review their policies and when disaster does strike sometime later they are surprised to discover that they did not have sufficient coverage after all. 

It is also a good idea to make sure that you have formed good working relationships with critical professionals such as an attorney and a good tax accountant. There are many areas of renting property which are regulated by law. If you are not aware of your obligations under these housing laws, you could find yourself facing legal troubles. Therefore, it is certainly a good idea to consult an attorney to make sure you may not be breaking any fair housing laws. It can be entirely too easy to find yourself in trouble because you unknowingly violated one of these laws. Additionally, make sure you meet with a professional tax accountant at least once per year to discuss your tax obligations regarding your property and revenue. 

It is also a good idea to check with your local government to determine whether you are required to have a business license in order to operate a rental property in the local area. While this was rather uncommon at one time, today more and more municipalities are enacting regulations which require a business license for each rental property.

Also, keep in mind that your property insurance policy will not cover the belongings of your renter in the event of damage. It is usually a good idea to make sure you let your tenants know this by putting it in writing. Many landlords not only encourage their tenants to obtain renter’s insurance but also require it. 

Finally, take proactive steps to reduce your liability by making sure that your property is safe. Liability insurance is certainly beneficial but the best way to ensure that you steer clear of trouble is to keep your property well maintained.

Advantages Of Owning Rental Property

The fact that you can be your own boss when you invest in rental property is a benefit which should not be underestimated. Whether you are considering quitting your current job to become a full-time rental property investor or you are looking to supplement your current income, you can benefit from the fact that there is a tremendous amount of independence to enjoy by owning and operating rental property.

More and more people are becoming interested in investing in rental property due to the large number of advantages offered by owning rental property. One of the largest of those advantages is the fact that when you invest in rental property, you are able to take ownership of an asset that is tangible. Compared to other types of investments, this is a tremendous advantage. It can be difficult for many people to get excited about stocks and bonds; however, gazing at a piece of rental property that you personally selected and are maintaining can provide you with the same pride in ownership that you received when you bought your first home. Rental property is also an income-producing asset which can be a much appreciated inheritance for future generations.

Income is another tremendous advantage of investing in rental property. While you will need to deduct the mortgage payment if you finance the property and any relevant expenses, a rental property is often able to produce ongoing income for you.

The value of appreciation should not be overlooked either. Generally, such properties improve in value over time. While appreciation can never be guaranteed, if you take the time to choose a property in an area that is stable then there is a very good chance that the property will continue to increase in value as time goes by.

Rental property owners are also able to take advantage of leverage. This is because you have the ability to purchase a rental property with funds that are borrowed. As a result, you are able to begin taking advantage of the benefits offered by owning rental property while only investing a percentage of the total value of the property. In addition, since the property itself will secure the debt you do not have to worry about using other assets to secure it.

Tax advantages are another important benefit of owning rental property. If you obtain a mortgage on your property, you will frequently be able to deduct your mortgage interest payments. There are also a number of other tax deductions which can potentially be taken when you own rental property including the cost of repairs and improvements.

What To Look For When Buying A Rental Property

Location is always important when it comes to real estate and that is no different when shopping for a rental property than when purchasing a home in which you will live. Properties which are close to amenities such as shopping, schools, worship centers and are generally considered to be in a good neighborhood and will typically make better rentals than homes that are located on busy streets or which are not near such amenities.

Outdated homes are a prime example of properties which do not make the best rentals. One of the main reasons that outdated homes do not often make good rental properties is the fact that they are simply more prone to have things go wrong with them. You will have two choices when dealing with an outdated rental property, you can either spend the money to update it and risk your profit or you can not update. The latter is also quite risky as most renters, if they have a choice, will rent a property that is updated. Renters typically expect the properties they are renting to be safe, secure and have working systems and appliances. Some of the main problems you may run into with outdated problems include plumbing issues, roof leaks, cracks and settling, electrical problems and the ability to obtain parts for appliances. 

Homes with pools also do not frequently make ideal rental properties. At first, you may see a home with a pool as an advantage which would be appealing to prospective tenants; however, this is not always the case. Many prospective tenants, especially if they have young children, do not want to live in a home with a pool because of the risk factor. You should also take into consideration the issue of liability as well as the cost of maintaining the pool. 

In addition, homes that are considered to be high maintenance may not make the best rental properties. Consider how much time you are willing to spend each week working on your own home, if you are a homeowner. You might find the tasks of weeding, mowing the lawn and watering the flowers at least fulfilling if not rewarding. The thing about tenants; however, is that they are often not willing to perform these tasks for a home they do not own. If you have a property that requires all of these tasks consider hiring someone to handle the yard work and then including the price in the rent. You will be able to guarantee that the work is done and your property does not look unkempt without having to actually worry about it yourself. 

It is always important to make sure you take location in mind when choosing a rental property because most prospective tenants will be looking for properties that are in good locations. If there is competition on the market, a tenant will often choose a rental that is in better location even if it means paying a bit more in rent.

Choosing An Investment Property

Before you actually begin looking for the right investment property, make sure that you have gone through your finances and have them in order. Ideally, you should check your credit report several months before you plan to purchase or decide to build the property in order to be certain that there are not any inaccuracies which could prevent you from obtaining a mortgage for the investment property. Finding the right rental property is certainly one of the keys to succeeding with investment rental property. 

Below is a guide to help you get started in finding the right property that will help you to generate additional income. 

First, consider whether you want to look for rental property on your own or whether you wish to use a broker to assist you in the process. There are certainly many advantages to working with a reputable broker when you are looking for investment property. In many cases, brokers may know of properties which have just come on the market and which may not have been noticed by others yet. A broker is also usually well versed about the local neighborhood, which can be important if you are not from that area. 

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It is also important to do your research about the local market so that you do not overpay for the property you ultimately purchase. When you do purchase a piece of investment property, you need to make sure that the deal you strike allows sufficient room for a profit margin just in case there are times when you do not have a full occupancy. 

Carefully consider both the advantages and disadvantages of purchasing a property that could be labeled as a fixer upper. While you very well may be able to purchase the property for less money than other properties, you may very well find that you have purchased a money pit. In the event that a lot of major repairs and renovations are required, this can equate to a large investment of both time and money. In this case, it would be better to pay more for a property that requires less attention. 

Before you purchase any property, take the time to have it inspected. Even if you have inspected the property on your own, you should still have a professional go over the property to be certain that the electrical wiring meets code, there is no lead in the paint and that overall, the property is safe. An inspection can sometimes turn up problems which you might not notice but which could ultimately cost thousands of dollars to correct. You will typically be required to pay for the inspection; however, it is a wise investment that could save you quite a bit of time and money. 

Finally, do not make the mistake of ‘settling’ for a property simply because you are in a rush to invest in rental property. This could result in an investment that will require you to spend more time and money than you originally planned and detract from your profit margin.