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Investment Strategy

Vacation Rental Properties: What First-Time Investors Need to Know

Guest article provided by: Financially Well.

Investing in a rental property can be lucrative, but it takes several careful steps before an investor starts to see profits. From finding the right location to making sure the house has everything a renter will need, there’s a long checklist to go over before you make a final decision. How much work will it take to get the home guest-ready, and how much should your budget be? Will renovations need to be made?

In some cases, a potential investment property is in good shape but needs a few updates or a bit of sprucing up before renters can make a booking, and those costs can easily get out of hand if you aren’t careful. You’ll also want to think about security, both in terms of tech and making some preventative measures such as getting to know the neighbors.

It’s essential to do a little homework before you make a move on a property since you’ll need to know how much it’s truly worth before you start paying for changes. Getting the biggest return on your investment is a large part of making it a success, and it will help you move forward with other investments or with making upgrades on the home.

Below is a list of things first-time investors need to be aware of and consider.

partial rent houses

Choose the right location and rental rates

Most investors — even first-timers — already know that location is important when it comes to buying a home, but when the home is a vacation rental property, it’s especially crucial. More appeal means more renters, so choose a property that boasts great views of the ocean or mountains, or is located close to a park.

These factors can also boost the home’s resale value, should you decide to sell the home in the future. In addition to location, you should also determine the rates of the rental. Though setting higher rates may seem off-putting, they will appeal to potential buyers if you put the home up for sale.

Research the market

Taking a look at housing market trends in your area of choice is always important since you don’t want to end up settling on an investment property you can’t afford. Even if you find a property that you love and falls within your budget, it’s worth looking around at other homes in the area to see if you can score an even better deal. Start by looking up average figures in the area, and then expand your search from there.


There are several ways to finance an investment property, but keep in mind that lending requirements aren’t as flexible as to when buying an investment property, and down payment requirements are usually higher. When it comes to a mortgage, a conventional loan is usually the best way to go, and lower interest rates right now can make this an easy choice. Other ways to buy a property include refinancing your current home, a reverse mortgage (if you’re a senior), or even a 401(k) loan.

Target any changes

After purchasing a rental property, you may be thinking about making some changes to the home or land that will attract more renters. This is a great way to make sure you have bookings throughout the year, but it’s important to focus the upgrades on things that renters in the area want. For instance, you might think a pool will add to the home’s value and get a higher rental price, but if the house is in an area of the country that gets cold weather part of the year, you’ll be stuck with costly maintenance for an amenity that only pays off part of the time.

Choose your upgrades wisely and do a little homework before making a decision, keeping in mind that there are several budget-friendly options. For example, providing free Wi-Fi to your guests will be highly appreciated but won’t add much to your costs — all you need is an internet provider and a good router.


managing short term rentals

Maintaining your vacation property is imperative since a home that requires repairs or aesthetic updates won’t be rented out nearly as often as one that is well-kept and clean. If you plan to manage the property yourself, look for ways to make this undertaking a little easier.

In addition to keeping your property clean, you’ll need to handle the financial side, tracking income, expenses, and keeping staying on top of your tax requirements. When it comes to keeping all this organized, look to software like Landlord Studio.

On the other hand, if you live too far from the property to perform upkeep yourself, consider hiring a property manager to care for it. Not only can a management company maintain your property, but they can also book your guests, hire between-guest maid services, and handle any issues with an on-the-ground local support team. The more satisfied your guests are, the more likely they are to book another stay and leave glowing reviews.

Investing in a property for the first time can be overwhelming if you aren’t prepared. Make a checklist of all the things you need to research and take care of so that nothing gets overlooked, and remember not to make hasty decisions.

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