Tips to Investing in Vacation Properties | Think Realty
As I guide a potential buyer through the process of buying an income generating property, I typically emphasize three general rules that apply regardless of where the property you are looking to buy is:
- Always do your due diligence,
- Put a premium on site and
- Focus your search on properties that have proven management companies and reputations in their respective communities.
Let’s take a closer look at these must-do items and how they relate to properties specifically located in sought-after vacation spots.
Conducting due diligence is critical before you take the plunge into investment property. Potential buyers should consult the property’s rental history to see how it has performed in the past. This is just as good an indicator as any other of the future performance of a property. While it may not be a primary focus when looking for an investment property, certain nuances can disrupt rental income and decrease the property’s return on investment. For example natural weather events. Understanding the local demand for rental properties is also crucial. Many areas, especially beachfront properties, have low and high seasons. Understanding how these seasons affect the area’s inventory and rental prices is key to getting as much value out of your investment as possible. Whether or not you intend to use the property for your personal use is also important to consider, as the time you spend using the property will limit the income potential of the property.
Location and facilities
My experience over the years has shown that tenants are willing to pay a premium to be in a desirable area – in short, location is king. Renters value the convenience, be it near local attractions, shopping, or dining. Buying a property in a desirable area with plenty of built in or nearby amenities tends to allow the investor to charge a higher price for the property, which means a higher rate of return for the investor, even compared to the higher price charged for the property Securing the property paid is the ideal place. The design of the house is also very important. While much of the properties we sell are on one of the most beautiful white sand beaches in the world, many of my clients visit the hot summer months and make a large, private resort-style pool an important amenity. Other sought-after items include a private bathroom for each bedroom, which offers a lot of privacy and the ability to comfortably accommodate a family.
Professional property management
Finally, my final tip for sourcing a great vacation home is to find a well-established home that has already been thoroughly reviewed and managed by a professional management company. An excellent guest experience is of the utmost importance. Obtaining a property that already has great management enables a potential buyer to have immediate success with a company that has a proven process in place. For example, the Florida Panhandle has a diverse selection of inventory with an incredible rental season that Rented Inc. and Weiss Analytics have named the best vacation rental market in the United States for having the highest return on investment.
Our market along the Florida Emerald Coast is unique because the majority of our resort inventory is geared towards short-term rentals (i.e., one to seven night stays) and a constant high season between Memorial Day and Labor Day, as well as an exceptional low season in which these properties can generate income for most of the year.
Lastly, always take the time to identify the right market for your investment property. Once you’ve identified a property, do your due diligence, keep the location / amenities a priority and work with a reputable, experienced management team. You are on your way to finding a high income property in a vacation destination.
Jonathan Spears is the founder of the Spears Group at Scenic Sotheby’s International Realty and has an extensive knowledge of the real estate market in northwest Florida. He has posted sales of over $ 700 million and was named the youngest member of “The Thousand Top Real Estate Professionals,” as published in the Wall Street Journal, for the second year running, and has him in the top half of one percent of the more than 1.3 million REALTORS® nationwide according to individual sales volume. Jonathan graduated from Florida State University with a BA in Business Administration at age 19.