Have you been dreaming about how amazing it would be to own a private summer home?
When you own a vacation home, you no longer have to deal with the inconvenience associated with searching for a hotel each time you want to get away. Cramped and loud hotel rooms will be a thing of the past. Altogether, you may have a much more enjoyable vacation experience. The only thing that is standing in your way is the cost of a second home.
When you own a second home, you likely will take on a new mortgage payment. Property taxes, maintenance costs and insurance also add to the overall cost of the home. While it may initially seem like owning a vacation home is not affordable, there may be a great solution to this problem. Purchasing a property that can double as both your vacation home and a rental property makes owning a second home much more affordable. When you are not actively using the property as a getaway spot, the property can be making you money through rental income. In fact, the rental income may partially offset the costs, or it may entirely pay for the cost of the home. After you take a closer look at the experience, you may be able to determine if this is a smart option for you and how to feasibly make it happen.
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Deciding If a Vacation Rental Is Right for You
Regardless of whether you are dreaming about the vacation experience at a rustic lake house, a charming beach house or something else, you need to consider the logistics associated with owning and managing this type of property. For example, how much time to you plan to spend at the vacation home each year? Are you comfortable with the thought of vacationers spending time in the house while you are gone? Are you excited about the possibility of owning a vacation property without having to take on the substantial ownership costs on your own? There are both pros and cons associated with using your new second home as an income-producing rental property. Many people find that it is easier to conceptualize the pros and cons when they actively search for a new property and crunch the numbers associated with using it as a rental property.
Choosing the Right Location
One of the first things that you need to do is to determine which location you may like to purchase a second home in. A vacation home that is used as a rental property is one that serves two primary purposes. Because of this, the property should be ideal for both purposes. The first purpose of the property is as a summer home or vacation home for you to enjoy with friends and family. This should be a place that you will enjoy visiting regularly for at least the next few years, and it likely is a place that you have already visited and are familiar with. The second purpose of the property is as a vacation rental. When you look at the best place to buy a home that will be used as a rental property to vacationers, this property should be in a desirable location where many people enjoy vacationing. In order to make a decent or even substantial amount of money for you, the home should be leased on a fairly regular basis. If you plan to use the home for long periods of time only in the summer and if the location is most well-suited for summer vacations, such as may be the case with a beach house, you may not reasonably expect to make much money using it as a rental. On the other hand, if you only intend to use the home sporadically yourself and if the home is located in an area with a longer tourist season, it may generate much more money for you. The best place to buy property for this purpose is in an area that you will enjoy visiting and that has almost year-round appeal to vacationers.
Selecting an Ideal Home
After you have narrowed down your search parameters to a specific city or region, you can then begin searching for the ideal vacation home to purchase. Again, this is a home that must be practical and well-suited for your own vacationing needs, but it also should be appealing to vacationers. For example, if you intend to buy a lake house, a lovely location on the lake may be an excellent option to consider. However, this may not be ideal if the home is located too far away from attractions, stores and other important places that may be appealing to vacationers. The home should have a typical layout with a reasonable number of rooms. When the home is too small or exceptionally large, you may limit your pool of possible renters. In addition, select a home that may be easier to maintain from a distance. A home with a pool and immaculate landscaping may look great, but these features can be expensive and challenging to maintain when you are not on the property regularly. In addition, the home should be in great condition from the start so that you can begin renting it out to vacationers almost immediately after you purchase it.
Crunching the Numbers
Now that you have found a lovely home that may work well for your vacationing activities and as a vacation rental, you need to analyze the financial aspect of ownership. Research annual ownership costs. This will include property maintenance, mortgage payments, property taxes, property insurance and a healthy sum for repairs. These are the basic expenses associated with ownership that you will have regardless of how you use the property. Next, think about any additional expenses that you may incur if you lease the home to vacationers. This may include cleaning expenses, extra repairs, more utilities expenses, marketing costs and more. You also should estimate the income that the property can reasonably generate for you. How many weeks of the year will the home be available for lease? What are local homes of similar size and condition in the area renting for? You should consult with a local property management company that specializes in vacation home management to get realistic information. Remember that non-refundable deposits and cleaning fees can also be charged in addition to the rental fees so that you can offset some of the ownership expenses.
Understanding the Self-Management Experience
Another important factor to think about before you finalize your decision to purchase a vacation rental home relates to managing the home. When you manage a vacation rental property on your own, you can save money by avoiding having to pay for a property management service fee. On the other hand, when you manage a vacation rental property on your own, you are solely responsible for finding and screening tenants. You also are responsible for facilitating the disbursement and collection of keys to tenants, for walking through the property after tenants vacate to determine if any of the deposit will be retained to pay for damages, for coordinating cleaning services and repair work and more. You may have heard that owning a long-term rental home is a lot of work. This may be true, but remember with a long-term tenant, you will not have to deal with all of the marketing, cleaning, repair and general overall leasing activities on a regular basis as you must do with a vacation rental home. Owning a vacation home that is used as a rental can be very lucrative in many cases, but you may not want to manage a vacation rental property on your own. After all, the stress and hassle associated with doing so much work yourself may make it disadvantageous to own a second home.
Determining If Professional Property Management Is a Better Option
An alternative to self-management is to let a professional management company manage a vacation rental property for you. You will pay a fee for professional property management services, but in many cases, hiring an experienced management company may ultimately help you to generate more income from the property and to keep expenses as low as possible. For example, a property management company that manages many properties in the same general vicinity may already have marketing strategies developed and may already be actively seeking tenants for its managed homes. The right company may be able to keep your property’s occupancy rate higher throughout the year while also keeping costs as low as possible. After all, they may already have great relationships and perhaps even contracts with repair, maintenance and cleaning companies in the area.
Putting Casago’s Services to Work for You
As you might imagine, the benefits associated with hiring a professional to manage a vacation rental property are directly related to the company that you choose to hire. Casago is a reputable management company that specializes in vacation rentals in desirable locations along the West Coast, including in the Santa Barbara area. We have one of the lowest management fees charged by reputable and experienced management firms. You may be hard-pressed to find another management company specializing in vacation rentals that offers a management fee lower than 15 percent. More than that, we have extensive personal and professional knowledge of the Santa Barbara real estate market, including the market for vacation rentals.
More than that, we go to great lengths to market your second home so that occupancy remains high throughout the year. In fact, we list our client’s properties on almost 100 different websites, including top sites like VRBO, HomeAway and AirBnB. Unlike many other management firms in the local area, we also offer your home as a rental for short-term corporate housing. Some corporate housing rentals may be leased for up to one to two months at a time. Our efforts to find short-term tenants also extend to connecting with local real estate agents and listing the property as a short-term housing option on Zillow, Rent.com and other traditional real estate listing sites.
Our services also continue with professional tenant screening service. While some other property managers run a cursory background check, we conduct an in-depth check to help you find quality tenants or renters for the property. Once a tenant or renter has been located, we handle all aspects of the property rental agreement and fee collection. We also ensure that the occupancy and pets rules are complied with. Some management companies use lockboxes and electronic devices to convey keys to new renters, but we personally meet each guest upon check-in. We conduct a thorough pre-arrival and post-arrival check. We also review the property with the guest when they vacate the home to avoid disputes. As a further service, we offer concierge service to your tenants to ensure that they are satisfied. Remember that online reviews and ratings are essential for keeping your property leased in the future. After tenants vacate, we act quickly to clean the property so that it can be leased out again without delay.
You can see that buying a second home is cost-effective and perhaps even lucrative when you turn it into a rental property for vacationers. While self-management of a rental home can be stressful and time-consuming, you can see that Casago offers quality services at fair rates. To learn more about our services and what we can do for you, contact us today.