Looking to scoop up an investment property? Vacation rentals can be a wonderful way for an investors to build wealth in real estate and enhance their portfolio. You just need to know how to make sure the property you buy will help you maximize your profits. To make the search easier for you, here are a few helpful tips you will want to follow.
Carefully Research Home Values and Real Estate Trends
If you want to ensure that a rental property is a good investment, you want to be able to negotiate the best possible price for it. That can be hard to determine when looking at the listing prices on homes, especially in popular North Dallas areas. You can use a home value estimator to really figure out what potential properties are worth so you do not end up overpaying. This loan calculator’s estimates are based on several factors including the overall value, property details, and sales history.
Before making an offer, you may also want to check whether the local real estate market is more favorable for buyers or sellers. In a buyers market, you may have more wiggle room for offering less than the asking price, but you need to act quickly in order to snag quality investment properties in a sellers market. Knowing this information can also help you better prepare your finances for this investment home purchase; ask your local real estate agent for advice. Home loans for investment properties usually require a minimum of 15% down payment. When shopping for investment property loans, many buyers choose to work with a local mortgage broker instead of a bank. The advantages of working with a local mortgage broker like Competitive Home Lending include a faster and easier application process, no-obligation quotes, and lower investment property interest rates.
Be Ready to Put Some Work into Renovating Your Rental
When set up and managed correctly, an investment property can provide profits to short-term rental investors. You will need to make sure your home has what it takes to “wow” renters, so plan to make a few changes once you have closed on your property. Outdoor spaces can be a major draw for renters, so pay special attention to those areas, and consider adding some amenities. It can also be helpful for investment property owners to know what amenities people search for when cruising through short-term rental sites. Because travelers are arriving at all hours, it can be helpful to have 24-hour check-in available and to allow guests to check themselves into your rental home. Those who are staying for an extended period of time may also be looking for features like a home security system and washer and dryer, as well as kitchen appliances to prep meals with. Finally, if you want to garner rave reviews for your rental, you need to incorporate special touches into your guests’ experience, whether they’re guides to local restaurants or complimentary toiletries.
Search for Short-Term Rental Homes in Traveler-Approved Locations
Your vacation home could have all of the luxury touches and features in the world, but if it’s not in the right location, you’re not going to see a return on your investment. So, before you begin looking at prices and planning renovations, research online to see how popular your town really is with tourists. You can easily find guides that will let you know good and bad vacation property locations, and you can try searching in these areas or even extending your efforts into neighboring towns and communities. For first-time real estate investors, buying a vacation home can feel like a real gamble. However, as long as you do your homework and work with an experienced local real estate agent, this can make a rental property a good investment. Take your time finding the right investment home that will help build your real estate investment portfolio.
An investment property's projected income can be used to help you qualify for for an investment property loan. This can help reduce your DTI and increase the amount of your investment property loan, even if the property does not have a current renter. You can list your rental property as a short-term rental for additional rental income. Check with your local real estate professional before making an offer on a short-term rental investment property.