If you are considering buying a property to use as a short-term rental, it's important to plan ahead to ensure a successful investment. Here are five steps to begin the process of planning your property purchase:
Begin Dreaming/Research the Market: Before investing in a property, it's essential to research the market thoroughly. Look at the local demand for short-term rental properties, the competition in the area, and the average nightly rates. This information will help you to determine the best location for your investment and the type of property that will yield the highest return. Additionally, buy a local owner a cup of coffee and ask them how their property is doing in the area. Be sure to choose a location you too can be passionate about. This will help your overall enjoyment of the short-term rental journey.
Determine Your Budget: Once you have an idea of the market, you should determine your budget for the property purchase. Consider all costs associated with the investment, including the purchase price, closing costs, renovations, setup and ongoing maintenance expenses. Be sure to factor in how much you can realistically charge per night to determine your potential return on investment. Knowing your budget is going to be the key in your success. This property is going to be used as an asset growing vehicle, so making sure it turns a reasonable profit is going to be necessary.
Obtain Financing: Once you have identified a property to purchase, you will need to obtain financing. Consider all of your options, including traditional mortgages, private financing, and joint ownership. Be sure to seek out a professional who understands short-term rental investments and also is able to provide you excellent customer service. Yes your terms of your finance is going to impact your profitability, and your process and education along the way is going to be critical to the overall success of this investment vehicle.
Choose the Right Property: When selecting a property, consider the location, the size, and the amenities. Look for a property that is in a desirable location with easy access to local attractions and amenities. Additionally, a larger property with multiple bedrooms and bathrooms can accommodate more guests, increasing your potential revenue. However, larger does not always mean a greater profit margin. Calculating the expenses and income is going to be one of the top priorities in this transaction.
Develop a Marketing Strategy: Finally, develop a marketing strategy to promote your short-term rental property. Consider listing your property on popular vacation rental websites, such as Airbnb or VRBO, and use social media to promote it. Additionally, consider partnering with local businesses and organizations to attract guests to your property, or even consider hiring a property management company to help get the business off the ground.
By following these five steps, you can begin the process of planning your property purchase for short-term rental use. With careful planning and execution, your investment can yield significant returns. If you have any questions on any of these steps please do not hesitate to reach out. I would be more than happy to help educate, guide and ultimately line you up withe best professionals for you next Real Estate Investment.