Factors To Consider When Choosing A Location
In this blog post, we’re going to go over several critical factors to consider when choosing a location to start your first vacation rental. Before you purchase any kind of real estate, take time to ask yourself the following three questions:
What is your budget? There are two big things to consider in your budget. First is your down payment on the home. If you’re going to buy an investment property and not live in it, banks will usually ask for a 25% down payment. This is fairly standard in the industry. You may find some banks who might do it for less, but for the most part plan on about 25%. If the house is not in good condition, you’ll also want to budget for any repairs needed. The second big thing is your staging. With vacation rentals in particular, you’ll need to provide bedding, linens, furniture, cooking utensils, and more. Typically, for a 3 bed 2 bath, plan on around $30,000. Some may say that’s fairly high, and you may find a lower price depending on how much you’re willing to shop around. But as a conservative estimate, plan on about this amount.
What is your distance? What you’re really asking here is are you willing to manage your vacation rental remotely? Are you willing to manage this home even if it’s not within driving distance? Hopefully for you, the answer is yes because you’ll have a lot more success when you treat your vacation rental as a business and you set up processes that will allow it to function at a distance. If you’re the only one responding to inquiries and maintenance issues, or if you’re the only one cleaning the property, you’ll burn out fast. You likely won’t own more than one at this rate. So you’ll want to find a more sustainable method of running the property.
What is your Timezone? If you are two hours difference or less than the timezone of your guests, then it’s probably easier to respond to inquiries from guests. But if you’re managing a rental in China and they message you at 2am expecting a quick response, it won’t be sustainable. So consider the timeframe in which you’re willing to manage your property, if you will be managing guest communication. You’ll also want to consider when an average check in or check out time will be and translate it to your own timezone.
Once you’ve answered these questions for yourself, you’ll be ready to start the house hunt for your first vacation rental investment. Cheers!