Warm Wealth: Investing in Vacation Real Estate
If you’re looking to grow your wealth, you might want to take a closer look at vacation real estate – renting out a holiday home can prove highly lucrative and relatively low-stress but you’ll first need to understand the ins and outs of management. Here are a few tips to get you started.
Finding Your Property
Locating the ideal vacation home isn’t always straightforward. There are a number of factors that can affect the viability of real estate.
- When looking at an area, pay close attention to its tourism seasonality. Some neighborhoods are busy at one time of year and quiet at others
- Factors such as local amenities, employment rate, crime rate, and government investment can play into the likeliness of property appreciation
- As you consider which vacation property is most suitable, consider the effects of a warming climate and how this might affect tourism moving forward
Securing Your Property
Signing the contract and purchasing a property is not always straightforward for existing homeowners.
- Second homes typically require a down payment of at least 10%. A large down payment could also help you to get a better mortgage rate
- In adherence to IRS laws, you must live in your second home for more than 14 days or 10% of the time that it’s available for rent
- Interest rates are typically higher on investment property mortgages, ranging from 0.5 – 0.875 percentage points higher than mortgage rates for owner-occupied homes
Managing Your Property
Once you’ve secured your vacation property, there is now the question of finding renters and managing its upkeep.
- You may need to carry out some marketing to help draw in new guests – to help with this, use a free online tool for your logo design
- Accounting software can help you to get your head around the costs and income linked to recurring guests
- It can often be advantageous to set up a business that will represent you as a landlord – register as a Limited Liability Company (LLC) for tax advantages, less paperwork, and reduced personal liability
If you want to grow your personal wealth, vacation rentals can prove a valuable asset. Just be sure to carry out plenty of research in advance and make sure the property is located within accessible distance.
Peak Property Management is Colorado’s premier full-service Real Estate Services company. We take care of your property better than if it were our own. Learn more, at: www.peakpmgt.com