I get asked a lot of questions. It’s kind of my life these days. One of the most frequent questions I get has to do with investment homes and what do I feel are good ways to make money in real estate. It’s kind of a loaded question. If anyone ever tells you there is no way you can loose money, run away! But, if you are in the market to make an investment, here are a few ideas.
Vacation rentals are huge in our market. They serve a dual purpose. They provide income and they provide a vacation space for the owner. To be clear, I am NOT talking about timeshare. Timeshare in my humble opinion is the fastest way to waste money. I have one, I never use it and I can’t pay someone to take it away. What I am talking about is what is known in my world as a “short term rental”. This can be a single family home, condo or townhouse. The key is the zoning. Only certain areas allow this type of zoning, which by it’s nature, allows an owner to rent out the property, much like a hotel. They are often furnished and have system in place to maintain them. You can find them in many price ranges and styles. Think of it like this. You are from the United Kingdom and you plan on being on holiday for 2 weeks. You want your own space and your own pool. The hotel is okay, but it’s cramped and you really would like to cook your own meals and also have a big family. Solution? Short term rental! You can find a 4 bedroom home with a pool that rents for maybe 1000 a week or less. It has all you need to be comfortable and is just minutes away from the theme parks! Imagine now that you are the owner of this home. Your property manager provides all the services your guests need and you collect a paycheck. Want to use the place for your vacation? Block the time and save it for yourself. You can do as little or as much of your own booking and maintenance that you like. It’s even easier if it’s a condo since the outside is already covered by the association. These units start as low as 125K and go up as high as you can imagine. There are many new communities that are set up for this type of rental and have on site staff to take care of every detail. These are priced around 300K or so and are brand spanking new! This means they have lower maintenance costs, better energy savings and are more appealing to your future guests.
So that’s the good stuff. Possible pitfalls include occupancy. If not marketed properly, the unit may go empty, so be prepared to chip in if you have a mortgage. You should NOT expect every single month to be fully booked. There will be wear and tear on the home since guests will not always treat it like their own home, but with a clear contract and security deposit, rarely are there issues. The tourism industry has it’s ups and downs, but overall, if you choose the right place in the right area, you can do quite well and get a favorable return on your investment.
If you are interested in seeing some of what these places look like, send me an email to David@DavidDorman.com and let me know what you have in mind.