A vacation rental is not just an investment, it can also be an escape. Some folks enter the vacation rental market purely for profit, others to diversify investments, and some are trying to leverage rental income to make the dream of owning a second home in a desirable location a reality.
If you’re thinking about purchasing a vacation rental, here are some key things to consider.
1) How much house can I afford?
If you can purchase the property for cash, that’s great! If you plan to use financing, it’s important to keep a realistic budget. Many vacation rentals are seasonal and even peak seasons can be disrupted. To help pinpoint what you can afford, create an annual budget with some cushion. This way you’ll be able to pay the basic expenses out of pocket even if you have a few bad months.
2) Will I be able to keep a steady flow of rental bookings?
The most successful vacation rentals have something that isn’t easy to replicate so you may just have to get creative. That unique something is often the main factor that keeps your property rented in the off season and allows you to demand top dollar during peak season. Properties with a view, unique amenities, and a location that’s close to traveler destinations will inherently help keep your rental booked while others lay vacant.
3) Is there a Homeowners Associations (HOA)?
Arizona is considered a vacation rental friendly state, but many properties are accompanied by a Homeowners Associations (HOA) that can greatly restrict rental capabilities in your community. Before you buy, carefully review the rules that govern your property. Understand what it would take to change the governing rules, and if any CC&Rs (Covenants, Conditions, and Restrictions) exist for your neighborhood that can also restrict rentals even when there isn’t a Homeowners Association present.
4) How much should I budget for home maintenance?
Every home requires maintenance. How much depends on the age, amenities, and construction. If you have a private yard and pool, carefully consider the expense of keeping those amenities looking great year-round. For all properties, think about the day to day of what may require repairs. We recommend a proactive maintenance schedule to help prevent last minute emergencies, lost bookings, and negative guest reviews.
Thinking about investing in a
vacation rental or second home?
The experts at Tru Vacation Rentals can help you find, remodel, furnish, and even manage your rental property. We don’t have a one size fits all mentality because we know the goals of every owner, investor, and property are unique. If you’re interested in learning more about the ease of buying with Tru Realty, contact Odessa@TruRealty.com.
Odessa Keilman is a long-time Phoenix resident, with 20+ years of experience in contract writing, pricing negotiations, budgeting, and project planning. She has 8 years of experience in the Vacation Rental Industry and holds an MBA from Arizona State University’s WP Carey School of Business.