To many people owning a lakefront vacation home seems out of reach, but the right vacation home could potentially pay for itself. With the onset of people choosing an Airbnb rental over a standard hotel, the potential for owning a vacation home that pays for itself is within reach! Don’t be fooled though, making the most of your lakefront rental comes with risks. We have gathered a list of tips to make sure your rental venture does not fail.
Location, Location, Location– We often stress the importance of location in real estate investing. But when it comes to buying a vacation rental property, it is by far the most crucial factor. Vacation properties that are situated in a good location will have a high occupancy rate, which is the key to generating positive cash flow. Besides boasting all the basic amenities, the location you invest in should be active throughout the year and not just during a few months. A good example of this is a direct lakefront home that is in a mild climate or in the northeast close to a ski resort. Year round rental potential is critical to having your property pay for itself!
Set a financial goal– Before you can do anything, you need to determine your break-even point .You need to figure out how many weeks out of the year you need to rent the property in order to compensate its expenses. Calculate how much this house is costing you on an annual basis. Take that number and divide it by the amount of rent that you charge for one week in the house. Unless you determine this number, you will not have a goal to work towards. A general rule of thumb is to anticipate approximately $10,000 per bedroom gross rental income every year.
Advertise properly– Make sure you are not using outdated methods to advertise your vacation property. In today’s world, you need to focus on Internet advertising to bring people to your property. There are a number of different ways that you can advertise effectively online. Social networking sites are a great place to start. Many vacation rental sites are inexpensive or even free, and they can be very effective. You can even create your own website.
Be your own property manager– Another way that you can make your vacation rental pay for itself is to cut out management fees. Many people that own vacation rentals hire a management company to do everything for them. The management company will clean the property, conduct necessary repairs, and collect rent money for the owner. They will also make sure that the property is rented for the owner. While this is a preferred method for many, it can be costly enough to make a big dent in your overall profit. Handling minor repairs does take time, but the overall cost saving can really make a difference.
When buying a lakefront vacation home, don’t overextend yourself. Try to pay all the expenses yourself until you have a steady rental income in place. Use these strategies to cover your expenses when it’s feasible to do so and enjoy the extra savings. Owning a vacation home can give you a sense of security and peace of mind. Knowing that you have a place to escape to when life gets tough can be a huge relief. And if you ever find yourself in need of a temporary place to stay, your vacation home will always be there for you. Owning a lakefront vacation lake home can offer many financial and non-financial benefits. If you’re thinking about purchasing a cabin of your own, be sure to weigh all of the pros and cons before making a decision. When you’re ready to make your lakeside rental dreams to the next level, contact any of our Lakefront Specialists to make it a reality!
Posted by Scott Freerksen – The Lake Guy