How to Buy Vacation Rental Property
Unlike other investments, you can't just pick up a phone and say you'll purchase it. You'll need to close on the property just as if it were your own property. That means potentially qualifying for and then obtaining a mortgage, going through the closing, and then taking full possession of the land as if it were your own.
Is this the right investment to make for you? It is if you meet three specific criteria right now.
1. You want a home that you can use for retirement later on.
When you're considering a vacation home for rental, it is going to typically be in a resort area that has some attractive features with it. Maybe it's close to the beach or the mountains. You could have the property on a lake potentially. Whatever the case may be, find the home that will eventually be your retirement home and the investment is going to make a lot of sense. You'll also be able to occupy this property at least 2 weeks out of the year and have your losses subsidized.
2. You have to move from a high traffic vacation area and can't sell the property.
If you have to move because of your job or life has thrown you a curveball and your property is already in a high traffic area, then it is more profitable to rent the property as a vacation home then it is to take a massive loss to get the property off of your hands. You could sign a long-term lease with a tenant if you want as well, but there's a good chance you won't make as much money in a vacation destination from a 1 year rental as you would with periodic 2 week rentals or even weekend rentals.
3. You've got extra cash to spend and you're willing to gamble.
The problem with a vacation property will always be the risk of future development. Your home has to compete with other land that could be become condominiums and saturate the market with vacant properties. There might be new golf communities springing up around your home that have more value to a renter or short-term vacationer and that will leave the home vacant. If you've got extra cash and you're willing to gamble, however, then the purchase of a vacation rental isn't a bad investment to make.
If you want to know how to buy a vacation rental property, then look for the low cost homes that are in your chosen area. Find the best deal and then begin work toward closing on that home so that you'll have an investment that makes sense for your portfolio.
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