Secrets to Making Money on Your Second Home or Vacation Rental

For individuals who travel often or want to make some extra money on the side, investing in real estate can provide an effective solution. If you have the financial means to do so, you could invest in a property in a popular destination and rent it out to tourists. This extra cash can be used to fund your trips or put up for future purchases. There’s also the added bonus of having your own place to stay when you want to get out of town for a while.

While having a second home or vacation rental you can offer interested parties may seem like a win-win situation, this is only true if you’ve done your due diligence. Below is a look at a few things you want to keep in mind when using your home as a vacation rental.

There Are Local Laws

Before you start advertising your property for rent you need to have a clear understanding of what the rules and regulations are where your property is located. You will have to make sure that the property is up to code, and ensure that renting your property on a short-term basis is allowed in the area.

 Protect Your Property

Though you probably have homeowner’s insurance on your vacation rental, this may not be enough to cover you should something happen while a tenant is residing in the home. Should something go wrong with an appliance, the property caught on fire, or a natural disaster results in the roof, flood, or structural damage, you want to know that you’re fully covered. Talk with your homeowner insurance provider to find out what other types of insurances need to be purchased to protect your property.

Decide How You’ll Manage the Property

Unless you’ve purchased a vacation rental or second home in an area near your current home, you’re going to need to determine how you’ll manage it. The distance and time it takes you to constantly travel every time there is something to be done can wear on you and dig into your profit.

For instance, how do you intend to collect payments for the vacation rental? Will you use a vacation rental database? Or, will you simply accept and receive payments through payment processing services like PayPal or Venmo? If the tenant should report damage will you hire a super to make and manage the repairs or will you travel to your vacation rental yourself? What about emergency property management?  Let’s say there was a tropical storm that caused significant property damage to your vacation rental. How will you ensure the insurance claim goes off without a hitch? As you won’t likely be able to travel to your property yourself for a while, it might be ideal to consider a drone inspection.  for accurate snapshots of your property’s damage.

Create Rules and Regulations

While doing a background and credit check on someone who only plans to reside in the vacation rental for a few days might be costly and time-consuming, you want to protect yourself as best you can. That’s where having solid rules and regulations come into play. You can create a rental agreement that outlines what the tenants are and are not allowed to do. This agreement should also include what the financial or legal consequences are for breaking your rules. Have the tenant read and sign the agreement before their check-in and secure a copy for your records.

Invest in Marketing

Last but not least, if you’re going to reap the benefits of renting out your vacation home you have to be willing to invest in advertising. Effective marketing is essentially how you get your rental out to interested parties and ahead of the competition. You’ll need to take quality pictures and draft up a description of the place that entices renters to reserve the space. You will also need to determine which platforms you’ll use to market. While social media could suffice, there is also the option to look for online vacation rental databases like Airbnb or VRBO and online classifieds which can also be useful in spreading the word and bringing in new business.

Owning a vacation rental can be a lucrative opportunity for those who love to travel the world or simply want to make some extra income. If you’re going to be successful, however, you’ll need to pay close attention to detail and create an effective plan from start to finish. Incorporating the above-mentioned advice into your plans will help to ensure that your rental property is protected and profitable.

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