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If you’re looking to buy your first short term rental property, there are a few tips that you should keep in mind. Before you begin searching for the perfect home, it’s a good idea to get preapproved for a mortgage and estimate your future income. This will help you to know whether you can afford the monthly payments on the home.
Location is critical
If you want to buy your first short term rental property, location is one of the factors you should consider. A good location will boost the value of your home.
The best place to start is to research the market in your intended locale. For example, if you are moving to the city, buying in a downtown area may be the way to go. Likewise, if you are looking to invest in real estate, you may want to look into properties located near colleges and universities.
There are several ways to find out which properties are in high demand, including checking out listing sites, putting a few listings on your own and hiring a property management company. You can also hire a handyman to get your property ready to rent.
Get preapproved for a mortgage before securing financing
Getting preapproved for a mortgage before buying a short term rental property can save you a lot of time and money. Having a lender ready to back your offer is a great advantage in today’s competitive housing market.
Preapproval also gives you an idea of how much money you can borrow. Lenders look at your credit history and debts to see if you qualify for a home loan. They will use your debt-to-income ratio to determine how much you can afford.
It’s important to have all of the financial documents you need in order to get preapproved. This will give you a complete picture of your credit profile and help you avoid any potential pitfalls.
Getting preapproved can take several days, but some lenders can do it in a few hours. You can choose to do the process online or in person. A good idea is to apply with a variety of lenders, so that you can compare quotes.
Estimate rental income before buying a home
One of the first things you should do when you begin to research a new investment property is to estimate the rental income. This will help you determine whether you can make the property a profitable venture.
There are several ways to estimate the amount of rental income you can generate. You can refer to your real estate agent, check with other landlords, and even look into your own personal finances.
One of the easiest ways to estimate the amount of rental income you will likely produce is to use the 1% rule of thumb. This rule states that the total rent should be at least 1% of the purchase price of the home. Typically, a purchase of $100,000 will require a rent of at least $1,000.
Proper lease is important
The proper lease is an important aspect of your property management strategy. It helps you avoid potential pitfalls and ensures your tenants are happy. When it comes to buying your first short term rental property, you should do your research.
For starters, you should consult a financial advisor and a real estate agent. They can provide you with information on how to finance the property, and what you can expect in the way of rental income.
Aside from the usual rent and transient occupancy taxes, you’ll need to keep an eye on local and state laws. You’ll also want to know about security and eviction laws. Also, make sure you have enough cash on hand to cover your expenses and unexpected costs.
VRBO and Airbnb can turn buying a rental property into a nightmare
The short-term rental market has become a popular alternative to hotels. Whether you are looking to stay in a hostel dorm or in a luxury chalet, you can find something to suit your budget on websites such as Vrbo and Airbnb.
These sites allow you to book your next vacation rental in an easy process. Both sites work hard to protect both guests and hosts. They also have a variety of home styles to choose from.
The main difference between Vrbo and Airbnb is their cancellation policies. While both have some flexibility, Vrbo has a stricter policy. It is possible to cancel a booking at least 14 days before the check-in date. But only if the problem has been resolved with the property manager.