So you are thinking of buying an investment property to balance out your retirement savings, here are some things to consider before deciding to buy a short term vs long term investment property.
1. Do the Math!!
I can’t stress this point enough. Does it make sense to buy the rental in the first place with expenses, mortgage, etc. Will your property have cash flow? There are great free resources on Bigger Pockets.com like an investment calculator to see if your investment makes sense in the first place.
2. How much money will you actually make renting out the place?
Check out your competition for your rental. Are they renting out and for how much? Does it look like long or short term rentals are doing better in your area. Long term renters typically pay their own utility bills while short term rentals don’t.
3. How much time do you have to spend working with renters?
Short term vacation rentals take more time while long term rentals typically take less time (unless you have a difficult long term tenant) Excellent customer service is key to having successful short term rental. It is important to build trust with the rental communities on VRBO / Homeaway, Airbnb, and TripAdvisor to have your rental perform well. 5 star ratings are key to making your short term rental successful.
4. Where is the investment property you want to purchase?
Typically most short term rentals have been in vacation areas, but more and more you can find short term rentals all over the world. You may want to consider a long term rental if your area doesn’t attract a lot of outside visitors to support your rental.
5. Are there a city / town ordiances regulating short term rentals or is the property in an HOA with some rules regarding rental properties?
It is important to find out the answers to these questions before buying the property.
While it is in your bundle of rights to rent out your property as a home owner, sometimes it may just be too costly to ledigate to get there laws reviewed. It’s just easier and more cost effective to find out an issues that may come up before hand.
Buying a short term or long term investment rental property can be a great idea, if you get the property at the right price and in a good location for renting.
Investing in real estate can be a wonderful way to balance your retirement savings. I enjoy not having all my savings tied to digits on a screen – like the stock market, bonds or cash in a bank account. It’s nice having tangible investments that’s why I love real estate as an investment.
Keep in mind Real Estate can be a risky investment, just like the stock market can be. Property values always go up and down, and the best time to buy an investment property is when we are in a down market.
On the flip side most investors make most of their profits when they go to sell the property in an up market.
I would be happy to help you with your next real estate investment, please get in touch. Thanks
Please check-out my short term real estate investment properties in the Blue Ridge Mountains of NC:
West Jefferson, NC sleeps 8
Piney Creek, NC sleeps 12