Buying Your First Vacation Rental Property? What to Know Before You Invest
Vacation rentals are gaining a reputation as a lucrative real estate investment. However, not all short-term rentals are a smart purchase. If you’re new to real estate investing and considering purchasing a property as a short-term rental, this is what you need to know.
Where to buy a short-term rental property
The ideal short-term rental location has three things:
Strong tourism industry with year-round tourism.
High rental rates compared to home prices.
Vacation-rental-friendly laws.
Turnkey shows there’s no question why San Diego hits the first mark, with its year-round temperatures averaging 70 degrees, vibrant neighborhoods and popular tourist attractions. And while homes are expensive in San Diego, so are short-term rental rates. While a traditional rental might go for only $2,793 a month, in some neighborhoods short-term rentals can net $3,500 or more monthly.
Which neighborhood to buy in is the biggest question San Diego investors face. Some areas that are popular with tourists, like La Jolla, are prohibitively expensive for first-time investors. Instead, consider uptown and downtown neighborhoods like Penn Station and Inspiration Point North, which are considerably more affordable but still draw crowds thanks to proximity to the San Diego Zoo and museums. Beachside locations are another safe bet, although investors worried about oversaturation may want to opt for Ocean Beach or Point Loma over Pacific and Mission Beaches, which together house a third of San Diego’s vacation rental properties.
San Diego short-term rental laws
So what about the third point? Navigating short-term rental laws is the biggest challenge for real estate investors. As of 2019, San Diego has repealed regulations that would have restricted short-term rental owners to primary residences and no more than six months per year. For now, there are no enforced regulations on short-term rentals in the city. However, investors concerned about shifting regulations may choose to purchase a property that can convert to a long-term rental to mitigate risk.
Attracting renters to your short-term rental
A great location is the start, but it’s not everything you need to draw travelers to your vacation rental. These strategies will attract more renters and let you command higher rates for your property.
Supply the right amenities
Some amenities are expected — high-speed WiFi, linens, toiletries, and cookware are the cost of doing business for vacation rental owners. However, some amenities net a premium.
Smart entertainment devices, outdoor living spaces, hot tubs, and recreation equipment like bikes and kayaks are one-time costs that lead to higher profits at every booking. Pet-friendliness and handicap-accessibility also increase your property’s rental value, since properties with these features are harder to come by for travelers.
Hire a professional photographer
Photographs are the first thing guests see when shopping for a vacation rental. If they don’t like what they see, renters won’t click the listing to learn more. Invest in a professional photographer who will showcase your property in its best light.
Write a compelling listing
The rental listing is the final chance to pitch your property. Approach the listing description like a copywriter, focusing on creating concise, captivating prose rather than enumerating every detail of the property. Check here for in-depth advice on writing your property’s listing description.
Hire a property manager
Renters expect prompt communication from their hosts, whether that’s at check-in or when something goes wrong in the middle of the night. Unless vacation rentals are your full-time endeavor, hire a property management agency that’s always available so you don’t have to be.
Are you ready to start shopping for your investment property? No matter what type of property you’re looking for, a local real estate agent can help you find a place that’s sure to be a hit with vacation rental travelers.