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If you’re looking into investing in rental property, there are some important points you should consider first. Taking time to think through some essential details can help you make a good investment decision and make your first short-term rental property investment a winning one. Keep reading to find out what you could be considering while making your decision.
Examine Your Profitability
The first concept you should consider in choosing a rental property to invest in is profitability. It’s important to make sure the property can be profitable, especially if it’s located in a seasonal area that might experience more vacancies. The main indicator of the profitability of a rental property is cash flow. To calculate the potential cash flow of your property, subtract all the property-related costs and expenses from the rental income value. This can help you decide if the property will become a financial asset or a financial burden.
Look for Appealing Amenities
It’s also a good idea to look for appealing amenities in your potential investment property. Either buy a property that has appealing amenities to vacationers or install them yourself. Some examples of popular amenities vacationers look for include a game room, gym, pool, hot tub, and TV.
If you do decide to invest in a property with a pool or hot tub, it’s important to understand the costs of installation and maintenance. Hot tubs require draining every few months because high temperatures change water chemistry. Pools require regular brushing on the walls and floor, and the water requires consistent circulation, filtration, and chemical treatments in order to remain safe.
Many people enjoy a nice DIY project—upcycling furniture and restoring old or broken items to good condition. While this can be a fun and satisfying hobby, it’s a smart idea to avoid investing in “fixer-uppers” (rental properties which will require a large amount of money to get into renting condition). As you acquire wealth, it will become more possible for you to invest in bigger projects, and eventually take on a fixer-upper property if you want. But in the beginning stages of your investment process, this practice will allow you to spend your money most effectively, and ultimately get the most return with the least risk. If you’re not sure what kinds of properties are good to invest in, a real estate counselor can help you to figure out that and many other helpful things.
These are only three of the many things you should consider before investing in a rental property. You’ll thank yourself later for doing your homework now in choosing a winning short-term rental property investment.
Are you looking for more ways to make money? Check out some more ideas in this other article: 3 Options to Look Into for Earning Passive Income