Turning a Second Home Into Vacation Rental

Some investors are proposing to buy second homes to offer as vacation rentals. Before taking action, however, investors should be aware of certain beneficial steps they can take. This includes examining the desired neighborhood, identifying what houses are available, determining what types of permits are required, finding out if short-term rentals are allowed, and checking the extent of coverage under an existing homeowners insurance policy. In the rental arena, there can be a significant differences in rental income between a three-bedroom/two-bathroom house and one with four bedrooms and four bathrooms–a difference of 30 percent to 50 percent. As a result, it is important to look for the maximum amount of bedrooms and baths in order to attract larger families and groups. It is also helpful to check local hotel rates throughout the year to identify variations between the seasons to gauge how potential rental income might vary. Other key strategies include using professional photographs and posting at least 10 of them on Web sites like VRBO.com, hiring a house manager or management company if not personally managing the property, responding to potential renters in no more than a two-hour period, and not being overly aggressive or quick to close a deal. | Read More