So you just got back from vacation. And now you find that you fell in love with the location and that quaint little beach house you stayed in. You also want to buy a place just like for future vacations and make a little money from it when you’re not there. What could be better – a place to vacation that brings in a profit? Still, there’s a lot to consider, especially if you want it to be a good investment move. So here are our tips for buying a vacation rental in Cleveland.
Consider the Location and the Appeal
That spot in the mountains or on the beach or by the lake may appeal to you, but will other people like it? That should be the first question you ask before buying a vacation rental in Cleveland. Will potential tenants like it as much as you do?
This has to do with location as much as (and probably more than) anything. A good location should have easy access, plenty of attractions, and inviting amenities. It should also have something to draw people in during the offseason. If the location doesn’t appeal to other people, then you probably won’t get much of a return on your investment.
Dig Into the Laws and Regulations
And don’t forget to check out local laws and regulations before buying a vacation rental in Cleveland. Short-term vacation rentals are not permitted in some areas and have stringent regulations in others. You don’t want to invest in a vacation rental only to find out after the fact that it is, in fact, illegal or so regulated that it becomes a money sink.
Think About Mortgage Matters
For most people, buying a vacation rental in Cleveland means getting a mortgage. But it is a more complicated matter than getting a mortgage to purchase a primary residence and typically with higher rates. You won’t be able to qualify for VA or FHA loans and mortgage insurance is harder to get and more costly. And if you rent out the property for more than a couple of weeks a year, it will be considered an investment property and the mortgage will be more costly. So before you buy that vacation rental, carefully consider all these mortgage matters.
Don’t Forget Maintenance Costs
You absolutely can’t forget the maintenance costs when buying a vacation rental in Cleveland. You won’t be at the property for most of the year, and you may even live hundreds of miles away. All this means that you will likely have to pay someone else to perform routine maintenance and make needed repairs – which will, of course, cost more than if you did it yourself. The rule of thumb here is to set aside 1% to 2% of the property’s value each year for maintenance and upkeep expenses. Keep in mind, too, that you may even have to hire a professional property management service.
Take Insurance Into Account
And then there’s insurance, which is typically more costly for rental properties. You may be able to extend your current homeowners policy to cover the vacation rental, but that’s not always the case. Ultimately, you may need to apply for a stand-alone commercial or business liability policy. You simply don’t want to be caught short on insurance coverage for an expensive investment like a vacation rental.
Finally, buying a vacation rental in Cleveland means finding tenants – if that is, you want it to make you money while you’re not occupying it. And that means effective marketing. But how do you do that?
You could and probably should list the property on all the important vacation rental websites like Airbnb and HomeAway, as well as spreading the word through social media channels. Far more effective, though, is calling on your local real estate agent for marketing expertise and effective marketing strategies. Your agent will know exactly where your target market hangs out and how best to market to them. So, before buying a vacation rental in Cleveland, be sure to consult your agent.