Owning multiple vacation rentals is a great way to generate passive income, but there are many things you should know before starting. For example, in some states, it’s illegal to have an owner unoccupied short-term rental property. There are even HOA regulations within a city that could prevent you from renting out for less than 30 days. The key is knowing what you’re getting into before deciding if this type of investment is right for you.
It seems like many people are jumping on the bandwagon of owning a vacation rental these days. There are many reasons why someone might want to own a second home for rent, but there are also some things you need to know before taking the plunge.
Here are 3 key things you need to take note of before you own multiple vacation rentals:
1. Is it Legal?
One of the first things you need to do before looking into owning multiple short-term rentals is making sure that it’s legal in your area. There are some areas where more than one vacation rental property is not allowed, and others where it can be hard to get approval for a second home.
In many cases, you may need to get a license from the city and ask them if they will approve a second property for vacation rentals. If you’re already renting out one home and they find out, you could be in trouble and asked to shut down your current rental.
2. Will it be Profitable?
A very important thing to research is profitability. Before you go through all the effort to buy a new vacation rental you will want to make sure that you will see a return on your investment. With this research, you can determine how long you will have to keep it running during the year.
Research peak times. It is best to have your property up and running during peak times so you can get the most out of your investment. Also, know that there will be slow times as well so it’s important you are prepared for when your income is down.
3. Can You Keep It Running?
Owning a second home for rent is not as simple as putting up an ad on Craigslist and waiting for the money to start rolling in. If you end up buying another property, you will need to spend time making sure that everything runs smoothly.
Make sure that you understand all the operating costs that are acquainted with running a vacation rental. Although the returns have a higher potential it will also require you to put a lot more money into it.
You need to make sure that there are no issues with the home, and that there is enough security in place to protect it. This usually means putting a camera outside the house, paying an on-call service for emergencies, and even hiring a professional cleaner.
Owning a vacation rental is an exciting and rewarding experience. But it also comes with some unique challenges when it comes to the management of multiple properties. But with the right tools, however, this can be a breeze. Lodgable offers free property management software for property managers to seamlessly manage vacation rentals across the country. Aside from connecting property managers to AirBnB and other booking sites, this all-in-one software will help reduce costs and work with you to increase revenue.