Have you ever heard the saying “When you fail to plan, you plan to fail.” Although the advice is pretty explanatory, many people do not follow it and end up with bad consequences. We will be discussing 5 common rookie mistakes that people make when purchasing investment properties.
Lack of Research
Most who have failed when buying an investment property, such as a vacation rental, bought on a whim. There are multiple questions you need to ask yourself when buying a home. Research needs to be done concerning the community, the neighborhood, crime, etc. You also need to fully understand the monthly expenses including HOA.
Overcrowding the house with “extra” items is a huge mistake. Keep the home beautiful but as simple as possible. You can decorate however you want, but know at least ½ of the items are going to be ruined by guests. Cut down on costs by having guests rent items such as baby cribs, strollers, & BBQ grills. If you want to provide a video gaming system in the house, just have 1 set-up to the main TV or in a themed kid’s bedroom. Guests need a non-stressful vacation, provide TVs with the same system throughout the home. Having Roku TVs in one room and then FireSticks in another is just a headache for a guest.
Unique bed configuration or lack of parking spaces can be a major issue. When a guest books a home, they have in mind how many people are going to be staying at the home. Bigger homes (such as 8-10 bedrooms) are ideal for big families and family reunions. However, if your home occupancy sleeps 20 people & you only have parking space for 2 cars, there is going to be an issue. Make sure whatever home you purchase, your guests can sleep comfortably and have enough space to park cars.
Income & Expenses
Do not underestimate how much an investment property costs. A vacation rental will have many expenses such as wear & tear on the home. Appliances and furniture will be constantly used creating a need for repairs or replacements. Then you include the monthly fees you need to pay as a homeowner. Take into account all these expenses and do the math on how much income you need to make.
Pools cannot be left alone without proper maintenance. Multiple problems can happen with a poorly run pool. While you don’t have to buy a house with a pool, it will earn more guest bookings. When relaxing on vacation, people either think of a beach or a pool or both. But if neglected, you will receive constant complaints from guests.
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