If you’re considering starting your own vacation rental business, it can be intimidating to know where to start and what’s involved in the process. Luckily, with some knowledge and the right resources, you can be successful in this venture. Boxwood Properties wants to help, and below we’ve put together some excellent tips to point you in the right direction.
How Do You Know If It's a Good Investment?
Consider the number of people that travel to your desired area for their summer vacation. If you want to attract as many renters as possible, look for locations where many families with kids are looking for a fun place to stay.
Finding the Right Property
Buy in an area where rents are high enough that you can make money on your property even if It's not rented all year round. If you purchase in a location with cheap rent prices and few renters, you may have difficulty covering your expenses.
Real estate is all about location. It’s imperative to consider factors such as proximity to attractions and easy access to public transportation. When it comes to vacation rentals, Nashville has a lot going for it. Also known as Music City, this popular destination is known for a vibrant music scene and nightlife, historical attractions and plenty of things to do for all ages.
If purchasing in Davidson County (Metro Nashville), Non-owner Occupied short term rentals (“NOO STR”) are limited to certain zoning regulations. As of January 2022, no new non-owner occupied permits can be obtained in any Residential zoning. Many new construction NOO STR’s are found in commercial and multi-use type zoning. The agents and property managers at Boxwood Properties are extremely competent in Navigating the permit process in Davidson County and the surrounding counties.
Amenities To Attract Renters
Many factors contribute to making your vacation rental appealing, from price and location to amenities such as a pool, luxury linens, proximity to shopping and dining and gourmet kitchens. If you’re not sure how to compete with other rentals in your area, start by doing some research. Look up local listings in similar areas, and see what they offer that yours doesn’t.
Purchasing a Rental Property
Before purchasing anything, spend time considering your budget. Calculate how much income you can expect to realize from potential renters, and ensure that amount covers your costs — including property taxes, mortgage payments, insurance, and upkeep.
If you’re looking at homes that need some work, focus on buying decent-quality, sturdy homes with good bones. That way, when it comes time to renovate your rental home, you encounter fewer surprise issues and unexpected costs.
Professionals You Can Hire
When investing in real estate, hiring professionals can help ease much of your stress. A property manager acts as an on-call maintenance professional and coordinates cleaning and repairs. The right agency can handle rental bookings and help you list your property for maximum returns, and an accountant can assist with tax-related matters. It may be more expensive to hire experienced professionals to handle these tasks than to do them yourself, but when it comes to your hard-earned money — do it right.
Protecting Your Assets
To protect your assets against potential lawsuits and other risks, consider forming a limited liability company, or LLC, for your vacation rental business. To form an LLC, you can hire a lawyer or use a much cheaper online formation service to handle all the paperwork. However, make sure you do plenty of research into Tennessee LLCs before making a decision.
A Profitable Venture
Investing in vacation real estate takes work, but if you're willing and determined — it can become a profitable venture.