Many people consider purchasing a home or property in their favorite vacation spot. They dream of having a getaway for their family to use for generations.
However, owning a vacation property in addition to your full-time home can have a significant effect on your finances. That is why many people make the investment and rent out their vacation homes when they are not using it to earn extra income.
There are a few things you must consider when investing in a vacation home with plans to rent it out. One of the most important factors is seasonality.
Take seasonality of the property into consideration
When looking to purchase a vacation rental property, there are several metrics that you must consider, including:
- The rental demand in the area;
- Whether revenue has increased or decreased in this area;
- The real estate regulations of the area; and
Since vacation homes have a largely seasonal nature, seasonality is one of the most important of these metrics. Conducting thorough research is essential to take advantage of the peak rental season.
For example, if you purchase a vacation home near Vail, it is critical to know that the peak ski season is between December and March. It might be beneficial to plan to rent during that time and stay in the home in the off-season to increase income opportunities.
Seasonality can also determine when you buy
The seasonality of a property not only impacts rental demand, but also the price you pay for the property. Essentially, if seasonality influences rental prices and demands, it will also affect the asking price for the buyer looking to invest in the property.
Buyers should look for the best deal, and approaching a sale with strategic insight is critical to protect your best interests. O’Brien Legal can help you safeguard your assets and interests now and in the future when it comes to real estate investments.