Going on a luxurious vacation to a resort area is usually
one of the highlights of the year for many individuals. Areas such as Breckenridge,
Colorado, attract hordes of visitors every year to ski the slopes during winter
and to go horseback riding and fishing during the summer. Those people who
regularly visit the same place from year to year often decide to purchase a
vacation home. Such a residence affords a guaranteed place to stay, even during
the height of the tourist season. Yet there is another benefit to owning a
vacation home that knowledgeable Realtors, such as Ron Shelton of BreckenridgeAssociates Real Estate, know quite well: one can put money in their pocket by
using their vacation home.
The method of earning money through a vacation home is by
renting it out. Many homeowners find this makes perfect sense as they often
only use the vacation home a few weeks out of the year, which means that it
stands vacant the rest of the time. There are some important considerations to
go over when deciding to purchase a vacation home that will be rented out. The
first is to make sure that the area where the vacation home is located draws a
sufficient amount of visitors every year. This is where an experienced Realtor,
such as Ron Shelton of Breckenridge Associates Real Estate, can help by
providing useful data. The snug town of Breckenridge, Colorado, is one such
spot where tourists flock. The town boasts 11 lodges and a total of 1,802
second homes, so there is a definite demand. (1) Another positive indicator for
the town is that the population swells from 4,500 residents to over 39,000
during peak seasons. (2)
Another consideration when deciding to rent out a vacation
home is whether to rent it out for the short term or long term. Both practices
have their own benefits and drawbacks, such as renting a vacation home by the
week can generate two to three times the money than renting it for several
months at a time. (3) The drawback to short term rentals is that associated
costs are higher, such as minor repairs and small touchups whenever the renter
leaves. Talking to a local Realtor, such as Ron Shelton of Breckenridge
Associates Real Estate, can help one decide on the appropriate rental strategy
for maximum revenue. Of course, the most important factor in all of this is
having a paying tenant in place.
The owner of a vacation home has to be aware of local laws
and potential negative situations. This is why sitting down with an experienced
Realtor, such as Ron Shelton of Breckenridge Associates Real Estate, is vital
to learn the lay of the land. All of the local taxes, fees, and laws have to be
adhered to. An important criteria is whether the vacation home is under the
jurisdiction of a homeowner's association and whether the rules of the HOA
allow a home to be rented out. A Realtor can also warn a potential buyer of
impending construction or other projects that could negatively impact the
potential revenue of the vacation home. Practically no one wants to rent a
vacation home that's next to a loud work site.
If one wishes to make money by renting out their vacation
home, they have to be pragmatic when buying the property in the first place.
One should check out the current mortgage rates to decide if it's the right
time to buy. The current rate for a 30-year fixed-rate mortgage is rather low,
sitting at 4.28%. (4) A common sense approach to purchasing a vacation home in
the first place is making sure that one can afford it. A person should not
assume that the home will be constantly rented out. However, many people do
make such assumptions. A 2010 study by the National Association of Realtors
found that seven out of ten second home buyers said that rental income
influenced their decision to buy. (5) One should go over all the numbers with a
seasoned Realtor, such as Ron Shelton of Breckenridge Associates Real Estate,
to make sure that one has the means to pay for the vacation home. Renting out a
vacation home should provide a welcome financial boost to the homeowner, but
they should not depend upon such revenue for the regular mortgage payments.
Realtor Ron Shelton of Breckenridge Associates Real Estate
says, "A vacation home is not only a great idea for having a guaranteed
place to stay while visiting, but it can also be a great investment by bringing
in rental revenue. Of course, having some rental income is just one part of
what makes a second home, or resort rental, an investment. The most rewarding
aspect of owning a second home is obviously the personal use one gets out of
it. While a vacation home is a second home, one should buy the property with as
much prudence as they would with their primary home. Breckenridge is a great
place for renting out a vacation home as visitors come throughout the year to
enjoy our natural beauty and outdoor activities. We're quite happy to sit down
and crunch the numbers to figure out some rental projections. One important
factor in owning a vacation home is that of capital appreciation. Historically,
the market value of resort properties have outpaced inflation, and most other
investments, over the long run. We also help our clients out by recommending
trustworthy managers and service people that are local, which is often a
necessity as most homeowners are out-of-state. If you only use a vacation home
a few weeks out of the year, it makes tremendous sense to rent it out while
you're not using it. An empty home still costs money on a regular basis due to mortgage
payments, property taxes, and other associated fees. Why not generate some cash
and put it into your pocket while you're not using the home?" (6)
A vacation home can serve as more than just a place to crash
once or twice a year. A lot of revenue can be raised by renting it out to
others while the owner isn't using it. However, there are a lot of items to be
considered on buying and then renting out a vacation home. One should sit down
and talk to an experienced Realtor, such as Ron Shelton of Breckenridge
Associates Real Estate, to learn if there's rental potential for a vacation
home in the local area. It's always wise to remember that any home is an
investment, so it makes perfect sense to put that investment to work. In the
end, a vacation home that generates short term or year-round rental income is a
worthy wealth-building tool, which is just icing on the cake as such a home is
also a wonderful place to make lifelong memories with one's friends and family.
References:
1) http://www.gobreck.com/the-town/facts-and-stats
2) http://www.townofbreckenridge.com/live/living-in-breckenridge
3) https://www.landlordology.com/long-term-rental-vacation-home/
4) http://www.cnbc.com/2017/04/12/mortgage-applications-rise-as-interest-rates-fall-to-2017-low.html
5) http://www.foxbusiness.com/features/2011/09/14/how-to-safely-make-money-on-short-term-rentals.html
6) Quote from realtor Ron Shelton of Breckenridge AssociatesReal Estate
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