There are many ways to invest in real estate. Although markets fluctuate, real estate is generally a wise and safe enterprise to explore – an industry that tends to typically right itself even in the face of evolution and challenges.
Growing with incredible haste, vacation home properties have quickly become the favoured path for all types of investors. Entrepreneurs, families, retirees – anyone can viably expect a gain from this thriving trend, and it’s much more attainable than many believe.
Investment in the vacation home rental industry has never been wiser, but maximizing the potential of that investment can be tricky.
When beginning the vacation home investment venture, it is wise to recruit professional help to navigate the process. This is where a property manager comes in. The property manager should possess a combination of specialized knowledge in real estate and the local tourism market, assuring a hassle-free and profitable experience for you – the homeowner – from start to finish. A professional property manager works directly for the homeowner, and to that end, their goal is to help protect your investment and increase your returns. Vacation home ownership is a long-term commitment, but with the right tools and a top team at your disposal, it can be a wise and lucrative investment that pays off in both financial and personal rewards.
Know Your Markets – Know Your Opportunities
While it’s certainly true that people travel everywhere, there are geographical markets that are consistently stronger than others. To maximize your investment, you should strive to obtain a home in an in-demand region. Foreign investors from China, the United Kingdom, Canada, Mexico, and India all continue to find lucrative properties amongst the most popular tourist destinations from around the world.
The Selection Process – Consider Your Priorities
It goes without saying that you will want to align yourself with reliable, experienced professionals throughout the entire process from search to closing – and quite possibly beyond! Your licensed real estate agent is not only obligated to act in your best interest but they are bound by regulations that protect all parties involved in any transaction. This is a significant purchase and one that should only be trusted to those with in-depth knowledge of the local market and regulations.
When considering vacation home options, there are generally three categories to select from pre-construction, new builds, or pre-owned/resale. Pre-construction affords many options to the home buyer in terms of lot selection, model, colour schemes, and upgrades. Since the home has not yet been built, you have the opportunity to make it precisely “your own”, but you will also have to wait for the home to be built before you start earning income on rentals – so this may not be the best option for a vacation home buyer looking to earn quickly.
New build homes may not allow for as much customisation in features and style, but it will still provide a new home – usually with a lot less wait time to begin using the property. In freshly-built communities, you can also often find heavily discounted homes in this category because builders will be highly motivated to get the remaining homes sold as the development completes. A pre-owned opportunity is not one to shun, however. Though there may be a need for updates, repairs, etc. in some cases, this could be quite worthwhile if the home is located in a prime community with high demand, for example.
Sealing the Deal – Where To Go From Here
Upon selection of a home, the next step is to make an offer. If accepted, a contract for sale is drawn up, and purchase deposits are made. Deposits may vary based on the type of home you purchase and other factors. Foreign nationals are usually required to pay a minimum of 30%-40% down payment and the balance in a mortgage.
If you are in a position to put down more, you will secure a better interest repayment rate. Once the buyer and seller commit signatures to the contract, and monies have been paid, completion is generally just a matter of awaiting the closing date to finalise the process. In the interim, you have a lot to think about in terms of your plans for use of the home!
Property investment should always be viewed as a long-term investment. A period of two or more years is recommended to maximize profit, build equity, and cover the associated costs of selling. Your return on the initial investment will come from property appreciation, rental income (short or long-term), savings on your own accommodations when visiting, or some combination of these methods.
A high percentage of vacation homeowners are not local to their vacation homes. Obviously, this can make the business of maintaining and renting that property a daunting task, to say the least. Among other aspects to consider, there will be maintenance and repair issues, housekeeping, pool upkeep, preventative pest control, and of course – the actual process of renting the home as travellers book it! If that sounds like a lot, that’s because it is – and it is even more taxing from thousands of miles away!
The solution to this is professional property management. A quality property management company should be qualified to handle all aspects of your home’s care and maintenance, as well as keeping it marketed and rented – exchanging your burdens for peace of mind while seeing to it that your investment has a real potential for returns.
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