Investing in vacation rental properties has become a tremendously popular way to make profits from real estate in the Chicago area. Travelers are opting to stay somewhere that feels more like home as opposed to large corporate hotels. In our latest post, we will offer tips for buying a vacation rental in Chicago, or anywhere else!
Before purchasing any property, you have to really decide if buying a vacation rental is the right choice for you. It will typically be a more hands-on investment, and it is really great for those who thrive on being hospitable and welcoming. If you love having guests, hosting parties, and welcoming others, owning a vacation rental may be a wonderful choice for you!
Understand The Local Markets
It is important to know if there is a demand for vacation rentals in your particular neighborhood. Learn about the tourism rates, what is going on in the local real estate market, and the occupancy rates. Look into other vacation rentals in the area. How many are there? Are they booked often or does it appear that they are having trouble finding guests? You want to enter a market that has a demand for vacation rentals, but that isn’t flooded with an excessive amount of available properties.
Determine The Property Type
You could choose to purchase a house or condo to use as a vacation rental. Just ensure that your plans are allowed if you are in a development with an HOA. You don’t want to discover that using the property as a vacation rental isn’t allowed after you make the purchase. Purchasing a single-family house will give you more freedom to do as you wish with the house. It will also offer your guests more privacy. A condo can also be a good choice as the exterior is likely to be maintained by your HOA. Plus, there are often amenities such as a pool or gym which your guests will be able to utilize.
Understand The Costs
The costs of owning a vacation rental are a bit different than owning a rental with a longer lease term.
- Taxes: bit only will you have property taxes to consider, but you will also be taxed on your rental income and with an occupancy tax.
- Cleaning: Your cleaning fees will be considerable. With tenants coming and going, you will need to thoroughly clean the rental between guests.
- Utilities: With a standard rental, your tenant will pay most, if not all utilities. With a vacation rental, these costs fall on you. Your guests may not be as mindful about turning off the lights if they aren’t the ones paying the bills.
- Marketing: Your marketing will be a full-time thing. With a traditional rental, you only market until you find a tenant, but with a vacation rental, you will constantly be on the lookout for new renters.
How will you be financing the purchase of your Chicago vacation rental? Payi8ng in cash will save you from high-interest rates, but it isn’t always possible. There are different loans you can use to buy the property including a convention loan, short-term loan, or portfolio loan. Most of these types of loans will require a substantial down-payment up front. Sit down with your accountant or financial advisor to determine which type of loan makes the most sense for you.
At Chicago Home Buyers, we can offer you all kinds of potential vacation rental properties. By working with us, you can rest assured the property has been fully researched and well-maintained.