You want to buy a cabin that will set you up to make a return on your investment? Makes sense. Not only can you generate rental income, build value through appreciation, and earn tax deductions, but you also get the opportunity to learn about real estate. Lucky you, Nathan Fitts is the most knowledgeable and experienced realtor in North Georgia, and he will gladly share insider tips and tricks with you as well as guide you along your path of your first mountain rental cabin investment! Let’s look at the top five items to consider before purchasing your new property.
1. Short Term Rentals vs. Long Term Rentals
So, you’ve decided to take the leap and begin searching for your first investment property. You need to consider if you want to make this cabin a short-term cabin rental or if you want to try to find tenants that will stay for a year or longer. There are plusses and minuses to both scenarios. A short-term rental is defined as a property that is rented from one evening up to one month. Whereas a long-term vacation rental is rented for one month or longer, most commonly being a one-year contract. Speaking of contracts, if you are taking the long-term approach, hopefully you will only need to deal with a rental agreement annually. However, if you choose short term, be prepared for a little more leg work on your end or consider a property management company to work for you.
2. Location, location, location
After you’ve determined what type of renter you are looking for you can start narrowing down your location. If you have decided on a short-term rental investment strategy then you should consider a property with spectacular mountain views, or lake views, or better yet, a mountain and lake view! Other properties that thrive in a short-term rental program are cabins nestled in the woods or located by rivers or creeks.
3. Competitive Market/Investment Analysis
Not only do you want to perform a competitive market analysis, which is standard practice here at our office, but you also want to do an investment analysis. What’s the current going rate for long term rentals? How about for short term rentals? As long as your total projected income for either option is at least 10-20% more than your mortgage, then you’re making a wise decision.
4. Do you want to be a Landlord?
It’s all fun and games when your cabin is rented and income is starting to flow, but you have to be cognizant of the wear and tear on your home that come with renters. Not to mention the maintenance and repairs that go with it. Truth is things break and sometimes you’ll have vacancies. You need to know to prepare for the worst-case situation so that you can enjoy everything better than that!
5. Try It Out
Congratulations! You did it! You just purchased your first investment property and now you’re ready to start marketing it, right? Wrong! You should plan to stay at the cabin and make sure that your property is attractive, desirable, and functional. Whether you need to put on a fresh coat of paint, add some decorations, or update the landscaping, you’ll get a better feel for the property if you stay on site. You want your cabin to rent, so take the time and energy to make your place better than the surrounding rental properties!
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