Possum Kingdom Lake Home

Generate Income with a Vacation Rental Home

As the weather begins to warm and kids are itching for the school year to wrap up, everyone is starting to think about their summer vacation plans. After spending the last year indoors and experiencing the world virtually, it comes as no secret that everyone is ready to find somewhere to travel.

Because of the pandemic, second-home purchases rose about 46% last year and made up 6% of the mortgages between January and March of this year. Many of those who own a home in Possum Kingdom purchased the house as a second home or vacation home. If that’s you, there’s a good chance that you’ve considered renting your home out on VRBO or Airbnb. 

By owning a vacation rental home, you can introduce people to the beauty of Possum Kingdom Lake while expanding your portfolio. And with an expert Possum Kingdom real estate agent by your side, you’ll be able to find valuable properties to start building your business.

The Initial Investment of a Vacation Rental Home

Making smart decisions about which properties to invest in will reap higher profits down the road.

The first question you need to answer is how much can you afford to spend on an investment property? To answer this, we turn to money.com. Here is what David Reiss with Brooklyn Law School recommends.

Start with your gross rental income, which is simply the total of one year’s worth of rents for all of the units combined. Subtract 5% or so to account for occasional vacancies throughout the year. It’s safest to use existing rents, but you can conservatively increase the amounts if you are planning to improve the units and raise rents.

Then add up the yearly operating expenses — property taxes, insurance, utilities, plus at least 5% of gross income for a maintenance/repair fund — and subtract that from the annual income. To get your cap rate, divide that number (the net operating income) by the purchase rate.

Once you know how much you can afford, you’ll want to work with a local real estate agent that knows the ins and outs of the area that you’re looking to purchase in. They will guide you to the Possum Kingdom neighborhoods that draw in visitors and provide the amenities that tourists desire. Remember, not all PK neighborhoods allow for short-term rentals. Be sure to find out ahead of time before purchasing a home.

Preparing for Visitors

Chances are, you need to spend some time sprucing up the property before renting it out. You’ll want to spend time making it stand out among the competition so you can keep the vacation rental home booked out throughout the year, allowing you to maximize your profits.

When you’re decorating your vacation home, you’ll want to stick with neutral colors, simple décor, and tasteful embellishments that give your rental a sense of elegance. Think classic over eccentric.

However, you can always give your vacation rental home a particular theme to attract an ideal visitor. For example, in Orlando, it’s not uncommon to find Harry Potter or Disney-themed rentals. In Nashville, Dolly Parton and Bachelorette style rentals are popular. Even in Dallas, there is a 90s theme and 80s theme rental available. Going niche in the vacation rental business is a great way to stand out; just remember, you have to be willing to go all in. 

Lastly, when it comes to preparing for your guest, you’ll want to think about which services you can provide to make your customers feel at home. Consider how you want to enhance your guests’ experience and add value to your booking. These extras could be anything from free gifts that showcase local shops to services such as a personal chef or stocked refrigerator.

Pricing Your Vacation Rental Home

After purchasing the home and putting a lot of work into making it feel special and unique, it’s time to market the house and start generating revenue. Similar to selling a home, before listing your home on vacation rental sites, you’ll want to make sure you set a competitive rental rate.

Make a spreadsheet of how much you need to make each month to break even. It’s important to know this number because it’s unlikely that you’ll be booked out every week each month. Next, spend some time researching other houses in the area available for vacation rentals and compare them to your property. What do you offer that they don’t, and vice versa.

Marketing Your Vacation Rental Home

The right marketing plan can make or break how many visitors book your vacation rental home, and it all starts with having fantastic photos of your property. It’s always recommended to have a professional photographer take the pictures of your home to ensure it looks its best. But if you’re just starting out, it’s ok if you need to photograph the house yourself.

Here are some great tips to remember when photographing your home, such as embracing the natural light, making sure you’re aware of your reflection in mirrors and windows, don’t forget the amenities, and make sure you stage each room.

In addition to putting your home on VRBO, Airbnb, and other online rental platforms, there are lots of ways to market your vacation property. Start by sharing it on social media; you never know which of your friends or family members are looking for a vacation spot. Create a website that is full of local resources and use the power of SEO. You could even partner with a local business.

Vacation rentals can be a great investment opportunity. When you invest in an ideal area, you can enjoy seasonal or even year-round rental income for years to come.