Vacation rental property considerations: Santa Rosa Beach
Investing in a rental property is a big decision. It can be a profitable venture, but it’s not without a few challenges. Before making the leap, here are a few essential things to consider before investing in a Santa Rosa Beach rental property.
1. Make Sure You Want to Be a Landlord
Owning a rental property in Santa Rosa Beach is one thing; being a landlord is something else entirely. There’s a lot of work involved and many people to keep happy. From Saturday night calls from tenants to emergency repairs, being a landlord isn’t exactly a relaxing job. Before purchasing a property, make sure you’re ready for those interruptions, you’re prepared to stay on top of everyone’s rent, and that you have the stomach to deal with late payments and other frustrating situations.
If you’re convinced if a rental property is a way to go, but you’re not sure that you can tackle all the hands-on work of being a landlord, consider working with a property management company that takes care of all the day-to-day issues. Your overall profits may be lower, but your attention will only be necessary for big decisions, so your headache rate will also be much lower
2. Run the Numbers
First, do your homework and collect all the expected expenses of any rental property you’re considering. Along with the price of the building itself, you’ll need to know how much the property taxes are and what the cost to ensure the building will be. Keep in mind that taxes and home insurance are numbers that fluctuate so go back several years to get a history of the taxes and shop around for several insurance quotes.
Next, you want to be sure the income potential of the property provides enough to cover these expenses while leaving enough profit afterward to cover unexpected costs, a property management company if you’re using one, and hopefully leave a few bucks behind for your portfolio. Some experts suggest following the one percent rule or making sure one month’s total rent is greater than one percent of the value of the property. For short-term vacation
3. Consider the Property Carefully
Once you know you’re ready to be a landlord and you’re comfortable with the numbers, it’s time to make sure the property is a good fit for you and your portfolio.
Location is one of the most important considerations. Think carefully about who you think your ideal tenants are and then make sure that the right amenities are present including schools, parks, shopping, beaches, restaurants, and nearby places to work. Take a look at the neighborhood’s crime and safety information as managing homes and condos in Santa Rosa Beach Florida can be more than most landlords want to bite into.
When you’ve narrowed your selection down, take a close look at each of the buildings to get an idea of what some of the expenses might be. How much will a new roof, HVAC system, water heater, or other major projects be? What is their current condition? Have pest infestations been present in the past? Look carefully into the shape of the building, too, as the previous owner may have been enjoying higher profits by putting off significant renovations.
Then, consider the local market. Are there any vacancies in the area that will compete with filling your vacancies? Is the rent price you need to earn a profit appropriate for the area? What are the current rental rates for the specific home, subdivision, or condo? Is there anything unusual that could impact your future income such as rental restrictions for? The more information you have, the better your decision will be.
A Personal Decision
Finding success with rental properties isn’t for everyone. There are many challenges involved, and it’s unlikely that you’ll find a perfect property. However, doing your due diligence so you’re prepared for sticky situations could mean the difference between a profitable venture and a frustrating struggle
Lastly, you must have enough cash or access to enough credit before purchasing the property to handle a variety of expenses before you’ve built up enough of a reserve from the rental income. There may be immediate expenses after buying to renovate or make repairs, and you must be prepared for significant costs such as a failed heating system or a plumbing emergency. One of the most common things people don’t account for in Santa Rosa Beach is the off-season. After the first year of owning your home or condo, you will have a better understanding of the fluctuations throughout the year. Most experienced landlords recommend having at least five percent of the property’s value on-hand for emergency expenses at all times.