Right now, the languishing housing market offers some lingering upsides for those who have some investment dollars to burn.
Home prices are low, financing is cheap and inventories are bulging.
It’s a good time to consider purchasing that vacation rental.
The road’s been rocky for real estate in recent years, but that means it’s a buyer’s market and good time to grab a piece of the American Dream as a solid, long-term investment.
“Vacation homes are almost always a good investment,” says vacation rental guru Christine Karpinski, director of Owner Community for HomeAway.com, the global leader in vacation rentals, hosting some 540,000 vacation rental listings.
“First, if you’re looking for a good long-term investment, real estate tends to be a good bet. Second, vacation properties have the ability to pay for themselves, and owners often earn a profit in rental income. Third, the investment comes with the desirable perk of having a place at the beach or in the mountains to call your own,” says Karpinski, a vacation rental owner herself and author of “How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment” (Kinney Pollack Press, $26.00).
Karpinski says it’s as if the planets have aligned over vacation rental acquisitions.
Vacation rental space is the place more and more travelers opt for when they want a bargain vacation that comes with accommodations that provide all the comforts of home.
According to Karpinski, here’s why you want to move on that vacation rental now.
Prices are as low as they are going to go.
Property prices are as low as they’ve been in ten years. Procrastination won’t keep them low. Analysts say the housing market is scraping bottom and poised to move up.
“I don’t take the plunge now, I’ll look back ten years from now and say, ‘Why the heck didn’t I buy back in 2010?’” says Karpinski
Interest rates are likewise as low as they are likely to go.
Erate.com had the interest rate for 30-year, conforming fixed rate mortgages at 4.23 percent on Oct. 25 and says rates on non-owner occupied properties is about a half a percentage point higher — with a virtually mandated 20 to 30 percent down.
Markets are flush with inventory.
The slow economy and even slower housing market has left vacation markets brimming with buying opportunities from sellers looking to bail to foreclosures that warrant careful scrutiny.
“One caveat: Before you let yourself fall in love with a property, make sure it is legal to rent it out as a vacation home. Some areas and homeowners’ associations do not allow short-term rentals,” Karpinski warns.
Good help is easy to find.
The recession weeded out incompetent, fly-by-night real estate people who jumped on the booming market bandwagon. Those who survived have been around the block a few times and know the game.
Say Karpinski, “Real estate professionals still working today are the top in the business,” says Karpinski.
Renting a vacation property is easier than ever.
Vacation rentals are more popular than ever, thanks to their home-away-from-home allure but also because the Internet has made them eminently more visible.
“More and more consumers are choosing to stay in cozy condos, cabins, and chalets instead of cramped, impersonal hotel rooms when they travel. And as market demand has surged, organizations like HomeAway.com have sprung up to help connect vacation homeowners with these potential renters,” Karpinski said.
The online vacation rental portals help owners market homes by posting photos, descriptions, testimonials and other marketing information to attract vacationers.
HomeAway.com also offers vacation rental owner support. It’s Owner Community offers property owners information about proven best practices from experts, articles on everything from setting up your business to upgrading amenities on a budget to handling complaints.
After the Gulf oil disaster, HomeAway.com set up HomeAway Gulf Coast Response Center to fill a void left by major media and to help Gulf area vacation property owners through the lost income claims process, to provide insight from experts and to offer a forum for sharing concerns, stories and frustrations.
“Ten years ago vacation rental owners were on an island, but now it’s easy to get the support you need,” said Karpinski.
Buy now, beat the 2011 peak season rush.
The longer you wait to buy, the more likely mortgage rates and prices will rise and the good properties will be snatched up.
Also, buy now and you’ve got plenty of time to prepare yourself and your property for the peak rental season. Seasoned vacation property owners’ rental fees generated during the twelve weeks between Memorial Day and Labor Day pay their mortgages for an entire year. Most inquiries come in between January and March.
“By buying now, you will have a cushion of time to get the home ready for your guests, take great photos for your property listing, and start marketing it to potential renters,” said Karpinski.