Lately, you've been thinking a lot about investing strategies. You have a small
nest egg that needs to grow, but frankly you don't trust the stock market. (If
you're like many investors, your 401(k) hasn't fared well in recent years.) And
while real estate has been somewhat of a rocky road in recent years, it's still
a solid long-term investment strategy—and clearly we're in a buyer's market. But
you aren't really interested in being a landlord. What to do?
Christine
Karpinski has a suggestion: Purchase a vacation home and rent it out to
travelers.
"Vacation homes are almost always a good investment," says
Karpinski, director of Owner Community for HomeAway—te the world's leading
vacation rental marketplace—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, 2007, ISBN:
0-9748249-9-2, $26.00).
"First, if you're looking for a good long-term
investment, real estate tends to be a good bet," she adds. "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. And finally,
there has never been a better time to buy a vacation home—it's like the planets
have all lined up perfectly."
Karpinski, who owns vacation homes in
several parts of the country, says she herself is looking for new properties to
invest in. Overall, she says, the vacation home rental market is a burgeoning
segment of the economy.
Want to know more? Read on for a few reasons why
there's never been a better time to go vacation rental house hunting:
There have never been so many properties on the market.
For potential home buyers, there is a silver lining to the slow economy and the
housing crisis: Most vacation markets are chock-full of buying opportunities.
Once you've pinpointed the vacation rental market that is right for you—The
coast? The mountains? A ski resort area?—you will likely have a lot of
properties to choose from.
"There are many properties available right now
in many different areas," says Karpinski. "Once you start hunting, I think
you'll be pleasantly surprised at what you find. But I must offer 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."
Prices aren't going to get much
better. In fact, they're the lowest they've been in five to ten years.
If you're pretty sure you want to buy a vacation home "someday," you might want
to quit procrastinating and pull the trigger, says Karpinski.
"Prices
should increase eventually," she points out. "Now is the perfect opportunity to
make a really sound investment. In fact, speaking from my own perspective, I'm
afraid that if 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?'"
Interest
rates are very favorable for purchasing. Today, mortgage interest rates
are low. Bottom line: Take advantage of them while they last.
These days, you have access to the best real estate
professionals. Anyone connected to the housing market who managed to
survive the housing crash had to be at the top of his or her game. That means
the agents left standing today—including the ones you'll be working with in your
search for the perfect vacation home—are possibly the best of the
best.
"Quite simply, the real estate professionals still working today
are the top in the business," says Karpinski. "And because vacation home renting
has become so popular, they are more knowledgeable than ever. Use their
knowledge to your advantage. They are at your service when it comes to helping
you hunt down the best property for you."
It's never been easier
to rent your vacation home. As mentioned earlier, vacation home rentals
have never been more popular. 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 have sprung up to
help connect vacation homeowners with these potential renters.
If
you buy now, you can be ready for the 2011 peak season. It's true that
the longer you wait to buy, the likelier it is that interest rates could rise.
But there's another reason not to procrastinate: If you buy now, you'll have
time to get your property ready for peak rental season. Experienced vacation
homeowners often find that the rental fees generated during the twelve weeks
between Memorial Day and Labor Day pay their mortgages for an entire year—and
most inquiries come in between January and March.
"Even turnkey
properties aren't really turnkey," notes Karpinski. "To get your property up to
your standards, there will very likely be things that you will want to spruce
up. Rooms might need repainting. Decorating will need to be done. And the yard
might need some work. 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."
"Someone is going to be smart
enough to take advantage of the great buying opportunities available today,"
says Karpinski. "That person might as well be you."