8 BEST Tips before buying a Vacation Rental in Destin FL
The kids’ memories may be priceless, but owning a vacation rental in Destin FL certainly has a price tag — and a hefty one.
Here are 8 tips before buying a rental vacation in Destin Florida:
- The first question you need to answer is why you’re thinking about buying a second home. You may want a place at the beach, in the mountains or close to loved ones. Those are valid reasons. However, ask yourself first, Do I really want a second home or am I just looking for two nice beach trips per year? If you just want a mountain getaway two or three times per year, there may be a less stressful, more affordable way to do that.
- The more stuff you own, the more things you have to worry about. It is mentally freeing to not have to worry about a vacation property anymore and to not feel like we are wasting money by not getting enough use from it.
- It’s better off spending the same discretionary dollars on vacation rentals across the world.
- If you have friends with vacation properties, accept their offers to visit because chances are they are like us and bought it to make memories and not to have it sit vacant so often.
- If you want to own a second home for the right reasons, the second question to ask is whether you have enough money in your pocket for the purchase. Only consider a second home if you have the cash on hand to buy the property. Cash only.
- You should nevertake out loans for a second property, even if it’s an investment. A loan is a risk.
- If you take out a mortgage, you’ve added an element of uncertainty in your future. No matter what’s going on with you—job loss, death in the family, serious illness—that mortgage company expects its payment every month.
- A second home is one of those major purchases that you need to be able to easily afford. That is, you need to be able to comfortably balance carrying your primary residence, your second home, and saving and investing money for the future.
Do you want to rent your Vacation Rental Destin FL after buying it?
If you’ve investigated similar properties on listing sites and hotel rates in the area, you’ve probably got a fairly good idea of the price an average nightly rental can command.
It’ll vary depending on the quality of the property and any amenities that are very popular – for example, a 3-bedroom house with a pool can command a higher rate than a similar 3-bedroom without one.
A short-term vacation rental requires more regular maintenance, because you have to clean the property in between guests. But they do command a much higher nightly rate, so usually anything over a 50% occupancy rate will be more profitable than renting long-term and full-time.
Your cleaning fees are usually added on in addition to your nightly rate, as well, so you’re not paying out-of-pocket for that maintenance.
As for maintenance such as repairs to the property – well, you’re on the hook for that whether you rent short- or long-term. That’s the owner’s obligation regardless.
The advantage of long-term renting is that you don’t need to worry about keeping your calendar booked or arranging for housecleaning services – it’s lower effort, overall. But considering the vastly higher profit and the fact that you can get services to take care of the booking/management on your behalf for a low fee – it can still be worth it.
Should You Invest In A Vacation Property in Destin FL?
When on vacation, you ponder how great it would be to own property rather than “waste” money renting each year.
If you are considering buying a second home, be sure you understand the reasons you are buying one – as well as the potential negatives that may come with it.
Owning a vacation home is a good investment if you do your homework and research. Many people rush to buy a vacation home for the simple pleasure of just saying they own one. Take your time; buying any good investment is a marathon, not a sprint. Don’t be afraid to walk away from the property if you are not totally comfortable.
Take time to figure out exactly what your plan is for a vacation property.
Being in the financial position to buy a vacation home to enjoy is very different than buying a vacation property and needing to rent it out at times to pay its expenses.
If you are considering purchasing a vacation home, you should be able to pay all of the expenses without renting out the property.
If you are an investor purchasing a property in a vacation or resort area, leave emotions out of your decision. The “perfect property” isn’t perfect if you can’t pay your expenses and if you don’t make money.
It’s critical to know precisely how much rental income you would need to afford the vacation property and have a back-up plan to pay expenses if it doesn’t rent.
Should I rent a vacation rental in Destin Fl instead of buying it?
Renting means your hard-earned vacation time won’t be sucked into a black hole called “beach home upkeep.”
It also means being able to explore a different beach spot every summer — or deciding, guilt-free, that you’d rather go to Paris instead.
Vacation Rental in Destin: Talk to your Financial Advisor
If you’re not looking to buy immediately, set aside investment savings now for the second property and work with your financial adviser to make sure that the savings have an appropriate investment allocation.
If you’re buying now, use existing cash savings or, if possible, pull from a dedicated portfolio, but do not dip into your retirement savings.
Mintco Financial Planning and Advisors in Florida
Call us for a complimentary review at 813-964-7100
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