According to the National Association of Realtors, in 2015 an estimated 1.09 million vacation homes were purchased for investment reasons alone. Representing an increase for the first time in 5 years, it might be time for you to consider investing in a Prince George’s County vacation home that you can lease to tenants looking to enjoy a long vacation.
There are many reasons why people may be drawn to leasing your rental home for vacation purposes, whether long-term or short:
- More available space than a hotel room for large families or groups of people
- The opportunity for longer stays at a more reasonable nightly rate
- Extra privacy away from other vacationers
- The livability factor – appliances, furnishings, stocked kitchen, and more
- Avoidance of winter or summer months, depending on preferences
- Local living (i.e. experiencing the culture a small town like Laurel provides visitors such as state parks, historical roots, art galleries, and annual festivals)
Today we will look at some of the important considerations surrounding a vacation rental investment to help you decide whether leasing a vacation home is right for you or not.
Top 5 Considerations before Buying Vacation Rental Properties in Maryland
1. Is It Legal?
Before investing in a rental property you plan to later lease as a vacation home, it is important you check with your state and local laws regarding short-term lease agreements. Some zoning laws and homeowner’s associations will put minimum stay requirements on lease terms and some will even go so far as to not allow any leasing of your home to strangers.
Take the neighboring Montgomery County for instance. As of October 29, 2014 it was made illegal for any homeowner to lease their residence for 30 days or less in all residential zones. This means that landlords using their properties as vacation rentals or anyone using the popular Airbnb service for extra income are violating the zoning code if tenancy lasted under 30 days. This also means they are subject to the penalties that come with those violations
Recently, there was a push for an amendment that would allow all forms of short-term rentals to be legal in Montgomery County but you must be careful before you lease your residence as a vacation rental to avoid legal trouble.
2. Can You Afford It?
As with every major purchase, you must balance the cost versus the return. Since real estate is not a liquid asset, you must consider the fact that it may not sell for a profit should the need arise.
In addition, more so than with normal rental properties, there are associated fees to pay whether the home is being rented or not, including:
- Homeowner’s association fees
- Property taxes
- And so much more
3. Do You Have a Business Plan?
Leasing your Takoma Park rental property as a vacation rental takes the same amount of work that any normal rental property does.
- Advertising of your property’s availability on a regular basis
- Thorough tenant screening
- A lease agreement or contract detailing the rules for occupancy
- Collection of payment
- Inspections and walkthroughs to ensure no damage is being done to the property
- Appealing to tenants that want current market trends and fancy vacation homes
- Cleaning in between tenant stays
- Handling of bookings and dealing with cancellations
In the end, leasing your home as a rental actually becomes more work because there is far less responsibility placed on your short-term tenants.
Unlike a more permanent living situation where your home is made to feel like their own, and where certain responsibilities are clearly defined as your tenant’s duty, vacation rentals are more luxurious and casual for tenants. Being prepared for this is a must.
4. Is it Protected?
Since the influx of tenants in and out of your rental property will be more than the normal rental property turnover, there is bound to be an increase in vacancies.
Be sure to protect your vacant rental as you would any other property you lease. Try to make it look as though someone is occupying the property to avoid trespassing, vandalism, and burglaries and conduct regular visits to ensure your property is safe.
5. Is it Vacation Ready?
Vacation rentals are supposed to come as a complete package. It is your duty to make it feel like home rather than like a hotel so that tenants will enjoy spending their down time there and hopefully return as repeat customers each season.
Here are some great ideas for not only furnishing your property for everyday living, but for making it feel extra special for those on vacation:
- Include daily cleaning supplies, a mop and vacuum cleaner, as well as things like replacement light bulbs.
- Decorate – hang artwork or photography on the walls, add throw pillows to the couch, or place flowers in the kitchen. It’s the little things that will make a difference.
- Include hangers in the closet and ensure that the dressers are free and empty. Vacationers want lots of space, especially in a vacation home.
- Have books, magazines, and even board games for your vacationers to enjoy – it is a vacation after all!
- Include TVs, DVD players, radios, and clocks.
- Provide bedding and linens.
- Consider providing local tour guide information so your tenants can visit the hotspots.
- Take it one step further and provide a “Welcome Book” for your tenants to refer to.
In addition to making your Bowie property look nice on the inside with décor, it is crucial that you clean it from top to bottom for the next tenant regardless of how long your previous tenant stayed.
Consider hiring a cleaning service so that you don’t have to take that task on yourself.
Remember, this is not a typical rental property where you can require your tenants to thoroughly clean your home. While a general sweep up is reasonable, don’t expect anything more than that. You don’t clean your hotel room when you leave do you?
Owning a great rental property and leasing it as a vacation home can be very lucrative, but there is a lot to consider. Just because the lease terms are shorter doesn’t mean there is any less work to do.
In fact, you may notice more work is involved due to a higher turnover rate and more landlord responsibilities.
If you are considering leasing your Prince George’s County home as a vacation rental, and need help with all aspects of managing the property, call Bay Management Group today and see how they can help.
As one of the leading property management companies in Maryland, Bay Management Group can help you with everything from screening your tenants, to drafting a lease agreement, to payment collection, and more.
Take your own vacation from property management and let Bay Management Group handle all of the challenges associated with making sure your vacationing tenants are happy.