Day 2: Vacations Homes and what do people need to look for:
Make sure you have your ace team together. Talk over your budget with your lender, CPA and financial advisor, after you have decided how you are managing the property.
Is it purely a spot for you? OR are you cash flowing the property?
Can you truly afford the Mortgage, insurance, taxes, HOA, insurance, property maintenance, upkeep, property manager, cleaning service/ turn over?
How are you managing it?
What is the true ROI? Is the rental rate really going to occur in the area, have your realtor research what rents are occurring- are rents stable or do they fluctuate? KNOW YOUR NUMBERS! Figure out if this is truly a sound investment.
You will need 10% off the bat annually for general upkeep and maintenance. Even if nothing happens in year one, you will want to keep this fund in your budget. Roof, major systems, appliances, pools???, flooring, plumbing, furniture (every 5-7 years) Depending on how you utilize the space.
If you’re renting it out, you don’t want bad reviews based on it being dingy or not well kept, do you?
Research for a very reputable property manger. The ones who report to you, know your numbers, and do your seasonal maintenance, etc. If you’re looking for mailbox money… you want a great team on your side!
Number one, above all, have the 10% capital improvement fund set for what and tear, if you need to get a home warranty as back up, do that. Don’t forget if you buy a brand new investment property, you will still need to up keep the property, so start a fund, and keep the property up!
