A Beginner's Guide to Starting a Vacation or Residential Rental Property Business
A rental property offers a great opportunity to make some extra money alongside your day job. You can offer either short-term rentals, for example to vacation-goers, or offer long-term residential rentals, like families. The process for selecting and setting up your rental property business will depend in part on which option you choose. This resource guide from Savior Property Management can help.
Find the Perfect Property
A successful rental business starts with the right piece of real estate.
- Consider key real estate characteristics according to your target audience, like property taxes (relevant for residential renters) and proximity to tourist attractions (relevant for vacation rentals).
- If you're looking for a vacation rental, scope out properties according to premiere locations like Joshua Tree, Temecula, and Tennessee's Smoky Mountains.
- If you plan to rent to families, look up the details of school districts in your target area.
- Before you buy a property of any kind, schedule a home inspection to make sure it's in good condition.
Set Up the Administrative Side of Your Rental Business
Treating your rental property management like a bona fide business will help streamline day-to-day management and avoid organizational issues.
- Establish a formal business entity like a limited liability company, corporation, or s-corporation to launch your business.
- Determine your tax reporting and payment requirements for rental property income.
- Decide whether you will handle property management tasks like upkeep and finding tenants yourself or outsource them to a property manager.
- Find a real estate lawyer to draft appropriate rental contracts. For example, the terms of the contract will vary depending on whether you're marketing a short-term or long-term rental.
Make Your Property as Marketable as Possible
Tailoring your marketing to your chosen audience, be it vacation-goers or long-term renters, is essential to lasting success.
- Invest in home renovations that boost value, like adding granite countertops in the kitchen.
- Consider additional renovations according to your target audience. For instance, when it comes to vacation rentals, people like pet-friendly options and modern amenities.
- Search for fence builders near you to find professionals who can enclose the backyard for privacy and security.
- Take great real estate photos of the property to highlight its best features.
- Work with Savior Property Management to minimize headaches and maximize your return on investment.
Renting out property can be a great form of passive income. However, before it's truly "passive," you'll have to invest some time and effort in getting it off the ground. The above guide provides tips for starting a rental property business for either short-term vacation-goers or long-term residential renters.
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