When it comes to budgeting, there are a lot of common mistakes that are made. If you are new to the real estate world and you have never purchased an income property before on Florida’s First Coast; you will want to make note of this article and the mistakes most people make.
There is no better way to avoid a problem then to be familiar with the problem in the first place. Budgeting can be difficult! There are so many bills and expenses one has to pay in order to survive, but it is better to be aware of those expenses prior to investing in a property.
Being organized and prepared will make this investing process go a lot smoother. A countless number of people want to own investment properties, but they don’t have the funds to get started. If you get a loan from the bank, be certain to have a game plan to ensure you pay it off in the future. Again, if you are organized and you have your financials in place; this process might be easy. Let’s take a look at 6 mistakes real estate investors make when budgeting for their vacation property:
Unexpected costs are costs that come up when you least expect them too. Maybe your dishwasher broke down or you have no water coming out of your sink?
You are going to have to hire a plumber or someone who can come and check out the problem for you.
This involves spending money that you didn’t plan on doing when you first purchased your vacation property. It is important to set aside some money in case you run into such problems. If you don’t have money to fix minor issues, you could run the risk of having your quality renters move out and find a new place.
If you can find renters that want to continue renting your place for a long period of time, good on you! However, with vacation rentals, this is not always the case. You will have some vacancies from time to time, which mean; no income coming in.
Depending on whether you have a property management company that takes care of finding quality renters for you, this process is not always easy for the average person. Vacancies are a part of the process. One month you could have renters and the next you might not. Always be prepared for slow periods because they can happen.
Every property can use some maintenance from time to time. In order to keep your property in prime condition, you will want to keep on top of all your annual maintenance checks.
If you forget to do minor maintenance to your vacation property, you can expect to run into issues from time to time due to lack of checkups. Not only will you save money from preventing bigger issues from happening, but your place will be in better condition because of it.
With every good thing comes a fee. Property management is an extra cost because they are doing a service for you. A property management company is basically taking on the responsibilities of finding quality renters and making sure everything is going smoothly at your vacation rental. They are responsible for checking up and doing minor repairs when needed. Different property managers do different tasks, so it’s important to check with the company beforehand.
Be aware how much money you are investing in your vacation rental and make sure that you can afford to pay your bills after. Everyone wants to operate a beautiful vacation rental as long as they can maintain it and afford it.
You might be under-renovating your vacation rental and this is why you are having a hard time finding renters. Every place can use some updating. If you don’t update your rental you will find that people are choosing to rent out a newer home because of the updates.
Be as open and as accommodating as possible. If allowing pets in your vacation rental means that your vacancy rate will be at a minimum, this is something you might want to consider.
If purchasing an extra bedroom will guarantee more money each month and will be a better investment option in the long run, do what you need to do but make sure it will pay off and you can afford it.
There you have it, 6 common mistakes real estate investors make when budgeting for their vacation property on Florida’s First Coast.