Owning an investment property can be a smart way to diversify your income. They offer lasting potential to provide financial security even after retirement. However, before you consider such a venture, you need to be sure you’re ready to be competitive in the market.

Take the First Steps

Before you decide to become an investment property owner, you have to look at your chosen location. Will you be renting it out as a vacation home? Ideally, your neighborhood should be near a popular attraction or offer fabulous views, whether it be a park, beach, or another open area. Of course, once you find the perfect property, your work doesn’t suddenly stop. Once that’s done, it will be time to look at what nearby rivals are charging for rent, and determine if it’s a smart investment. After all, you’ll want to be competitive and attract renters, but you also need to earn a profit to make the second mortgage worth it.

Before you get ahead of yourself while imaging a fleet of rental properties, here are a few important first steps that can be greatly beneficial to your new business idea.  Creating an LLC might be one of the most important steps you can take.  Not only will it provide you with personal liability protection but it can also provide you with financial flexibility when you apply for a loan or file your taxes at the end of the year.  Additionally, hiring a competent real estate agent to help you research the rental market can be very beneficial.  A seasoned real estate agent can provide you with leads and also advise you on proper pricing to keep your properties booked up!

Secure Your Property

Unfortunately, in today’s society, home security is more important than ever. When you’re between tenants, a security camera or another form of home security will go a long way toward ensuring that your property stays safe. Moreover, there are several options you can choose from that can fit your particular budget and needs, such as a monitored service or an online feed to check from your mobile devices. This can be a major addition to your property, so do a little research to find the best service or system for you. Prices for security systems can vary depending on your choice but expect to pay anywhere from $250 to $1,500 for equipment, installation and activation in addition to monthly monitoring fees.

Color Cohesion

A good way to attract renters is to immediately “wow” them with the design of your house. After all, the wrong color in the bedroom can make it difficult to sleep, so a lot of thought should go into your choices. With the right shades, colors can positively impact the part of our brains that controls mood, so they must be picked carefully. Even if you only end up using neutrals, you want to avoid walls coming off as clinical or sterile. Likewise, choose high-quality paint brands to make touch-ups and cleaning easier, as well as to avoid wear, tear, and smudges becoming major issues. You don’t want to paint your walls every year, much less every few months.

Accent Pieces

With a few touches throughout the property, you can turn a house into a home. However, you don’t want to simply throw pieces you like around pell-mell, as each section should feel like it belongs with the others. For instance, a Persian rug might add plenty of class and protect your floors, but they may not pair well with a lava lamp. So, pick things that are similar in color, group them together, and avoid anything that clashes. After all, there is nothing worse, aesthetically, than for lavender accent pillows to seem garish next to a pea-soup green throw. If you’re still unsure, you could use a designer or professional stager to help guide you to ensure the interior of your rental looks polished without you becoming overwhelmed. Keep in mind this will be an added cost, but you can save a lot if you opt for online designer services which can start as low as $75.

Durability

Like with the paint you choose, you want the rest of your home to stand up to the test of time. Yet, there are certain places that may need extra reinforcement, such as the flooring, as they will get more use. While wooden floors look beautiful, they are notoriously finicky and could warp over time. Instead, think about equally attractive, but much sturdier, materials. For instance, bamboo is natural and holds up well, as is stone, but even vinyl can look like tile and still be more resilient. Similarly, if your state is prone to storms, you should consider the material of the roof. Yes, durable options will require a higher payment up front, but, over time, should pay for themselves with what you’ll save in repairs.

Keep It Clean

As with security, if you’re not near to your investment home, you may feel more comfortable hiring a service to take care of cleaning between guests. Best of all, they have the experience to get your house sparkling in every nook and cranny, no matter how tight the turnaround. A company may be more reliable than an individual as well, as you won’t have to worry about your cleaner getting sick or needing time off. With a professional cleaning company, a rotating staff will ensure that you’re never left in a tight spot between bookings, and you may even be able to negotiate a lower price when you set up regular cleanings.

Handle Curb Appeal

Similar to when you sell a home, you want your house to have solid curb appeal. If your home looks tired or worn from the outside, it will leave a poor impression on guests, which may be reflected in the reviews you get. So, invest some time, energy and money into making your home attractive from all angles. When doing so, consider the environment for plant life, and determine if flowering plants could lead a long life. If not, mulch may be a better option to beautify your yard. Even little additions like brick or rock edging around your flowerbeds can lend a nice touch to your garden to set you apart and make guests feel like they’re in luxury.

If you can’t commit to landscaping and yard upkeep, plan to regularly use a service, which can run anywhere from $125 to $300 a month.

Be Generous with Extras

There are many options a potential guest has when choosing a vacation home, so you have to be certain that yours stands out from the crowd. You should include basic amenities, such as laundry services, air conditioning, and a full set of cookware, particularly for longer-term tenants. However, every little bit does add up, and even inexpensive items might seem like welcome indulgences to those looking for a break from the everyday. For instance, if there is something local to the town, such as honey or a particular blend of coffee, you could offer a few complimentary samples of it. Better still, consider adding a pressure cooker to make meals for guests easy, or a hand-held steam cleaner if you expect the majority of clients will be business-oriented. No touch is too small to have an impact.

Wanting to invest in a vacation home requires many steps to be taken between purchasing the property and putting it on the rental market. Yet, every piece of the puzzle is worth the effort and increases the likelihood of earning a steady income. It’s time to take the plunge and dive into the investment property pool.