Purchasing an investment property is an excellent way to get into real estate and try your hand at managing a rental. While there’s no doubt that this is an exciting purchase, it’s best to take things slowly. From buying your first property to managing it successfully, here are some helpful tips to ensure everything goes smoothly.

Choose a Location Near Popular Attractions

When it comes to vacation rentals, location is everything. Ideally, you want a property in an area that sees a lot of tourism or that’s near popular attractions. Of course, the size of the area can make it difficult to narrow down a neighborhood for your vacation rental. If this happens, think about who you want to market to. Seniors? Families? Twentysomethings? Having an idea of your potential guests can make it easier to settle on a spot.
 

Scout Out the Neighborhood in Person

It’s not enough to choose a location that sounds good on paper. Try to visit the neighborhoods that seem like good candidates for your rental. Check out the area in person at various times of the day so you can get a feel for the safety and convenience of the place. Safewise recommends looking for signs that the neighborhood is safe, like thriving local businesses and children playing outside. Make sure that your guests will have an easy time walking around the neighborhood and accessing public transportation. You can use online tools to measure the walkability, biking infrastructure, and proximity to transit of your potential property.

Treat Your Rental as a Business

One common mistake that many people make when entering the real estate market is treating their investment property as a hobby. While this investment may be a side gig, it is first and foremost a business. Being a successful business owner means managing a team, developing a marketing strategy, and researching ways to get ahead of the competition. If you go at this casually and haphazardly, you can run into problems and ultimately fall short of your goals.

Now that you’re running a business, it’s also important to understand the tax rules. While you must pay taxes on your rental income, you can take advantage of several deductions to reduce what you owe. According to Entrepreneur, you can claim tax deductions for home insurance, property taxes, travel expenses, and even guest service fees charged by short-term rental companies.

Budget for Upgrades and Amenities

Depending on the condition of the property, you may need to budget for updates that can make your property stand out. Maybe it’s a new deck off the back of the house so guests can relax and grill out in the evening. Or perhaps it’s all-new appliances, a fireplace or even a hot tub.

You’ll also want to plan for the little things like cookware, dinnerware, linens, toiletries, and even entertainment. Make sure you have a wifi connection and offer your guests a streaming media player so you’re not shelling out for cable and so guests can pick from thousands of programs.

Consider Finding a Partner

If this all seems a little overwhelming, consider partnering up with someone who has handled this sort of business before. After all, you can learn a lot from someone else’s professional experience. Even if you don’t want a business partner, try connecting with other vacation rental owners so you can share ideas and get helpful advice. While these people may be your competitors, the vacation rental industry ultimately benefits when owners work together to improve the rental experience for guests. You can find hospitality professionals on a variety of platforms, including Facebook, LinkedIn, and online communities such as Reddit.

Buying your first investment property is a very big step. Many investors have met their real estate goals after starting with a modest vacation rental, and you can too. So, choose your rental carefully, approach it like a business, take advice from knowledgeable professionals, and you’ll be welcoming your first guests in no time.