While interest rates are still comparatively low, you may want to take advantage and purchase a second home. A second home can be a great investment for your future. It can generate passive income and provide a great retreat for you from the routine of everyday life. Imagine for a second being the owner of a lakefront home, oceanfront retreat, or a cottage in the mountains by a ski resort.
If bought at the right price, your second home may hold an appreciation over the years and assure as much as a 10% return on your investment.
Buying investment properties takes expertise, and whether the project is lucrative or puts you in an unfavorable financial position than you were in before depends on the choices you make. Contact the New York investment property lawyer at Sishodia PLLC to avoid mistakes when buying an investment property.
How to Generate Passive Income Through a Short term Rental Investment Property
An investment property is a real estate property that you buy with the intention to rent out in order to generate passive income.
According to Airbnb statistics, valuation was $18 billion in 2020 with $3.4 billion in revenue and $193 million in bookings. It is becoming a very attractive business for new investors with promising returns.
If you are a fresh investor who is trying to start a short-term rental business, research may be time-consuming and management of your investment property may be overwhelming.
Fortunately, you can partner up with experienced professionals (real estate brokers, property managing companies, and real estate attorneys) who will guide you through the process.
From personal experience in dealing with short-term rentals and receiving passive income from a second home, I would like to share the following tips:
1. Choose a location that is attractive for short-term rental tenants (oceanfront, lakefront, forest property, or a cabin in the mountains by a ski resort);
2. Look for distressed properties that have been foreclosed, listed as short sales, or have been on the market for a long time;
3. Involve a knowledgeable real estate broker to run the comps for you so you can understand if it is a good buy;
4. Check the ongoing rental rate on Airbnb’s website;
5. Prepare an excel table with all the expenses and estimated passive income (you should include expenses like mortgage payments, taxes, repair and maintenance, management fees, renovation, furnishing, and reserve funds);
6. Hire a reliable management company (if outsourcing), cleaning team, maintenance, and repair team, and professionals for other services your investment may review (pool maintenance, gardener, electrician, pest service, etc).
7. Be ready with a reserve as you may be negative for the first year in business;
8. Consider paying off your mortgage faster by making larger payments.
Our firm now offers consultation on a short-term rental business, guiding you through the entire process of starting and succeeding in your short-term rental business.
Contact Sishodia Law PLLC About Getting Started in Real Estate Investing with your Short Term Rentals
A real estate lawyer can help you have a stress-free experience buying and renting out your first investment property. Contact Sishodia PLLC in New York City or call (833)616-4646 to get started today.