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Beginning real estate investors often search for the simplest ways to get started investing. It is natural to want to go the easy route when starting out because the process is new and mistakes can happen. A turnkey investment property is a really easy way to get started as an investor. While these properties are excellent sources of positive cash flow, some investors might have success exploring the vacation home market. The average tenant remains in a turnkey property for a period of one to three years. There will come a time when a new tenant must be secured to keep income flowing into the property. By renting your investment property as a vacation home, you could reach out to an entirely different demographic that is interested in only temporary housing.
Advantages of Vacation Homes
Vacation homes have a lot of perks when they are viewed as vacation homes. A nice home in a well populated area is one of the biggest secret weapons of any real estate investor. Cities like Orlando, Jacksonville and Boca Raton are huge tourist destinations. These cities are the epicenter of social and economic activity in Florida. Tourists from around the world search for vacation homes in these areas every day of the year. The popularity remains strong for accessible vacation homes. Just owning a home that is marketed for vacationers is one advantage.
Another advantage is the rent fluctuations. It is normal to raise rents during peak seasons to take advantage of constant bookings. A standad turnkey property has one tenant and one monthly rental price. A vacation home could command much higher rents in peak seasons and still higher than average rents in the off season. Most tourists are willing to pay a premium for close proximity to beaches, shopping malls or local attractions. As the owner of a vacation home, you can make sure you are booked through the busy season to catpure an entire year's worth of rental income in just one season.
Disadvantages of Vacation Homes
Unlike turnkey properties, vacation homes must be marketed and advertised well in advance of a tourist season. Local competition could be higher or lower depending on the amount of investors that own property in the area. The push to rent out your property might have you dropping your target rental price just to take bookings in the off season. A vacation home does not make you money when it is not being rented. The expense of advertising and promotion in times when you are not collecting rent can add up fast.
Apart from a great location and neigborhood, the cleanliness of a vaction home is very important. One of the first questions that tourists or families ask is about the cleaning regime. When one guests leaves, the property must immediately be cleaned in the short time before it is rented again. Cleaning fees can be expensive depending on the size of the home and frequency of cleaning. A turnkey property needs no full-time cleaning as these duties are handled by a tenant.