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What to Know Before Buying a Second or Vacation Home

Are you interested in purchasing a vacation home? Are you wondering what you should know before you take the plunge?

Whether it’s across the country or across the road, buying a second home can be appealing for a variety of reasons. You may be looking to make a sound investment, establish rental income for retirement, or own your dream vacation home in a destination you love to visit.

That said, it’s still wise to weigh the pros and cons of all your options, before you purchase a second home.

Here are some things you’ll want to consider.

1. Know Your Budget

If you’ve worked hard and saved, you may be looking forward to rewarding yourself with that gorgeous condo near the water or cozy mountain cottage you’ve always dreamed of. When reviewing your finances, just keep in mind that the purchase price isn’t the only cost that second-home owners face.

No doubt you will pay taxes and homeowner’s insurance on your new home. There will also be utilities such as heat, hot water, and electricity to consider, as well as inevitable maintenance to keep things in good, working condition.

If your home is a condo or located in a gated community, you might also be responsible for HOA fees. This may include services like lawn mowing or the use of a community pool. If it doesn’t, remember that you may need to pay someone to maintain the property if you don’t plan on living there full time. In this regard, an HOA can be a big plus for a second home, since you won’t need to manage as much upkeep while you’re away from the property.

You’ll also want to consider what it will cost to furnish your home, as well as the ongoing costs of maintenance. Make sure you leave yourself a little cushion for emergencies.

Add up your estimated costs and decide what you can truly afford. Consider the rent you’ll need to charge in order to keep up with your monthly expenses. Is this enough to cover the costs, and will you be able to generate a little income? Depending on the leasing rates in your target second-home area, you may come out with considerable monthly profit, or you may be cutting things uncomfortably close.

Buying a second home or vacation home can be a wonderful opportunity, and carefully planning your budget will ensure that you can enjoy the experience rather than regret it down the line.

2. Location, Location, Location

As with all real estate, it’s important to consider where your potential second home is located. If you intend it to be a vacation home, will you be happy visiting the same place again and again?

Many of us have somewhere away from home that we truly love, but many others prefer not to be locked down to one location. If your options are a second home or occasional trips to far-flung lands, consider which is best for you. (If you have the resources for both, even better!)

Location is perhaps even more important with an income property. As mentioned above, it’s critical that you research the going rates for rent in the neighborhood to make sure your costs are covered. Also, you will have some responsibilities as a landlord.

If your income property is near your primary residence, it’s less hassle to manage the property and tenants yourself. However, if the property is further away, or if you simply don’t want to deal with the extra work of being a landlord, you may want to hire a property management company.

3. Know About Appreciation

You may be purchasing a house to renovate and flip, or you may want to use it as an investment property over a period of years. In this case, it’s important that your home increases in value over time. Do a little research and make sure that this is a fairly safe bet before you purchase.

First, the home should be located in an up-and-coming neighborhood. Are there good schools and a growing population? Are there enough amenities to attract young families or retirees? An income property in a dwindling rural area is probably not going to appreciate much in value, but in a popular city or destination it has great potential.

Do some research on the projected growth for a particular area before you make an offer. Interview real estate agents in the area, and find a good fit with an experienced agent whose guidance you trust. As an expert in the area, they will be your greatest resource.

4. Spend Some Time

Maybe it goes without saying, but before you drop hundreds of thousands of dollars on a vacation home, it’s important to know you really like the place! To get a sense of living in an area, it’s a good idea to rent a home, or at least a hotel, for a time before making the big investment.

If you’re planning on eventually making your vacation home your full-time residence, make sure you take a trip during different seasons. Are you ready for southern heat in the summer? How about chilly nights in the mountains? Does the area have sufficient local business and amenities to meet your needs while you’re on vacation — say, restaurants, grocery stores, conveniences like gas stations, or medical facilities?

There’s no one perfect place for everyone; it’s just a matter of finding the right place for you. Once you know what you can realistically expect from your vacation home, and you are happy with it, then go for it!

Your Dream Vacation Home

Real estate transactions are among the largest purchases we make, so buying the perfect second home will take a bit of research. However, once you’ve found the right property in a location you love, you’re on your way toward a very rewarding lifestyle! Your family and your stress levels will be thanking you for years to come.

Don’t stop getting smart about vacation and rental homes now. For guidance on buying or selling a home in the Orange County area, please don’t hesitate to reach out. Contact the Stavros Group today!

How to Get Your House Ready for Renters

So you’ve decided to rent out your home, but have you given much thought to all the details? Perhaps you’ve rented it before and you’re looking at securing good, long-term tenants this time. Or maybe you’re here because it’s your first time, and you have questions.

It’s important that you properly prepare your house for rental, so that the transition is smooth and the tenancy is too. The last thing you want is to find subpar renters that don’t take care of your home, or a lack of willing tenants at the price you want due to broken appliances or an unwelcoming environment.

Check out this guide with easy steps on how to get your house ready to rent.

Declutter and Remove Valuables

If you’re renting out a house that you or someone else has been living in, you need to start by decluttering and removing personal items and valuables. Your potential renters want a space that is clean and functional, that doesn’t feel like they’re staying in someone else’s house.

Remove any knick knacks that don’t add aesthetic value, all clothing items, or any other personal accoutrements. Avoid shoving these items in a locked cupboard — your tenants will want storage, too! Move all the stuff you’re clearing out to your new home or a storage unit, or put them up for sale or donation to get them off your hands.

Decide What Appliances and Furniture Are Staying

You need to make it clear to your renters what is included in the rental agreement and what isn’t. Some homeowners rent out their homes fully-equipped with furnishings in the living areas and bedrooms, and crockery and cutlery in the cupboards. Others rent their homes completely unfurnished.

Right away, make a list of what is staying and what is going, so you can tell prospective tenants. Of course, tastes may vary, so be prepared for renters who might ask you to remove certain furniture items, re-paint walls, or make other unique requests. You may decide to oblige their requests, or not — either way, it helps to have a plan.

When you show your property to prospective tenants, let them know the specifics like whether you are taking the washing machine, or if the unit doesn’t come with a fridge. This can sometimes be a ‘make or break’ factor for people, and it will save everyone time and effort by being clear up-front.

Make Repairs and Replacements

To properly prepare your property for the rental market, you need to ensure that everything is in good, working condition. Check for small things such as faulty outlets or blown light bulbs, as well as larger repairs such as the AC unit or leaks in your ceiling.

Before you place it on the rental market, perform an extensive check of your house (looking everything over thoroughly!) and make a written list of all the necessary repairs and replacements. You should start this list early on, so that you can add to it as you notice things, and so you have time to perform the needed updates.

It’s advised to schedule vendors and contractors for repairs as soon as possible. The last thing you want is to be paying higher fees for last-minute, “emergency” repairs just days before your new tenant moves in.

Normal wear and tear is expected when you rent out a house, but completing the essential maintenance tasks will be important in securing the right renters. Keeping everything in working condition and looking nice will let you charge higher rental fees and attract and keep your tenants for longer.

Reference this quick checklist when inspecting for repairs.

You should check:

– HVAC systems

– leaky drains, pipes, or water damage

– clogs, blockages and all the plumbing

– appliances like the water heater and kitchen equipment

– windows and window screens

– hardware such as doorknobs, towel racks, etc

– Lightbulbs, switches and outlets

This is also a great opportunity to make any renovations or remodels in your home to increase the rental value!

Have Carpets Professionally Cleaned

Carpets are soft and comfy, but they also trap dust and other unwanted grime. Before you market your rental property, make sure its carpets are all freshly cleaned. If you had the carpets cleaned fairly recently, then a simple vacuum or shampoo should do the job.

However, a professional deep carpet clean is recommended when you’re renting a house that has been occupied for a while. If you or your previous tenants owned a pet, then a deep cleaning is essential to remove trapped odors, fur, dander, and pests.

Get Keys Made or Rekey the Apartment

If this is your first time renting out the house and you are the only person that has lived in it, then there is no reason to change the locks or rekey the apartment.

In this case, simply go to the locksmith and get a few sets of keys made. Your renter will expect at least two sets of keys. However, if you’re renting out a big home, or to a family or group of people, you’ll need more so that everyone has access.

You will also need to keep a couple sets of keys yourself, for emergencies, repairs, and routine inspections.

If you had previous tenants, it’s advised to rekey locks once a tenant moves out. The only way you can assure your new tenants that their assets are safe and secure is by rekeying the apartment, as you cannot be sure that your old tenants did not make copies of the keys.

Clean the Property Interior and Exterior

Curb appeal and outdoor living space both make a big difference in attracting tenants. It’s important that the building exterior and the surrounding area outside are clean and neat. This includes your garden and the street in front of your house. You don’t want potential renters to get a bad first impression from broken furniture outside, unkempt landscaping, or trash strewn on the road.

Once you’re sure that the exterior is looking sparkly and clean, it’s time to deal with the interior. Check all the walls for scuff marks and give them a proper scrub. Assess whether they need to be repainted. A fresh coat of paint goes a long way in making the home feel clean and new, so we highly advise keeping the right paint on-hand for touching up your walls.

Also ensure the windows are clean, appliances are clean, as well as all the little nooks and crannies in cupboards, under shelves, in corners and crevasses, and so on.

Cleaning is critical when you’re renting out a house. Once you’ve cleaned it once, double-check and clean it again! Good tenants want to move into clean homes, and above all you’re looking for good tenants. If you have the time to do it yourself, that’s fine, but we often recommend hiring a professional cleaning service to spare yourself the considerable effort, and to make sure the job is done perfectly.

Is Your Property Ready for Renters?

Are you prepared and ready to rent your home after reading these steps? It’s a fairly straightforward process, as long as you ensure that everything is up to standard, clean, and working properly.

Perhaps you’re interested in jumping into the rental game and considering buying a house to rent out. We are here to assist you with finding the perfect rental property with great investment value! Get in touch with us today to start the no-pressure conversation.

Ten Top Tips for Orange County Landlords

Owning rental property in Orange County can be a lucrative investment, providing a steady stream of income every month. However, being a landlord can also be a major source of stress, headaches and heartache, from screening tenants to collecting rents to upkeep of your property.

So how do you manage your Orange County investment property or properties while simultaneously managing your sanity? We have some helpful tips that may save you time and money in the end.

1. There’s An App For That

Whether you’re managing two or twenty rental properties, it’s critical that you stay organized. Losing track of your repair receipts might mean a hit to your tax deductions. Misplacing a lease agreement may bite you later if you’re forced to evict. Utilizing property management software, you can keep everything safely in one place. Some apps even enable you to collect and track rent payments, manage repair requests, screen tenants, and list a vacant rental on sites like Zillow and HotPads.

Take a look at these reviews to learn about 2019’s best property management apps:

FitSmallBusiness.com

Reviews.com

2. Think Long-Term

As a landlord, you’re likely not in it for a quick flip. You want to extract the most income from your property over a period of years, even decades. With that in mind, consider undertaking renovations and improvements that may cost more right now but will pay off in the long run. This includes adding in-unit laundry, updating the kitchen and bathrooms, and installing soundproof windows in street-side rooms. It may take a few years for these investments to pay off, but in the end you will recoup your costs, realize higher total income, and have a property that’s more attractive to future renters.

3. Don’t Overlook Landscaping

The next time you’re heading to your rental property, try this little experiment: Drive past first without going inside, and take note of the exterior. Does it look inviting, or does it look unkempt and overgrown? Based on the view, would a potential renter want to see more? You don’t need a veritable Garden of Eden outside your property, but a well-kept exterior space is important in maintaining your rental’s curb appeal. Plant some low-maintenance foliage, and set up a system to manage its health. Contract a landscaping company if need be—in the end, you’ll benefit from more renter interest and higher rents.

4. Show Your Tenants Some Love

The stress of being a landlord can vary greatly based on the quality of your tenants. To ensure that the good ones stick around, address their concerns promptly. If something at your property needs repair, express to your tenants that you are working hard to solve the problem, and do your best to get things fixed as soon as possible. Just like you want good tenants, your tenants want a good landlord who cares about more than just receiving their monthly payment. Write them a letter of appreciation for prompt payments and keeping the place clean, or simply thank them for treating your property with care the next time you’re around.

5. Sweeten the Deal

Since a thank-you note may not always be enough to retain your good tenants, consider offering them concessions such as a free month of rent or an extension of their current lease. It’s always easier to keep your current tenants than to find new ones, so losing a bit of income in the short term is well worth it to save you the time and effort of finding and screening a new batch of applicants. If a lease is set to expire during slower months like the holiday season, you can propose an extension to keep your tenants in the property until a busier time of year when new tenants will be easier to find.

6. Keep a Record of Your Property’s Condition

To protect your investment, be sure to keep detailed records of your property’s condition between tenants. Before new tenants move in, take photos and video of the entire property and save them securely in multiple systems like your computer and the cloud (a la Dropbox or Google Drive). When your new tenants are ready to move in, prepare a checklist and walk through the property together. Note the condition of each space, and have your tenants sign the checklist to acknowledge that the walkthrough was conducted.

7. Analyze the Market

If you’re getting ready to put your property on the rental market, first perform a comparable rental analysis. Just like selling a home, your best resource for pricing a rental is to compare your own property to others in the area. Look at rental properties of similar size, bedroom and bathrooms, and amenities. Make note of their rental prices, and adjust your target price based on differences like recent upgrades or problem areas. Losing rent income due to vacancy is your greatest enemy as a landlord, so it’s important to maintain a competitive, fair price.

8. Require Rental Insurance

This is frequently overlooked by landlords, but it can save you a heap of trouble. Requiring your tenants to have rental insurance will help if your tenants cause more damage than their security deposit covers. If a forgetful tenant leaves on the stove and starts a fire, or leaves the sink running and causes water damage, your landlord insurance might not cover all of the damage. You may be able to recover damages from your tenants’ renters insurance. In addition, your tenants will be more secure from losses to their own personal belongings. Renters insurance is a benefit to everyone.

9. Work With a Real Estate Attorney

Whether you are drafting a lease agreement or seeking an eviction for a deadbeat tenant, it is eminently helpful to work with a real estate attorney who knows federal, state and local laws inside and out. As we all know, attorneys don’t necessarily come cheap; but making sure that your i’s are properly dotted and your t’s are well-crossed is worth the price. While on its face a contract or a court filing may look simple enough, it can set you back months of time and thousands of dollars to get something wrong.

10. Treat it Like a Business

Ultimately, your rental properties are like any business investment, and you should treat them as such. Focus on cash flow: pursue late rents and do not hesitate if eviction is required. Invest in improvements which will net higher rents. Follow laws and ordinances to the letter, including Fair Housing and zoning rules. Maintain your property to high standards. And most of all, if you cannot afford the time and effort of being a hands-on landlord (which can be considerable), then consider hiring a property management company. You’ll lose a portion of your rental income, but the majority of the stress that comes with managing a property will be off your hands. Not a bad tradeoff.

We’re Happy to Help

As your local real estate experts, we have years of experience helping investors buying and selling rental properties. In addition, we have a broad professional network of trusted vendors, and we are always happy to recommend a contact for any of your investment property needs. Whether you’re looking for a real estate lawyer, a painter, a photographer for your rental listing, or any other industry pro, we are well acquainted with some of the absolute best. Let us know how we can help!