Have you ever dreamed of owning a second home or having extra income from rental property? Many of us would love to own a vacation home, but simply can’t afford it. Well here are a few ideas to make your real estate generate additional income and may present a realistic solution to owning a second home…. or maybe even a third.
Rent your vacation home
Renting out your vacation condo or house is a great way to generate extra income. In many cases, your additional rental income will be enough to pay the mortgage on the property. Websites like VRBO.com, which lists vacation properties that are for rent, have made it very easy to make renting out your second home profitable.
Another great option for generating some additional income is to own rental property. This is different from renting a vacation home, as the tenants live in the house usually on a 6 or 12-month term. This makes keeping a tenant much easier, and also means steady income year around. A savvy investor will usually try to estimate his mortgage, and other expenses associated with the property, in comparison to rental income and try to make them as even as possible. This may sound simple, but there are many different expenses associated with a rental property such as annual property taxes, insurance, miscellaneous repairs, and routine maintenance (for more information see Buying Rental Property).
The previously mentioned options are for more long-term investors. You have to be willing to break even for many years before you begin to see any profit. However, there is an option for those investors wanting to see a substantial gain more quickly. Flipping a house is a great way to make money off a property in a short amount of time. Anyone wanting to flip a house needs to understand something very important; you are going to need plenty of capital and man-hours upfront before you see any reward (read more on The Bigger Pockets Blog). Many investors look for homes in foreclosure or bankruptcy to flip. This can be a tough process as you have to try to calculate how much time and work the house needs and compare it against what you think the finished product will end up being worth. For investors who are able to make this determination successfully, flipping homes can be a very profitable alternative to rental properties.