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How to Eliminate Risk When Investing in Vacation Rentals

11 Aug 2015

Real estate investors take some of the biggest risks out of anyone in the market. This is especially true in Florida, when the influx of tourists and new residents from all over the world make the market highly volatile. But, the fact that this state is high on many people’s lists of travel destination makes it a prime area in which to invest in vacation rental properties. There are certain precautions investors can take to reduce the risk associated with investing in these kinds of houses.

 

Know the Market

Florida is a massive state, full of different real estate submarkets. Those from out of state may assume this refers to the Gulf Coast and the Atlantic Coast. But even within cities, there are vastly different areas in which you can invest. Take Panama City, for example. This beachside town is well-known as a party-heavy spring break destination. But going just 10 to 15 miles outside the central hub, and you will find quiet, handsome homes near a beautiful white-sand beach.

 

As you explore the different options within Florida, you must identify your target market. When you have, it is important to know when this crowd usually visits the state. If you handle renovations and upgrades in your property’s own off-season, you will greatly increase the chance of owning a profitable vacation rental. For more information, visit Marina Title’s Investors page.

 

Investigate the Property

With a target market in mind, you must inspect any potential purchase. Online virtual tours are a good start, but they will not give you a full understanding of the property’s benefits and drawbacks. Either you or a member of your team should investigate the home firsthand, ensuring it has the proper amenities to appeal to your potential renters. Again, keep the market in mind: targeting high class families will require top-of-the-line facilities, while a rental for college students should have highly durable amenities.

 

Before you ever visit the property, however, it is wise to order a title search from a company like Marina Title. This documentation will reveal any hidden issues with the house, such as liens, encumbrances or questionable ownership. Both types of investigation could greatly reduce your risk when investing in any property.

 

Get Proper Insurance

As most people know, Florida endures many hurricanes and other storms throughout the year. What may not be so evident, however, is that typical insurance policies do not cover damage done by this destructive weather. You will need to ensure you are covered in the event of a storm. You will also need to have coverage for any damage done by renters. While you can have this included in your insurance policy, you can also have a damages clause in the rental contract, placing liability on the lessee for any destruction of property.

 

Insuring the physical structure should not be the only policy you purchase. It is important to also have title insurance. If your right of ownership is challenged and you are forced to relinquish the property, title insurance will protect you from financial ruin.

 

For investors in need of title searches, title insurance and other services associated with purchasing property, Marina Title is here to help. For more information about our various offerings, call us at 1 (800) 610-4750 or email us at info@marinatitle.com today.

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