Focus on Resort Market Real Estate Investing in Big Bear
When looking to invest in a resort market, you want to make sure that you set yourself up for success. This investment niche is different than most, so preparing your mindset and setting expectations is paramount. Making your resort market investment dream come true is absolutely doable, but it can become a nightmare if you purchase a property before you do your due diligence and focus on what matters most. But where do you start?
Focus on 3 key areas which will lead you to a positive outcome you can feel confident about. Get answers to the following 3 questions (hint…we can help!):
1. What am I looking for?
Revenue return. What makes a Big Bear cabin a great revenue generator as a vacation rental property? This information is critical to make a smart investment decision.
Criteria
When considering a cabin’s vacation rental value, there are obvious criteria such as location, lake and ski resort access, and property condition. There are also more specific criteria, that when combined properly, can make all the difference in your annual net return. Things like bedroom to bathroom ratio, accessibility, and added amenities can affect your bottom line. You want your cabin to bring the most value to the widest range of people in comparison to your competition. You should know what features are in highest demand by guests eager to ensure a great vacation experience.
Your Big Bear Real Estate agent should be able to articulate what these criteria are, and why. Once you understand what to look for, the right cabin will present itself. It won’t be a guessing game.
The fewer features a cabin has to attract vacation rental bookings, the harder you will have to work to net the amount you desire for the investment to make sense. “Hard work + vacation home” is not typically what the dream is about. Of course there will be work involved with any investment, but if the pleasure received exceeds the effort, you have a winner.
2. How do I acquire it?
How you buy your investment cabin is very important, too. The terms of the purchase will absolutely impact your investment experience so be sure to consider all terms when writing your offer to purchase. There are the more obvious factors to include when compiling your offer, such as the offer price, amount of your down payment and interest rate. There are not so obvious factors, such as whether or not furnishings are included, rental-readiness (is it “turnkey”?), and the existence of a former rental history, if any.
Furnishings
Whether or not furnishings are included is a common detail to buying a cabin in a resort market. The personal property aspect of furnishings does not impact the real property value. It does, however, impact the investment property value. A furnished house is ready to rent and does not create added cost for the investor. You may need to upgrade a few items such as electronics and appliances, or add a few beds, but not having to furnish an entire house before you begin to rent it out adds a great deal of value. Even if the items in the house are not “5-star”, you can ease into upgrading your furnishings in a manner that suits your budget by trading out old items for upgraded ones gradually. Your first rental return check can go towards the new spa or sofa sleeper. That’s leading with revenue, making the money before you spend it on your cabin, and that is always smart.
Rent Ready
Another term that adds big value to the investor is a cabin that is already on a rental program. We call this “vacation rental turnkey”. The procedures and requirements to get a cabin up and running on a vacation rental program cost money and take time. When you buy a cabin that is already on a rental program, you are ahead of the game because it’s ready to generate revenue and may even have reservations on the books the day escrow closes. This is very valuable to the investor, but has no value to the real estate itself. An appraiser will not factor revenue return in the property valuation.
Another valuable item is an actual rental history. Some properties are on a program but do not have a good rental history; others have a great rental history but are no longer on a rental program. Just because a rental history is not impressive does not mean that the investment cannot do well There are many reasons why a cabin does or doesn’t do well and your agent needs to be able to tell you those reasons. A rental history, even if the cabin is no longer being rented, is an invaluable benchmark of performance. These are real numbers you can crunch to help base your potential return on.
3. Who can help me?
Making a successful investment in a resort market such as Big Bear absolutely depends on who you know and trust when planning to generate the highest possible return. You need a network.
Your Real Estate Agent, Your Advocate
Your agent should be the first key relationship that you make. She should know how to get all the information you need to become an informed investor. Make sure you select the right agent, someone who has a comprehensive understanding of this unique investment niche.
Management
You will want to make sure you identify the right vacation rental management model and/or company to suit your personal revenue return needs. This is critical because not all vacation rental management companies are equal. Your agent should be able to point you in the right direction so you can distinguish what is in your best interest. The relationship with your vacation rental management company or team requires trust and a mutual understanding of needs and expectations. It is ideal to start communicating with a reputable vacation rental management company while shopping for a cabin. They will bring your resort market investment education to the next level in terms of property management. Your agent needs to be able to hand you off to a company that is proficient and willing to invest their time in you before you buy. This sets up healthy expectations for the investor and minimizes unpleasant surprises that can often pop up.
Extended Network
Vendors and associations will also play a key role in the success of your Big Bear investment. You should have a list of resources/vendors and be fully aware of the associations that make important decisions about your investment market. CPRPRO and the the Big Bear Visitors Bureau are just two organizations that your agent needs to make you fully aware of. The network you set up is critical to your ultimate success as a resort market investor. Make sure you carefully select your Big Bear Real Estate agent. She is the first member of your team, and if selected correctly, will facilitate setting up the rest of your network.
The right Big Bear Real Estate agent will eagerly navigate through the terms of a great cabin purchase with you in a way that leaves you feeling confident about your investment. And remember, if you don’t get everything you dreamed of in the first cabin you purchase, you are only a 1031 exchange away from trading up in a few years and getting that dream cabin. Anyone can have their dream cabin if they are patient and on purpose with it.
Helping people who love Big Bear invest in our resort market successfully is the passion of Big Bear Real Estate. Let us help you get started today!
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