In recent years, producing additional personal income through a single or small number of rental homes has grown increasingly common. Here are 5 unexpected fees to consider when buying a vacation rental property in Plano to assist you have a better idea of what to expect.
Mortgage and Escrow
A basic understanding of the typical real estate transaction leads to the conclusion that you will need to obtain financing from a licensed and reputable mortgage lender.
While you may be used to paying your own mortgage each month and may even know what and how your expenses pile up, there are a few factors to keep in mind when purchasing a holiday rental.
First, because this is a property that you will not be living in, expect the interest rate on the loan to be higher than advertised. Next, if you are unable to make a full 20% down payment, any Private Mortgage Insurance, or PMI, will almost certainly be more than typical. Of course, once you’ve paid off the first 20% of the loan, this is no longer an issue.
Calculating property taxes put into an escrow account – often through your lender – is the last detail to remember. Don’t let these often-overlooked costs deter you from pursuing your rental property goals.
Depending on where your chosen rental property sits, it could be part of a Homeowners Association.
Any property you’re considering buying should disclose this early on, and you should be given materials that go through all there is to know about the HOA.
Any HOA dues and their payment schedule are one of the most crucial items to keep an eye on. Being a member of a HOA also entails following certain rules and regulations, as well as the possibility that your participation in the HOA will benefit you in the future.
Some HOAs are antagonistic to rental property owners because they are perceived as intruders, while others expressly forbid the establishment of a rental property.
While your primary goal is to purchase a home with the intention of renting it out, you’ll want to budget for any costs associated with generating interest in the property.
A fast search will provide you with all of the information you need on a number of famous internet sites that charge monthly fees to assist advertise rentals.
Some of these platforms handle online payment processing for you, but be sure to read all of the payment processing terms and conditions so you don’t end up without the opportunity to rent your house to individuals who are interested.
Acquiring additional insurance coverage for a holiday rental is similar to purchasing additional insurance coverage for your own home.
However, because it is a rental property that isn’t used on a regular basis, it is likely to cost more than the homeowner’s insurance you’re used to paying.
Before making any selections, visit with your agent and explain your plans in detail. Get all of the information you need from them. An official meeting also gives you the chance to ask any questions you may have.
If you’re a hands-on person who lives close to your rental property, you may have previously planned to take care of it yourself.
If you can’t get there right away, you may need to hire a property manager, cleaner, or maintenance worker. Take into account any necessary pay and benefits, as well as supplies.
Help When Buying a Vacation Rental in Plano
When buying a vacation rental in Plano, contact our team to assist you at Sell My House Fast Dallas Texas.