At GoNitely we want to know more about what buyers are thinking when purchasing an investment home. What are the problems and how can they be solved? What's most important? What are they looking for?
To that end, we interviewed a prospective vacation home buyer, Alan, to find our a little bit more about his thought process.
GoNitely: Tell us a bit about yourself. Who is Alan?
Alan: I’m a software engineer living in the Bay Area for 5 years. I’m in my early 30s and I don’t own a house.
GN: So, you’re in the market for a vacation home. What triggered that? When did you decide to start looking for a property?
Alan: I want to diversify my investments and buying real state seems like a great idea. Unfortunately, buying your first home in the Bay Area is a nearly impossible achievement. So, I started to explore buying a vacation home nearby where I can enjoy my investment and, at the same time, list it out on Airbnb and other platforms to make some extra income.
GN: Are you buying alone, or with a partner, with friends, with family?
Alan: I wanted to buy with friends. But this is very tricky since it is a big amount and I don’t want to compromise my friendship. So, for this time, I’m exploring buying a vacation home alone. I would buy with a friend if I had a company to lay out a nice contract to protect all the parties involved.
GN: Did you have a certain area in mind, or was the search based more on availability or other factors?
Alan: I want to buy in Lake Tahoe area. When buying a vacation home, you need to pay attention to the city rules. In South Lake Tahoe, for example, there is a cap in the number of vacation homes allowed and you must get a license. As a result, I’ve filtered my home search to be around Lake Tahoe but outside the South Lake Tahoe city limits.
GN: What are some of the must-haves you’re looking for?
Alan: I want to be close to the lake and have a modern feel to it. I’m looking for three bedrooms and two bathrooms. Some cities have a limit on the occupancy, so I’m avoiding anything bigger than three bedrooms. I want a place with a covered parking since it snows in Lake Tahoe.
GN: How did you proceed? How did you start looking for your ideal home?
Alan: I created a filter in sites like Redfin and Zillow. I get notified as new houses come in the market.
GN: What were some of the hurdles you encountered? What made the search and/or selection difficult?
Alan: There is not a ton of inventory in Lake Tahoe. So, I’m finding it very difficult to find something that I like in the price range I’m looking for.
GN: Are you planning for self-use exclusively, or are you considering renting out the property when you’re not there?
Alan: Renting it out for sure.
GN: What are the things you look for when choosing a property management company?
Alan: Technology, technology, and technology. As a software engineer, I want to have insights that only technology can give. For example: smart pricing based on demand. I want to make sure my property manager is spending as little time as possible calculating numbers and maintaining excel spreadsheets.
GN: How much of an influence in your purchase decision does the potential rental income have?
Alan: This is very important for me. I would be happy with a break-even amount on a monthly basis. Meaning, the mortgage I’m paying is covered by the rentals in my property.
GN: Are you just hoping to cover your cost, or are there specific financial goals?
Alan: This is primarily an investment, so I want to hold on to the house and sell after eight to 10 years to make some cash on top of the original purchase price.
GN: In the entire process, what do you feel is the toughest part where a product could help potential buyers?
Alan: Dealing with multiple sites can be tricky. For example, if the property is booked on Airbnb you need to make sure to remove it from the other sites to avoid double booking. Also, at any point in time, a product can definitely help oversee your house in any given period. A product can help with communication between owner and property manager.
GN: If there was a one-stop solution to invest in short-term rental properties, from selection to management, what are some of the things you’d like to see?
Alan: Deciding which house to buy is really hard. You can pay more initially, but then get more money in the long run. So, getting help to find a good trade-off between purchase price vs expected income is highly desirable. I would also love a mobile app where I can get notified when I get a booking.
Thanks to Alan for sharing his thoughts with us! Are you interested in a frictionless way to buy an investment property? Head over to gonitely.com and leave your email!