1. Research the Local Market
You don't want to invest in a foreign market. Even if you don't live in the area where you plan to buy a vacation rental, you'll need to conduct in-depth market research to make informed decisions. If you make a hasty investment, you may not get the returns you were hoping for.
To start the research process, use online rental search platforms to view average rents in the area. You can check out platforms dedicated to advertising vacation and residential rental properties. Look into properties that are similar to the type of home you plan to buy, and evaluate their rental rates. You can take things a step further by looking up the sales price data for these addresses to estimate how much you may have to invest upfront. There are some areas in Belize where data may be challenging to find. You can research an excellent investor-friendly realtor®, and they will know the market. They may even have a spreadsheet or two on how to analyze a certain property.
2. Prepare Your Finances
If you need more capital, you should wait until your financial situation improves to purchase an investment property. How do you know you're financially ready? You should have enough liquid cash available to cover your down payment, closing and renovation costs, and legal costs for the property you have in mind. It would help if you also had additional liquid savings that could serve as business cash reserves. Your agent will have some creative ways to finance a property in a place where there is no financing. If you want to learn how you can do that, be sure to read our Free Report here.
3. Find an Investor-Friendly Agent
While you could purchase a vacation rental property independently, working with an agent with ample experience supporting investors is a smart idea. A real estate agent who has helped numerous investors purchase vacation homes in the same market will be able to offer you expert guidance. When you are finding an investor-friendly agent, make sure to ask any candidates about their history of helping investors in your vacation area. Do they invest in the area themselves? You want to find an agent that loves the country as much as you do.
If you want to purchase a property in Belize, let the RE/MAX 1st Choice Belize team help you find the perfect place!
4. Tour Homes With Popular Features
If you purchase a home that lacks the features renters want, you might spend more on renovations. Aim to tour homes that already have attractive characteristics for tourists and short-term renters. Depending on the area, this could mean modern appliances, a spacious deck, and rooms that could function as a home gym, office, or theater. Make sure to highlight these features in photos later! Look at the property through the lens of a renter, not you as an owner. While I may never pay $2,000USD a night in a hotel room, many people out there would. There is always someone willing to pay for the best of the best.
5. Make a Competitive Offer
Whether you're purchasing a vacation rental home in a highly competitive market or a market that isn't attracting many investors at the moment, you'll still want to ensure that your offer is persuasive. To make an appealing offer, check in with your agent to determine the final amount, and do not ask the seller to pay closing costs. You can also offer a small deposit - this can discourage the seller from backing out of your offer in favor of another buyer. My mentors say, "Money is made at the time of purchase."
When investing in a property outside of the country, be cautious about selecting something listed as-is. Properties with this designation generally have significant defects that the seller must disclose. While you can get a good deal on these homes, you run a serious risk of ending up with a money pit instead of a vacation home or investment property, so be cautious, especially when purchasing from a distance. Get an inspection done if there is a building on it. If there are no home inspectors, I tell my clients to get a builder to look at it.
Make Steps Towards Your First Investment Property
You're probably excited about the idea of owning a rental property in your favorite vacation destination. But it's essential to approach this process carefully - investing in a lackluster rental property is a substantial financial misstep. By following these steps, you'll be ready to research your target market, ensure that your finances are in good shape, and connect with an agent who understands your needs as an investor.
