I got pre-approved for a mortgage on a 2nd property! This is going to be an investment property. Though I assumed I would be good to go, I still find it nerve wrecking to talk to someone about your finances. Both lenders I talked to were great and seemed genuinely interested in my plans. They were able to offer some good advice and insight into current trends and future predictions.
I’ve come up with a max dollar amount I’m comfortable spending but a lower number would be ideal so I have some extra room in the budget to make repairs and facelifts.
Speaking of budget, I haven’t made one of those yet, so the numbers I have in my head may not be realistic… I better get on that.
After the excitement of hearing I can actually buy another property I started to think more about what kind of rental property I want to buy.
My choices are a residential rental property or a vacation rental property.
With a residential rental property, I would buy a property close to the Twin Cities and rent it to tenants who would hopefully inhabit it for a year or more at a time. Whereas a vacation property, I would purchase more of a cabin type property 1.5+ hours out of the Twin Cities near or on a lake. With this type of a property I would market it to vacationers looking to rent it (on average) for a week at a time.
I’ve had my heart set on a vacation rental, because I want a cabin, but I feel like I need to consider both. So if you have advice, tips, experiences, horror stories, etc. of owning either type of property, I’d love to hear it.
I’m a T-chart kind of person so I’ll share what I’ve come up with so far:
Residential Rental |
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Pros: |
Cons: |
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– Closer to home in case something happens. |
– Income not as high. |
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– Longer term renters. |
– Wouldn’t have to opportunity to see inside the property as often. |
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– Wouldn’t need to furnish it. |
– I couldn’t use it for vacation use. |
Vacation Rental |
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Pros: |
Cons: |
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– I could use it for vacations. |
– I would have to furnish it. |
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– Higher income potential. |
– Shorter term renters. |
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– I could get into the property on a regular basis to inspect. |
– I would have to pay cleaners between renters. |
This story is long from over…be sure to check back to hear how my rental adventure progresses!