(0)Feeling inspired by Chip and Joanna Gaines' HGTV hit show Fixer Upper? Want to dip your toes in the vacation rental industry? Hmm, it sounds like you could be the perfect fit to purchase a rundown property in need of some serious TLC, turn it into a stellar vacation rental, and watch that revenue stream into your bank account. Before diving head first, you’ll need to explore the ins and outs of turning fixer-uppers into vacation rentals — cost, time, labor, restrictions, and the unexpected. And it’s doubly important to understand if a short-term rental investment is right for you.
So, is transforming a dreary old home into a revenue-generating vacation property worth it? Let’s find out!
1. Put Thought into the Location
Even in vacation rental real estate, the 3 Ls are essential — location, location, location! It’s important to consider guests from the start when purchasing a house, cabin, condo, etc. Will they want to drive this far from town? Is this an up-and-coming place to visit? What will motivate guests to come to this area?
Think about Gatlinburg and Pigeon Forge, Tennessee, for a second. They’re hopping towns with Appalachian charm, a whole lot of attractions, shops, and eateries, plus the Great Smoky Mountains National Park nearby. There is a myriad of reasons to visit the Smokies! And that’s the vibe you want for your vacation fixer-upper.
2. Consider the Cost
Now that you’ve found the perfect location to buy a fixer-upper vacation home, how much will it cost and how much will you save? For anyone with a lower budget looking to rent short-term vacation homes, starting with a fixer-upper could be your way into the market. However, there are many more costs to consider before signing the dotted line.
Over Budget
Hidden costs and higher-than-expected maintenance expenses can quickly push you over budget…and that’s often the case with any home renovation. If the money you save purchasing the house, cabin, or condo is absorbed by home improvement costs, then is it really worth it? Opting for a ready home to rent out may be a better option if so. Err on the side of caution by factoring in at least a 10-20% cushion over your established budget.
Tax Benefits
On the flip side, there are potential tax benefits for a time after purchase, as most states assess properties at the time of purchase or every 5-7 years. Plus, if you renovate a fixer-upper for your vacation rental business, tax write-offs are likely in your favor. As always, please consult a trusted tax professional to evaluate your specific situation. They may even uncover more savings to help fuel your fixer-upper project!
Payment Planning
When considering a home in need of repairs and renovations to transform into a beautiful vacation rental, look into home improvement loans and get pre-approved beforehand. Get binding written estimates for repairs where possible. And at least double contractor estimates to create a starting budget.
You can even see if purchasing a vacation rental with an IRA is right for you by speaking with a trusted financial professional. Preparing for down payments, closing costs, and other upfront expenses, like inspections, consultations, and reno quotes is vital.
3. Look into Property Restrictions
You’ve found the perfect home under budget and are itching to get the process going! Pause. Make sure to dig into property restrictions before placing an offer. Historic buildings may have specific restrictions that limit your vacation rental vision. Some neighborhoods don’t even allow vacation rentals of any kind. And you may need more permits than you can count, which may push you well over your time constraints.
4. Work with a Trustworthy Realtor
When searching for or purchasing a fixer-upper to turn into a short-term rental, we highly recommend using a trustworthy realtor in the area. A local professional will better understand what you’re looking for and may be able to get you the best deal. Not to mention, working with someone you know and trust gives you peace of mind. When making a major financial investment, trust is vital.
Looking to renovate and rent out Smoky Mountain cabins? Reach out to local Misty Patterson with CFY Realty.
5. Learn from Inspections
Before and after buying a rental property, inspections can be a huge help. They give insight into costs for first-time and experienced buyers. Home inspections can provide room for negotiation in lowering the initial price tag, and they can give you an opportunity to say no to a bad deal.
During a home inspection, check how old the home’s systems (appliances, roof, furnace, etc.) are to see what needs replacing now or later. And be on the lookout for structural and more serious issues, like cracked foundations and faulty wiring, that could cost more than you want to pay.
6. Set Aside Time for This Project
Vacation home renovations are a lot of work so it’s imperative to understand what’s worth your time! Whether managing project contractors or DIY-ing to save money, you’ll need to make room on your calendar throughout the renovations, repairs, and decorating. You’ll be hiring, scheduling, meeting, and making decisions left and right, so it’s essential to set aside time for your vacation rental fixer-upper.
While this project won’t last forever, it could take months to a year to complete depending on the size and complexity of your home reno project. Hiccups happen, contractors bail, storms prohibit progress…a lot can disrupt your time. So, dedicating time from the start can help alleviate some of the stress and burdens associated with fixer-uppers and remodels.
Talk with friends, family, and loved ones — be open, honest, and upfront about your time constraints — and commit. And add extra days and time slots on your calendar just in case!
7. Start Renovating & Customizing
Often a favorite (and sometimes daunting) part of transforming a fixer-upper into a vacation rental is the start of construction and renovations! Whether you have a unique running theme, farmhouse style, or a shiplap obsession, it’s pretty cool to finally see some progress underway on your vacation rental improvement project. While you can tackle everything in succession to get heads in beds ASAP, some homeowners find it easier to renovate in phases over a longer period of time. Whichever path you choose, here are some reno tips to help!
Increase Vacation Home Value
Customizing your rental property inside and outside will help it appreciate in value, so focus on landscaping, functionality, a sensible floorplan, and home improvements that will elevate the home. If you have a cozy log cabin rental, deck out the living room with a stacked-stone fireplace. Add picture windows to your mid-century modern home with a mountain view. Turn the primary bedroom of your one-bedroom shotgun house into a spacious retreat. You get the idea — play to your property’s strengths!
Keep Short-Term Renters in Mind
While it’s easy to get caught up in impulse purchases and quick design decisions during renovations, remember to keep your future guests in mind. Spending more money on a specific shade of paint instead of nice living room furniture won’t benefit your end goal: revenue.
Got a two-story townhouse on the beach? Add a luxe outdoor shower. Working with a four-bedroom barndominium? Make sure the dining area has a table for everyone to sit together. Going for bachelor pad vibes? Turn a few of your five bedrooms into a game room or theater.
Not sure which way to go? Reach out to our CFY Design Team — for quotes from simple upgrades to major renovations for both interiors and exteriors. Just ask for Property Decor Manager, Jessica Looney, at 1.865.518.6497.
Prepare for the Unexpected
Ugh, it’s the worst when something unexpected happens, right? It all depends. When renovating or remodeling a fixer-upper, often something will go wrong — whether it’s a miscommunication, mold uncovered in the walls, weak beams, or a delayed stone delivery — and you’ll need to handle that situation promptly.
And sometimes, your carefully planned budget leaves you with extra cash to pour into standout amenities to attract guests, like a luxury hot tub, a big screen projector setup, or a pool table. Either way, prepare for the unexpected. Don’t expect everything to go according to plan…just like life.
8. Market Your Property NOW
Don’t wait until your fixer-upper is completely renovated to start marketing on social media, in emails, via digital ads, or by word of mouth. You can even start a video blog, Pinterest album, or Instagram stories to document the remodeling process. Building hype for your newly renovated property’s BIG reveal is a vital step to get potential guests thinking about booking before you even open the doors!
Is it really okay to start marketing while renovating a fixer-upper? Absolutely! While we recommend not opening the calender until a more concrete deadline is established, watching a property transform and being among the first guests to plan their getaway at a beautifully remodeled vacation home is exciting.
Your First Stay
As a pro tip, schedule time for a stay yourself (or a close friend in the area if you live far away) before your newly updated or remodeled vacation rental hits the market. This way, you can experience the home for yourself, tweak anything you need to, and add personal touches to your property description.
How to Get Early Bookings
Whether it’s a one-bedroom retreat, a family home with three bedrooms, or a large group lodge for 50+ guests, no matter the square footage, amenities, or floorplan, Cabins for YOU Marketing has experience pushing properties under renovation or construction to get bookings even before you list with new photos, a professional description, drone shots, or a virtual tour. We even use channel partners, including Airbnb and VRBO, to expand your reach online.
9. Look Forward to a Profit
Turning a fixer-upper into a gorgeous vacation rental that attracts loyal, repeat guests is quite a challenge, and it takes time. From the start, it’s important to keep your end goal in mind: providing memorable vacations for guests and generating a substantial profit. Even if it’s your first time renovating a property, paying your dues will pay off — with the right strategy.
Property Management
If you want to put even more work and time into your vacation rental business, self-management is the way to go. If you’re looking forward to a profit — without handling reservations, answering calls 24/7, taking care of property maintenance, working on marketing strategies, setting up dynamic pricing, tracking multiple online listings, or monitoring guest feedback — partnering with a professional vacation rental management company is for YOU!