As you are driving around this week, enjoying the warmest winter on record for Tucson, I am betting you see several out of state license plates, maybe even a few from as far north as Alberta, Canada. The snowbirds are here in full force, and after the pounding the rest of the country has taken this winter, I am betting next year’s batch will be even greater in numbers.
While some may take the plunge and decide to purchase a home here, many others will be on the lookout for a great seasonal rental. If you have been tossing around the idea of adding to your portfolio with a local rental property (seasonal or year round) there a few things you should keep in mind.
Firstly, choose a real estate agent to represent you that is experienced in selling investment properties and will offer to help you not only find the right one, but also use their contacts with property managers to determine viable rental rates, assist you in calculating what might need to be done prior to renting and what returns you can expect, as well as offer tips on how to market the rental.
Also topping the list – have a talk with your accountant about your plans, and see what potential tax benefits or consequences there may be for your particular situation. If you don’t have the resources for all cash transactions, many lenders are now offering programs for the smaller investor.
In addition, there are ways to use your IRA to buy investment properties, and if you already own rental property that you want to sell, you may be able to utilize a 1031 exchange and “kick the tax can” further down the road.