Buying a Vacation Rental Property
When many people think of a vacation property, they think of a nice place to spend time away from home and get some relaxation time or see a new place. However, for others, they see this vacation home as a way to make a little bit of extra money.
There is a growing trend where individuals will buy vacation properties, but instead of using this property as a place to vacation or as a second home, they are actually renting it out to interested parties. This is growing in popularity as people can often fetch several hundred dollars for a single night in their home depending where they are and how nice the home is.
The process for buying a vacation rental property is a little different than a standard investment property, as you won’t have one tenant there for several months, and will often have different people every single day. In this regard, you are almost more like a hotel manager than a landlord. For example, people will generally expect clean towels, toilet paper, kitchen utensils, and so on. Also, you are more likely to have vacancies in a vacation rental, as you don’t have someone signed on a lease to live there. There is a high risk/reward in vacation rental properties vs. regular properties, so your choice whether to invest in them or not will depend on your own risk tolerance.
As far as actually buying a vacation rental property, it isn’t all that different from a standard investment property. You want it to look welcoming, have good bones, be located in a safe area, be located near amenities or popular parts of your area and more.
The ups and downs of investing in vacation rental properties
Vacation rental properties can be a fruitful investment, but are definitely not for everyone. There are many ups and downs that you should expect to go through when renting out a vacation properties. The ups you will experience are that you will be able to likely charge a good amount of money for your property, and you will find that most visitors will be respectful of your space. Also, this will allow you to offer a more personal touch than a hotel and you can feel good that you are helping people experience somewhere new or exciting.
In terms of the downs, those can be plentiful too unfortunately. The whole ordeal of running your own vacation rental can be very daunting, as you likely will need to clean things like towels, furniture, dishes, and more. Also, keeping track of who has booked out your property and ensuring they have the key and leave it where they should can also be stressful.
Tips for investing in vacation rental properties
If you feel that vacation rental property investment is for you, then you should know how to do it right. While it shares similarities with being a landlord of a traditional property, there are a few differences. Here are a few tips when it comes to investing in vacation rental properties and running them as well:
- While you can buy a rental property in your local area, there is nothing stopping you from purchasing one in an area with higher tourism (which generally leads to more short term rentals). Different cities and areas will also have different ROIs, so do your research on that as well.
- Know the costs involved with owning and renting out a vacation rental property. These include property taxes, rental income tax, occupancy taxes, utilities, household items you’ll need, maintenance/repairs and more. While these properties can make you a lot of money, they can also cost you a lot.
- Know what type of property to buy. You can buy apartments, condos, townhouses, or full on homes; and all can be rented out as a vacation property.
- Getting customers is your biggest mission and there are a number of different ways you can go about getting them. You can simply try use word of mouth or create a website for your home, can hire a property management company to help with operations or can use one of the various apps and services that exist out there in the marketplace.
- Depending on where you live, you might be able to get some tax benefits, so speak to a professional knowledgeable on the topic to see if there are some ways you can save money. Also, financing can be tricky so it couldn’t hurt to ask ahead about that as well.
While it isn’t for everyone, investing in a vacation rental property can be a good way to make a solid amount of income if done right. You need to do your best to think of yourself as a hotel manager more than a landlord, as many expect more out of a vacation rental, especially if they are paying hundreds of dollars a night for the house or apartment.