{"id":1616,"date":"2018-10-18T08:05:27","date_gmt":"2018-10-18T13:05:27","guid":{"rendered":"http:\/\/www.realtyhop.com\/blog\/?p=1616"},"modified":"2022-05-20T17:40:30","modified_gmt":"2022-05-20T21:40:30","slug":"buying-a-vacation-rental-property","status":"publish","type":"post","link":"https:\/\/www.realtyhop.com\/blog\/buying-a-vacation-rental-property\/","title":{"rendered":"How to Buy a Vacation Rental Property"},"content":{"rendered":"
We all love to go away on vacation. When embarking on a trip, you typically spend a decent amount of time (and money) deciding where to stay physically. If you opt out of lodging in an expensive hotel room, you may rent someone\u2019s personal property for your expedition.\u00a0<\/span><\/p>\n But what if you didn\u2019t have to book a hotel room and could instead stay at your vacation property? To take it a step further, what if you could make money off of this vacation home and rent it out whenever you don\u2019t stay there? Many Americans buy vacation rental properties to supplement their income and have a guaranteed place to stay on their trips.\u00a0<\/span><\/p>\n Depending on where you purchase the vacation rental and the overall size and quality of the unit, you can charge several hundred or thousand dollars a night. This appealing idea motivates many people to take the leap and purchase their own vacation homes. However, with <\/span>low housing inventory<\/span><\/a> in the wake of the pandemic, you may need to embrace your competitive nature to secure this money-making opportunity. Buying a vacation rental property is similar to purchasing a standard investment property. You want it to have good bones, be in a safe and appealing area, and serve as a welcoming abode for vacationers.\u00a0<\/span><\/p>\n Continue reading to learn more about the current vacation rental market and how you can best approach the process.\u00a0<\/span><\/p>\n When deciding whether or not to purchase a vacation rental property, there are several factors to consider. While the property can serve as a source of income, there are various expenses and costs you may have to front.\u00a0 Below are s<\/span>ome other pros and cons of owning a vacation rental.<\/span><\/p>\n Overall, financing a vacation rental property can be costly. If done correctly, you can turn the property into a sizeable source of income and your vacation destination that pays for itself.\u00a0<\/span><\/p>\n If you\u2019ve decided to invest in a vacation rental property, you\u2019ll want to consider the following to ensure you make an intelligent purchase.\u00a0<\/span><\/p>\n Location is as, if not more, important for your vacation property than it is when you purchase your own home! You could buy a piece of property close to your primary residence or spring for a high-traffic tourist destination. With both approaches, you should research the volume of tourists which come through each year to determine if the cost you put into the unit is worth the potential rewards.\u00a0<\/span><\/p>\n Some appealing tourist destinations in the United States include:<\/span><\/p>\n Decide which type of property you would like to purchase for the vacation home. There are various options between single-family homes, condominiums, townhouses, and apartment units.\u00a0<\/span><\/p>\n The available units in your purchasing area may directly influence this decision, or you may try to approach the situation from a competitive mindset. You can research available vacation rentals in your target area and potentially decide to fill a gap in the market by purchasing a different property type.<\/span><\/p>\n Since you are purchasing a home that many clients will potentially live in, you want to ensure that the property is competitive and appealing to renters. You should consider the amenities you enjoy in a vacation home and consider what other renters might also enjoy. For example, if going after a home in a warm location, you might consider purchasing a home with a pool or ample outdoor space so that renters stay at your property over competitors.\u00a0<\/span><\/p>\n To make income on your property, you will have to rent it out to vacationers. Since most people do not go on vacation for long durations, you may consistently work on the renting process. Various tools and sites help you <\/span>rent your short-term rental<\/span><\/a> property.\u00a0<\/span><\/p>\n Additional options include hiring a management company, relying on word of mouth in your community, or creating a website.\u00a0<\/span><\/p>\n While popular short-term rental property sites and property owners experienced a significant drop in revenue during the height of the pandemic in 2020, most were able to recoup their loss as the vacation industry shifted. As vacation destinations began to open up slowly, travelers did not want to stay in large hotels with an abundance of people and instead booked private listings from individual owners. Many property owners witnessed the shift and decided to jump on board, increasing the number of vacation rentals in many popular destinations.\u00a0<\/span><\/p>\n Simultaneously, many travelers ditched heading to conventional locations, taking trips to see family and friends they had not seen for a while. Therefore, vacation rentals in smaller communities also increased, providing more opportunities for owners to invest in various areas.\u00a0<\/span><\/p>\n Since there are now many popular areas to list a vacation rental, you may have more leeway when deciding where to purchase your vacation home.\u00a0<\/span><\/p>\n Like a standard rental property, you will have to file income taxes on your vacation rental. Refer to our <\/span>rental income and expenses<\/span><\/a> information to learn more about how to file accurately.\u00a0<\/span><\/p>\n As long as you rent out your property for more than fourteen days a year, the IRS will treat it as a rental property. Additionally, you must occupy the property for less than fourteen days or less than 10% of the days you rent it out to vacationers to file and claim deductions.\u00a0<\/span><\/p>\n When calculating your expenses, you must split your costs between rental and personal use. To arrive at a final number, you can multiply your total number of expenses by a fraction. The numerator is the total number of days rented at a fair rental price, and the denominator is the total number of days you and the renters use the unit.<\/span><\/p>\n By filing your taxes and deducting expenses, you can recoup a portion of the money you pay during the year to maintain the rental. While you will have to pay income tax on your property, you can maximize your savings by keeping organized records of your expenses to ensure you list everything during tax season.\u00a0<\/span><\/p>\nPros and cons of owning a vacation rental property<\/span><\/h2>\n
Pros<\/span><\/h3>\n
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Cons<\/span><\/h3>\n
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Tips for investing in vacation rental properties<\/span><\/h2>\n
Location<\/span><\/h3>\n
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Property Type<\/span><\/h3>\n
Quality and Amenities\u00a0<\/span><\/h3>\n
Advertise your Property<\/span><\/h3>\n
Vacation Rental Shift During COVID-19<\/span><\/h2>\n
Filing Taxes for your Vacation Rental Property<\/span><\/h2>\n