Owning a Vacation Rental Home can be one of the most rewarding investments you will ever make. There are many benefits to owning a vacation rental. Here is my list as to why you should consider this as one of your first steps into real estate investing.
Vacation Rentals Can Be Multi-Purpose Properties
A typical rental property, such as an apartment, duplex or home, serves only one purpose. The property is rented on a long-term basis to tenants with the only goal being to make rental income. Vacation Rental properties are typically rented on a daily or sometimes weekly basis. This means that you can rent the property and make rental income, while also occasionally using the property as a vacation destination for your family. This is one of the best parts of owning a vacation rental. It can serve as your second home when it is not being rented. I have even seen owners spend several months at their second home during the off-season. There is a lot to be said from being able to get some personal enjoyment from something that is also an investment.
The Rental Income Potential Can Be Huge
Vacation Rentals can offer a lot more income potential than a traditional rental property. Charging rent by the night rather than the month certainly comes with some risks, but the upside is undeniable. You can easily get $300+ per night for a property that would normally bring in $1500 per month to a full-time renter. You have the potential to earn big revenue if you are in a location where guests are willing to spend their vacation.
Invest in Prime Real Estate
The mere fact that you are even considering your property as a vacation rental should mean that it offers at least an above average location. It may be in a beach or resort area, in a downtown area of a popular city, near theme parks or some other amenity that will draw visitors.
These types of properties are typically going to offer better appreciation potential than the average home. For example, the median home value in Panama City Beach, FL has increased by 10.1% in the past year. The national average is somewhere around 3 -5%.
Tax Savings
Full disclosure here. I am not a CPA, so please do not construe anything i say as tax advice. Virtually all the costs associated with running your vacation rental such as insurance, property taxes and utilities, should be a tax deduction for you.
Things can be complicated depending on your situation and how often you personally use the property. Again I suggest finding a qualified CPA or tax professional to fully maximize your tax benefits.
Owning a Vacation Rental is Easier Than Ever
I’m not saying it is easy to own a vacation rental. It is still a commitment in terms of both time and money. The good news is the internet has made it easier than ever. There is a variety of marketing channels and resources at your fingertips should you choose to self-manage your vacation rental.
Don’t have time to self-manage? Take the time to research and hire a quality properly manager that will do all the work for you. With the right property manager, owning a vacation rental can become as easy as getting a check in the mail each month. I still recommend making at least a semi-annual visit to your vacation rental to make sure your manager is doing their job, but it really can be this simple.
Get a Head Start on Your Retirement
Many of us dream of spending our retirement in a warmer climate or near a body of water. Deciding where you want to spend your retirement is a vital decision. But how do you decide if a location is the best place for you? Owning a vacation rental provides the opportunity to scope out a location before hand to see if it is right for you. The added benefit is you will be earning rental income from day one. This allows you to work towards paying for your retirement home years before you are ready to retire.
