Owning a second home would be a dream come true for any one of us. Getting involved in real estate investing makes it possible to earn additional income from putting a roof over people’s heads.
This prosperous premise gets even more exciting when you consider investing in vacation rentals that allow you to buy property in an area that you would enjoy spending time in with your family while renting it out when you aren’t vacationing there, which helps to keep your costs down.
With a long-term strategy in place, you can make an investment that appreciates over time.
But like anything that has the potential to improve your financial situation, vacation rentals aren’t simple, or else everyone would do it.
They require research, economic sacrifice, and maintenance to remain a successful way to invest.
But by taking an intelligent approach, vacation rental investments can be a solid addition to your investment portfolio.
There are plenty of benefits that come from investing in short-term rentals and long-term rentals, and here are some of the main reasons they are worth your time and resources.
Beginning with Vacation Rental Properties
Vacation rentals are what you would consider being short-term rental properties that can provide you (and people that rent them from you) with an alternative to staying at a hotel while on vacation.
Generally, vacation rental properties get rented out for under a month and are fully furnished homes that are typically stocked with the basic amenities required for short-term use.
Like any real estate investment, locating the ideal vacation rental investment that works best for you is essential.
Don’t be afraid to ask yourself, “what would I look for in a place to stay if I visited the local area?”
Here are a few factors you need to consider when finding a profitable vacation rental investment.
Vacation Destination
Location may be the most critical thing to consider when picking a rental property.
You should find yourself a market that’s a popular vacation destination and one that you have some personal understanding of.
Is this going to be able to be a year-round vacation destination or one that is seasonal during the winter or summer months?
If there will be a lull in visitors during half of the year, that is a large vacancy gap that you may need to factor into your plans.
Marketing Strategies
What will be your marketing strategies to advertise your vacation rental? What will make your property stand out from all of the other options, and what will this all cost you to execute effectively?
Maintenance Costs
Don’t overlook the maintenance costs associated with vacation rentals, especially if you are purchasing a property that is pretty far from you that you won’t be directly managing yourself.
Remember that vacation rentals require a great deal more upkeep than standard long-term rentals because there will be way more occupants coming in and out of it than if you were leasing it for years at a time.
Increase in Property Value
Even if you eventually decide that a vacation rental is no longer for you down the line and decide to sell, you can almost always get a good return on your investment because vacation rental properties are constantly in demand.
This offers you a tremendous built-in exit strategy if that time ever comes.
Great Introduction to Investing
Popular vacation investment property platforms make getting involved in this income strategy much more practical for beginners, novices, and experts alike.
Short-term vacation rentals are considered by many to be a good entry point to real estate investing. Since your tenants will be temporary, you will have plenty of opportunities to learn from mistakes and grow from them.
Whatever isn’t working for you now, remember, those occupants will be leaving in a matter of days or weeks, and you can make adjustments before the following people come in because there isn’t a lengthy lease involved.
Tax Deductions
One fantastic perk that makes vacation rental investments worth to anyone who embarks on this potentially lucrative move is that there are many income tax deductions that you can claim.
When you are owning and operating a vacation rental property, don’t forget that this is a business, and there are related business expenses that you can deduct when tax season rolls around.
These expenses can include insurance, management fees, cleaning services, and taxes.
Make your accountant’s job as straightforward as possible (and your life less stressful) and keep good records of your expenses and hold onto all your receipts.
Make sure you are clear about a deductible expense in your particular situation.
