The trend of purchasing vacation homes is an increasing pattern in today’s real estate market. Investing in vacation homes usually stems from an investor’s personal choice of having a getaway property that can be used by the owner throughout the year. However, some owners also see this kind of real estate property as an opportunity to make profit by renting out their vacation homes to short-term renters.
What makes owners hesitate about renting their vacation homes is that they don’t know how profitable or doable this real estate investing has become.
The evolution of the real estate market and the growth of short-term rentals have prompted many experienced owners to comply with the increasing demand as long as they can provide it. The concept behind this type of renting is that it can give its owner substantial profit in a short period of time.
Short-term rental properties are usually more profitable than long-term rentals because they omit the time factor, which creates a risk for the owners when they think about renting.
To understand more about whether it is worth it or not to rent out your vacation home, you must understand the expectations and opportunities that make it happen.
Why Rent Out Your Vacation Homes?
Here are a few reasons why renting out your vacation home is a good idea:
1. Rise of the Short-Term Rental Industry
The rise of short-term rental platforms like Airbnb, VRBO, and Booking.com has made short-term rentals a direct replacement for hotels and luxury apartments.
These platforms are built on people’s listing their houses, vacation homes, or apartments for rent on per night basis. The fact that these websites have made it easier for real estate investors and landlords to deal efficiently with the many issues that usually make renting out hard is a driving factor.
Most homeowners worry about the logistics of short-term rentals because of the high tenant turnover. However, these websites provide credit card processing for payments, marketing for your home, and most importantly protection from damages which makes the whole process significantly less painful.
Related: What Are the Challenges of Owning an Airbnb Investment Property?
2. Easy Way to Make Profit
Owning a vacation rental home is like a gold mine if the location is attractive for tourists. The truth is that vacation homes will generally be in touristic areas, or in other words areas that can attract tourism. In the nature of things, these tourists are prepared to pay more than what usual rent costs. The rental income you can generate depends on the quality of the vacation home, its location, and the services provided.
If we consider Palm Springs, California as an example, on Airbnb the average price per night for a vacation home is $80. Renting a property there for 60 days throughout the year for $80 will give the home owner $4,800 in profit. That is an amazing return considering that the property will be rented for two months total in a year. This is what renting out your vacation home can give you, so why not grasp the opportunity.
Related: Turning Your Airbnb Investment Property Into a Multi-Profit Property
3. Better Rented than Empty
Owners who want to be real and stop beating around the bush will admit that they can’t use their vacation home all year round. Jobs, family, and climate play a role in contributing to owners not being there year round. So if you can’t use it, why not rent it to people who would pay you money to inhibit it? It serves a double purpose for owners.
Firstly, leaving a house empty for a long period of time might cause damages that occur because of a lack of upkeep or cleaning. Secondly, it helps with the security of your home; a house that doesn’t have residents for a longer time is an easier target for burglars.
4. Property Management Solutions
People usually hesitate about renting vacation homes because they are not sure if they can do the work that comes with this real estate investing business. This is where property managers come in.
There are three reasons why hiring a professional property management company makes perfect sense for people who own vacation homes. Property management companies provide their clients with services that will take care of every detail of the property on behalf of the owner.
- Not living close to a vacation property is usually the main reason why landlords hire property managers for their properties. Short-term rentals require constant attention because of the high guest turnover, which includes cleaning, check-ins, and maintenance. If you live far (as in the case of out-of-state real estate properties), then property managers are there to do it for you.
- Vacation rentals are a bit hectic and demanding according to all owners. They require so much more effort and time compared to traditional renting. Again, it is related to the higher number of guests that will use the property and the fact that they expect keys to be delivered or cleaning to be made. With a property manager, you won’t have to worry about any of those things.
- Property management companies can actually provide renting services. Owners who are not comfortable with using platforms like Airbnb might find that their best alternative is a professional property manager. Property managers can list your vacation home and keep renting it for guests on the dates approved by you.
Related: Professional Property Management: Pros and Cons
5. Opportunity to Grow
Vacation homes can be the stepping stone for a real estate investor’s path into real estate wealth. Renting out your property for a certain amount of time can generate you enough money to buy another vacation rental property. It gives you the chance to build a portfolio of investments that center around the vocational rental market.
Why not put your assets and your possibilities to good use? Your vacation home can be the source of cash flow you need to grow more as a real estate investor.
Conclusion
Renting out vacation homes is obviously a step in the right direction considering that owners are not using them for the vast majority of the year. The short-term and long-term rewards of using your property for rental purposes will lead to more money and success.
It’s not hard to become successful at it because the tools are there for owners to utilize. Airbnb has provided the platform; property management provides the execution; and you provide yourself with an opportunity to grow financially in a smooth and easy manner.