There's never been a better time to jump into vacation home rentals. Experts believe this fast-growing industry will see a huge popularity boom in the coming years, with around 63 million Americans using them by 2027.
However, that doesn't mean owning and operating a short-term rental is easy. If you're considering purchasing an investment property, here's what to know before you sign on the dotted line.
1. Financial Implications
Most people consider vacation rentals for one key reason: they create extra income! The right property can become a great investment, drawing consistent visitors year after year.
However, there are other financial implications you should consider as well. If you've chosen a property in the right market, expect its value to appreciate. This is a good way to boost your equity.
You'll also see benefits when you pay taxes. The IRS allows you to make deductions for certain expenses you'll see when managing vacation rentals. This includes things like hosting and property management fees, rental property insurance, and maintenance costs.
If you've been hoping to diversify your portfolio, vacation rentals are a safe bet. As an investment vehicle, these properties help you minimize risk by putting some of your nest egg into a different type of asset.
On a more negative, don't forget about the range of unexpected expenses you'll have to deal with. Set aside an emergency fund from the start for things like repairs.
2. Lifestyle Implications
If you buy a property in an area you love, buying a property in that area can be a great lifestyle choice. Depending on your occupancy rates, you can use your second home as a personal retreat for you and your family. If you want to focus on personal use, however, make sure you're considering vacation rentals in places you'd like to revisit at least once a year.
3. Personal Effort Implications
Some people call vacation homes a "passive income stream," but this isn't always true. Property owners often have to put a lot of work into their vacation rentals to earn extra money!
Before you start to get bookings, you'll need to market the property by taking photos, creating appealing content for your listing, and even paying to promote your property online. If you're in an area with seasonal fluctuations in tourists, this can get even harder. Worse, it can be time-consuming if you have little experience.
If you do your own property maintenance as well, you'll have to wear a lot of hats. You may end up doing basic repairs, providing customer service, hosting your guests, and more.
Get More Out of Vacation Home Rentals
When you buy a property with your eyes wide open, vacation home rentals can be a great way to earn extra money while obtaining a new home away from home. However, make sure you're considering all of the factors above as you make your decision, and consider speaking to an expert before you take the plunge.
If you're hoping to save time and effort while making your marketing, maintenance, and billing a breeze, consider partnering with PMI Matching Property! As a full-service real estate asset management company with a wealth of experience in the Fort Lauderdale area, we'll help you get more out of your new rental. Schedule a consultation to learn more.
