Vacation Rental Property: Will It Be a Good Investment?

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Why Is Buying Monthly Vacation Rentals a Good Investment?

Real estate investing has its perks. Aside from offering the ideal escape whenever you want to take a break, investing in a vacation rental property makes for an excellent strategy for positive cash flow. That is why real estate companies like The Short Term Shop never run out of property listings to offer.

6 Benefits You’ll Enjoy from Buying a Monthly Vacation Rental Property

It can be overwhelming—even intimidating—to think of investing in a vacation rental property, since maintaining a property is hard work. Also, if you’ll be opening it for short term rentals, then you’ll also have to consider learning about the overall local market. 

Real estate investing may not be a walk in the park, but it is something worth attempting, and here’s why:

Steady source of income

One of the biggest benefits of real estate investing is the potential profit you can earn. How? By making your property available for a month-to-month basis vacation rental when you’re not living in it. Therefore, the best thing to do is to have tenants rent it out for their vacation. The money you can earn from the bookings can also help you pay for mortgage and other expenses like repairs, maintenance, insurance, tax, and more.

 

Increasing real estate value over time

Compared to assets like vehicles, jewelry, or furniture, real estate properties have a stronger chance of appreciation. The value of real estate property increases with time because of several reasons. For one, if there is a low quantity of land or housing available in a specific location, the demand goes up and so does a property’s value. General inflation also plays a factor, because properties are becoming increasingly more expensive to build every year.

Should you decide to advertise your vacation rental property for sale in real estate agencies like the Short Term Shop, you’re guaranteed to get a higher return for your investment.

Tax deductions

Just like on any other property investments, you can also reap some tax deductions from your short-term property investment. One IRS rule states that you can keep all your rental income tax-free, if you get bookings for two weeks. Beyond that, you need to show records of your expenses, so that you can claim them as losses. Other tax deductions include:

  • Property taxes
  • Property management
  • Cleaning and maintenance
  • Repairs
  • Utilities
  • Loan interest
  • Insurance
  • Transportation
  • Advertising

To make sure you’re not missing any tax deduction benefits, the best course of action is to work with a professional accountant and/or a real estate attorney. This would also help you prevent breaking tax laws. As a result, you get to focus on other important matters regarding your property.

Less investment risk

Investing in a vacation rental property comes with reduced risks. The combination of studying the projected revenue for your prospect property plus working hard to attract guests and achieve high occupancy rates can lead to your success. Another effective approach is to use the property as a traditional rental. In case things don’t work out well, you’ll still have a property that you and your family can use for vacations and holidays.

Easy property management

You can work on a vacation rental business either on a part-time or full-time basis. To make things easier, it is recommended to hire property managers or rely on vacation rental management services to help you. They can talk to your guests, collect payments, or oversee any issues that need an immediate response.

Second home

Perhaps the best advantage of getting a vacation rental property is the chance to have a second home. There is no need to look for hotels, because you already have a place to stay. Furthermore, you can use the property to host events or gatherings.

How to Choose the Best Short-Term Rentals

A modern-style home with garden and pool

Before investing in a property, make sure that it is strategically located. Choose a property that is near attractions your guests can enjoy. Also consider the market conditions, proximity to amenities, and even the usual weather in the area. All these can affect how much your booking rates should range.

Don’t forget to examine the demand and market in the area to know if the property is worth investment. Check the vacation trends in the area—will your property be sustainable? Do a market comparison or investigate other properties in the area and how they are performing. While you’re at it, identify the typical rental price range among the rental properties, so you’ll have an idea of your potential return of investment.

Conclusion

Investing in a vacation rental property is indeed beneficial for those seeking long-term financial security. If you’ve done your homework, this type of a property can bring you a huge profit. Moreover, it can serve as a second home for you and your family. Even if you decide to sell the property to real estate companies like The Short Term Shop, you’ll still get a good return for your investment.

In fact, most of the investors preferred to own a vacation rental property because it yields a much greater return than investing in a timeshare cancel services. It’s difficult to sell your timeshare, but you cancel your timeshare if you decide you no longer need it.

Don’t know where to start on your real estate investing plans? Let the Architect’s Diary help you.  Read more of our insights to learn how you’ll succeed in your vacation rental investment journey!