3 Pieces of Advice for Vacation Rental Property Investors
Lots of buyers are seeking out vacation rental properties these days, and for good reason: They can be very profitable investments. The National Association of REALTORS® recommends investors start by understanding these three key principles.
THERE’S MORE TO LOCATION THAN JUST LOCATION
Obviously you’ll make more money on a vacation rental in a popular destination. Beach houses, areas with nightlife and cultural activities, and holiday destinations are all good bets.
But even your location within a popular destination matters. For example, a city condo that’s walking distance to restaurants, theaters and landmarks will command higher prices than one that’s also in the city, but several blocks away from the action.
Location concerns can be even bigger than that. Some municipalities have restrictions on short-term rentals. Some condo communities also have rules around length of stay, so there could be multiple sets of regulations to navigate. Make sure to work with a well-informed real estate agent.
SHORT-TERM RENTAL MANAGEMENT CAN BE INTENSE
Platforms like Airbnb and Vrbo do a great job streamlining vacation rental management, but they can’t do it all. Owners still have to interact with guests, tend to special needs and minor emergencies, and make sure the property is clean and maintained. It takes much more time to manage a short-term rental than a long-term one.
The potential stressors of a short-term rental should be carefully considered—or maybe you love the idea of a fast-paced income opportunity where you get to interact with all kinds of people.
PROFIT POTENTIAL IS HIGH BUT OCCUPANCY CAN BE UNPREDICTABLE
Weather phenomenon, changing seasons, supply and demand: Typically speaking, short-term rentals have higher profit margins than their long-term counterparts. But the potential for a higher return also comes with higher risk.
