Investing in vacation rental properties is an excellent strategy to make money in real estate. Thanks to Airbnb and other vacation rental websites, making money with vacation rentals has become much easier than it ever was before. But are vacation rentals a good investment for beginner real estate investors? Continue reading this article for the answers you are looking for!
Before we answer our main question “are vacation rentals a good investment for beginners?”, let us first explain what we mean by vacation rentals. Vacation home rentals are a type of real estate investment that falls under the category of short term rental properties. Vacation rentals are, therefore, an alternative to hotels that are rented out for a period of less than 30 days. Thanks to the internet, the trend towards staying in vacation home rentals has increased and many tourists are choosing Airbnb rental properties over hotels, opening up new opportunities for real estate investors.
Vacation Rentals for Beginners
Getting started in real estate investing can be a bit intimidating, especially if you start with investing in traditional rental properties. Having to deal with tenant-screening, long-term tenants, and maybe even eviction can be hard to deal with as a first-time landlord. That’s why many beginner real estate investors find it easier to buy a short term rental property to get started in real estate investing.
So, are vacation rentals a good investment for beginners? The answer is a strong YES! There are many benefits to buying a vacation rental property, especially for beginner real estate investors. Check out the top reasons why we think you should buy a vacation home rental as a beginner investor.
Why Are Vacation Rentals a Good Investment for Beginners?
1- Dual-use property
The idea of having a dual-use property sounds very appealing whether you’re a novice real estate investor or an experienced one. With a vacation home rental, you can use the investment property to spend your own vacations at while renting it out the rest of the year.
2- More rental income
A major advantage of investing in vacation rentals is that you can make more rental income as a beginner real estate investor. If you choose a good location, vacation homes tend to attract many travelers and tourists during the high season of that area. During these times, you’ll get to charge high rental rates due to the high demand. The rental income you collect helps you pay the mortgage and other investment property related expenses.
3- Easy to find guests
Thanks to vacation rental websites and applications like VRBO, HomeAway and Airbnb, finding guests for your vacation rental property has become much easier. While this is a good answer for “are vacation rentals a good investment“, it is still important for a beginner vacation property investor to learn how to attract guests to reach high occupancy rates.
4- There is room for mistakes
Owning a vacation home rental is a great opportunity to learn about real estate investing while having some room for mistakes. Because of the high tenant turnover, you can easily become an expert on property management issues and remedy them with the next booking. The experience you acquire can help you kick off your career as a full-time real estate investor.
5- You can always hire professional property management
Managing a vacation rental is a major concern for many inexperienced real estate investors. Not everyone has the time to manage a vacation property and prepare it for the next guest several times per month. Instead of handling property management yourself, you can always opt for vacation rental management services that will take over these time-consuming duties.
6- Real estate appreciation
Another advantage of owning a vacation rental is the money you can make in the long term if you decide to sell the investment property. Vacation rentals are always in demand, which means that their values are increasing all the time. When the time comes that you decide to sell the investment property, cash in the profits you made and use it to finance another investment property!
When Are Vacation Rentals a Good Investment? Use Mashvisor to Know
Now that you know why are vacation rentals a good investment, let us explore how Mashvisor can help you figure out exactly which vacation home rental makes for a good real estate investment.
Whether you are looking for a beach vacation rental or a vacation rental in the city, Mashvisor provides the solutions you need when it comes to vacation rental data. Using predictive analysis and special algorithms, our vacation property investment calculator provides you with real estate metrics that can help you identify the best vacation investment opportunities.
Do you have a free Mashvisor account? Use our Property Finder to find lucrative vacation rental investment properties that match your criteria in a matter of minutes!
The vacation rental data collected by our investment calculator shows that for properties located in prime locations, the rental income and the cash on cash return are typically higher when you go for the short term rental strategy when compared to traditional long term rentals. Let’s take a look at some of the best cities for Airbnb investment according to Mashvisor’s data.
Where to Find the Best Vacation Home Rentals in 2019
Florida vacation home rentals are popular among real estate investors due to the high Airbnb rental income that you can make, as shown by Mashvisor’s data below. However, Florida state laws require that you have a business license before you start a short term rental business and different cities have different Airbnb regulations. Be sure to thoroughly check out the laws before investing in Airbnb in any of the following cities in Florida.
- Median price: $356,794
- Airbnb rental income: $2,605
- Airbnb cash on cash return: 4%
- Occupancy rate: 54%
- Median price: $320,194
- Airbnb rental income: $2,363
- Airbnb cash on cash return: 3%
- Occupancy rate: 61%
Note that in the Orlando real estate market, you can only rent out a duplex investment property on Airbnb while living in the other unit. Otherwise, only primary residences are allowed to be rented out on Airbnb.
- Median price: $566,814
- Airbnb rental income: $3,439
- Airbnb cash on cash return: 3%
- Occupancy rate: 57%
The Florida real estate market is not the only place that is promising for vacation rental investments. Tennessee also has some of the best cities for Airbnb investments, with Nashville leading the way.
- Median price: $426,228
- Airbnb rental income: $3,280
- Airbnb cash on cash return: 5%
- Occupancy rate: 53%
A short term rental property permit is required here and non-owner occupied permits are only allowed in certain zones
To start looking for and analyzing the best vacation rental investment properties in your city and neighborhood of choice, click here.