Vacation home rentals or short term rentals are a great source of passive income nowadays, especially because websites such as Airbnb.com created big business opportunities for people to capitalize on from the comfort of their own homes.
To diversify and grow your real estate portfolio in big ways, you must choose the right location for the right rental property. Some locations are better suited for short term rentals, while other areas demand long term real estate investing. For this blog post, we go through the benefits and value proposition of investing in vacation home rentals for big financial rewards long term.
Related: The 20 Best Places to Buy a Vacation Home in the US at the Beginning of 2018: Part 1
7 Reasons to Invest in Vacation Home Rentals
1. Good location? No problem!
The location of your vacation home rentals is a major determinant of the success of your rental property in the long term. Invest in short term rentals in popular touristic cities that attract travelers all year round. This way, you can safeguard high rental demand throughout the year and maximize your rental income in return. And depending on the season and period, you can set your own pricing strategy to reap the highest rewards. Airbnb is a great option for vacation home rentals and it helps Airbnb hosts pick and choose their Airbnb guests on their watch and under their terms.
2. The short term rental market is growing
Thanks to Airbnb, the short term rental market is on a steep curve and is not slowing down anytime soon. Savvy real estate investors study the market and act accordingly. This means, they invest in the right places and at the right time. If the short term rental market is expected to grow in a few years time, it makes sense for real estate investors to capitalize on rental properties in locations that will earn them a big ROI and big profits.
If you are iffy on where to invest for vacation home rentals, your best bet is Mashvisor.com, which allows you to find the best profitable short term rentals (and traditional) across the country in a matter of minutes. And the best part? You don’t have to do any analysis of your own because Mashvisor gives a thorough analysis and data metrics to assess whether or not the property is worth the investment.
3. Short term rentals can earn you more money than traditional real estate
Unlike traditional real estate investments, owners can charge more for their vacation home rentals and change the price according to the season. Airbnb hosts/real estate investors can have a dynamic pricing strategy to maximize their revenue and stay competitive. It becomes your business and as a business owner, you strategize to increase conversions and enhance customer retention. The best thing about vacation home rentals is the fact that your tenants can keep coming back if they enjoyed their stay the first time. So treat your real estate investment like a business and see your bottom line skyrocket.
4. A short term rental property can help diversify your investments
By diversifying your real estate portfolio, you mitigate your overall risk from market volatility and spread your revenue across different business investments. You can use the revenue from your vacation home rental to cover mortgage expense for other real estate investments. This is great for beginner real estate investors who are looking to diversify and grow their returns; start with an Airbnb short term rental to kickstart your real estate business.
Related: The 7 Best Places to Buy a Vacation Home in Florida
5. Tax advantages
If the tax benefits of renting a vacation home rental do not cover your mortgage payments, then a short term rental strategy is not a feasible business option. Real estate is a business and just like any business, investors can write off their rental expenses to save money and grow their business. They are eligible to deduct mortgage interest on their rental properties along with business and rental expenses. This not only saves you money but should give everyone a big incentive to invest in real estate. If you want more incentive to invest in real estate, click here.
6. It becomes your own vacation home
This needs little explaining. How can you say no to a vacation home rental? Vacation home rentals are dual purpose because you can rent it out and make money and use it for your family vacations. When your vacation rental is vacant or it is the summer, you can pick up your bags and go without the need to spend hours planning your vacation itinerary. You know just where to go and this saves you time and money. Everybody wins!
7. A business with a social aspect
Another great feature of vacation home rentals is the fact that you can meet people and travelers from all walks of life. A short term rental business is great for building relationships with your prospective guests and creating a friendly environment for them to keep coming back. There is a lot of personal satisfaction from owning short term rentals as opposed to traditional real estate.
Related: The Best Places to Buy a Vacation Home in Michigan
Vacation home rentals are a lucrative real estate investment for your guests as well as for your family. The benefits outweigh the costs, but make sure you hone in on the right location to build your equity and appreciation in the long term. A bad location may not give you the leverage to set your own price and keep a high occupancy rate. All in all, vacation home rentals are a good business investment. They are a double-edged sword because everybody wins!
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.