Are you planning to buy a vacation rental property as your real estate investment? If yes, read on.
Vacation rental properties, such as furnished houses, apartments, professionally managed complexes, or resorts, provide an alternative to hotels and are often rented out to tourists. They are popular for their potential as a solid investment. Recent traveler trends also highlight a fantastic opportunity to generate extra income through long-term rentals.
For example, let’s consider the statistics for Utah. In 2021, the state welcomed approximately 17.8 million travelers. Among them, St. George emerged as the second most popular city, hosting 16% of in-state visitors and 15% of out-of-state visitors. This underscores that owning a vacation rental property is not only a savvy income-generating option but also offers a second home for your short-term holidays or a valuable addition to your retirement portfolio.
With that, let’s dive in and take a look at the five great benefits of investing in vacation rental properties:
One of the primary advantages of owning a vacation rental property is the potential for long-term rentals. This is mainly due to the fact that an increasing number of travelers now appreciate the advantages of booking short-term rentals over traditional hotels. Short-term rentals tend to offer more space, furnishings, and cost-effective options.
In fact, according to an analysis by VRM Intel, the demand for vacation rentals as an alternative lodging option witnessed an 81% increase between 2013 and 2017. Furthermore, it is projected to grow by an additional 59% between 2017 and 2023.
Imagine owning a vacation rental property in a thriving tourist destination like St. George. Having one of the best St. George Vacation Rentals, you can tap into this growing demand, offering travelers a unique and memorable experience while enjoying a lucrative rental income.
Real Estate Appreciation
Whether you use your second house as a vacation home or not, the best part is that it will continue to appreciate in value. In this way, you will earn a high return on investment when you decide to sell. In other words, investing in a vacation rental property not only provides you with long-term rental income but also builds equity over the years, especially if you keep it well-maintained. Make sure you timely renovate, upgrade, and make necessary improvements to your property.
Additionally, chances of appreciation are higher when you purchase a property in a high-demand area. Therefore, before investing in a property, analyze market trends or get a real estate expert’s help with the property’s future value to maximize your returns.
Offset Owner Costs
Expanding income property portfolios and establishing long-term revenue streams remain the primary goals for most second-home owners. There’s also significant value, especially for first-timers, in offsetting their expenses from the outset. From utilities and mortgage payments to maintenance costs and insurance fees, income from your vacation rental can help cover your monthly expenses. Additionally, as a vacation rental owner, you can enjoy certain tax benefits, such as deductions that bridge the gap between expenses and income.
Vacation rental properties are considered both a business and an investment, making property-related expenses eligible for tax write-offs. These expenses encompass insurance, repair and maintenance costs, marketing expenses, property management fees, and mortgage interest.
Easier to Manage
The true advantage of managing such a property lies in the reduced responsibilities, particularly as an owner. You won’t need to stress about common issues like rent collection, tenant reviews, or renewing leases annually.
As you may have already guessed, a vacation rental is also a holiday home for quick, fun getaways and an investment. Consequently, regardless of how long you need the property as your second home, you can easily block off weeks and days as unavailable. This affords you the luxury of setting aside time to spend with friends and family without incurring any accommodation expenses each time you travel.
In simpler terms, this arrangement not only enables you to increase your revenue and earn higher rental income when you’re not using the property but also allows you to save money whenever you desire a change of scenery.
Portfolio Growth and Wealth Building
Vacation rental properties can be a strategic addition to your investment portfolio. Over time, they can contribute significantly to portfolio growth and wealth building. Acquiring and managing multiple properties can further diversify your investments and achieve long-term financial goals.
The Bottom Line
Investing in vacation rental properties offers several benefits that make it an attractive option for seasoned investors and real estate market newcomers. From substantial rental income to the long-term appreciation of your property’s value, you can reap great financial rewards.
Before diving headfirst into this venture, make sure you have a well-defined plan and conduct thorough due diligence. With proper preparation, you’ll discover that your investment decision is highly rewarding and reap all the benefits discussed above.