You may have considered investing in a vacation rental property if you live near popular attractions or in a particularly beautiful area. While short-term rentals like those are a great way to make some extra income, like any job, they come with their own challenges. If you’re considering investing in one, read on to learn the pros and cons of owning a vacation rental property.
The Pros of Owning a Vacation Rental Property
One of the main reasons why people become landlords is to make some extra money, and if done the right way, the rental can pay for itself and make you some passive income. Additionally, you can write off any amenity updates or cosmetic additions on your taxes as business expenses; the nicer the home, the more tenants will want to pay for it! The best part of owning a vacation rental is that you can use it when it’s not occupied and even take it off the market once it’s done paying for itself. Many landlords end up using the vacation rental as their home when they choose to retire.
The Cons of Owning a Vacation Rental Property
Arguably, the biggest downside to owning any rental property is keeping up with maintenance and dealing with the occasional difficult tenant. You need to keep the property neat and maintained throughout the year, so you can’t forget about it. And like any other rental, screening tenants beforehand and having an airtight lease agreement is critical to avoiding a bad tenant. You’ll also need to put extra money into marketing the property, and while rent may cover those costs, it’s not consistent throughout the year. This is because vacation rentals are more commonly used during vacation periods, so the money the property makes will fluctuate throughout the year.
Is Owning a Vacation Rental Property Right for You?
Before becoming a landlord of any kind, you must be honest and ask yourself a few questions. Are you prepared to put in the time and effort it takes to be a landlord? Do you have the resources necessary to invest and maintain a vacation rental property? Do you have the social battery and interpersonal skills it takes to be a landlord?
If you answered “yes” to all the above questions, owning a vacation rental may be a great financial step forward. If you answered “no” to some of these questions, you might want to reconsider. Before writing off owning a rental property, make an action plan to see if you can get to a place personally or financially to be able to say “yes.” Whatever you end up choosing, knowing the pros and cons of owning a vacation rental property is the best way to make the most informed financial decisions.