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In short, a vacation rental property is a private property that is used for the purpose of providing a vacation home for travelers on a short-term, rental basis. They are a great alternative to hotels, and give renters a great opportunity to get an authentic experience to whatever place they may find themselves in. Further, vacation rental properties are a solid investment for those looking to invest into properties and real estate.
Vacation rental property businesses are all the foundational functions and processes behind maintaining the properties to a standard that is profitable and sustainable—such functions that go into these types of businesses are financial, acquiring property, property maintenance, marketing and advertising, and property management systems.
There are quite a few benefits that come with starting a vacation rental property business. Before we get into these benefits, it must be stated that in order to see positive turnout, there must be wise investment, lots of consideration/thorough research, and having a solid plan. Some other things to consider before you go all-in on a vacation rental property business, is the location you wish to establish your properties on, demand, returns on investments (ROIs), and seasonality.
It is encouraged by many vacation rental property investors to supply a 10% down payment on your property.
Your monthly mortgage payment is usually going to be your biggest expense. Additionally, vacation rental homes require a more expensive homeowners insurance rate, than that of your main residence. With that in mind, you will also have to factor in property taxes for your vacation rental home. This will vary by your state and even your city, so make sure you do thorough research on this. As for maintenance, experts recommend budgeting 1% of how much your property is worth for its maintenance. For example, let’s say you have a home you purchased for $500,000—you would set aside $5,000 annually for maintenance. This is for things such as repainting, fixing floors, plumbing, lighting and everything in between.
Lastly, the answer to this question varies widely depending on the factors above, however if you budget accordingly for these things, you can find just how much you might need. It is always smart to think you need more than you do, due to the market changes that fluctuate.
While the market for vacation rental property homes changes quite often, there is one thing certain for the upcoming trends in vacationing—people are more eager to venture out into more recluse, rural, and outdoorsy escapes and adventures. What does this mean for you? Well, perhaps this means you should try to find vacation rental properties that are elemental to these trends. Some places to consider for 2023:
Before you jump head first into buying and starting a vacation rental property, it is smart to come up with a detailed plan that will get you to where you want to go, successfully.
Although a vacation rental home property may seem like a personal investment, one should treat it as a business—this mindset will, in turn, lend you the most profitable returns.
When in the hunt for the perfect property for your vacation rental, there are two components to keep in mind. The first is–you should do your research about the local laws such as HOAs and zoning laws, in the area you would like to start a vacation rental business in. This can make or break your engagements and goals for your property, as some areas are more strict about STR (Short-term Rental) leasings.
When it comes to starting your vacation rental business, getting your finances in order should be one of the first things you do. It is important to do the following:
In order to market your vacation rental property, it must look appealing. Furnishing and staging for your rental home is a great way to bring in business, and should be taken seriously. Let Valta help you furnish your property to look its absolute best. Valta’s furnishing services are done by industry experts, and will combine both your tastes and the best styling choices based on market trends to your vacation rental, which is proven to increase clientele.
Hiring a property management company is a great way at maintaining your properties to a high degree. It also saves you a lot of time and money in the long run. While services will cost you some money, the benefits surely outweigh the cost. A professional property management company will take care of cleaning your vacation rental, making sure bookings are going accordingly, making sure your listings are up to par on all digital fronts, will keep guests satisfied, and will keep your property looking great year round. These are the small details of the vacation rental property business that sometimes get overlooked. It’s smart to hire professionals to do these things, especially if you have other responsibilities on your plate.
Pricing your vacation rental property can be a tricky task. You want to make sure you are competitive with other similar properties, but you also want to make sure you are making a profit. Here are a few things to consider when pricing your vacation rental property:
Listing your vacation rental property the right way is crucial if you want your profits to be high and not the alternative (breaking even).
You’re going to want to list your property on Airbnb, VRBO, and Vacasa, with the following characteristics:
With a little bit of planning and some basic knowledge, starting a vacation rental business can be a relatively smooth process. There are a few key things to keep in mind, such as understanding the local market, having a well-appointed property, and marketing your listing effectively. By following these tips, you can be on your way to becoming a successful vacation rental entrepreneur.
