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What makes Vacation Rentals a lucrative investment strategy

Updated: Apr 12, 2023



Investing in vacation rentals has become increasingly popular in recent years, and it's not hard to see why. With the rise of platforms like Airbnb and Vrbo, it has become easier than ever to rent out a property to vacationers looking for a unique and memorable experience. But why do people choose to invest in vacation rentals in the first place? Well, there are also a variety of benefits, both personal and financial. Here are a few reasons why vacation rentals have become a lucrative investment strategy:


Strong Rental Demand


If you have a property or space within the property that you are not using all the time, renting it out to vacationers can be a great way to generate extra income. Vacation rentals are in high demand, particularly in popular travel destinations. The demand for vacation rentals is consistently high, which means consistent rental income.


Higher Rental Rates


Vacation rentals typically command higher rental rates than traditional rentals. This is because vacationers are willing to pay more for the amenities and location of a vacation rental.


Flexibility


Unlike traditional rental properties where tenants may sign year-long leases, vacation rentals allow hosts to rent out their properties for short periods of time - anywhere from a few days to a few months. This means hosts can easily block off dates when they want to use the property themselves and generate rental income when they are not using it.


Tax Benefits


Aside from traditional tax benefits, including deductions for mortgage interest, property taxes, and depreciation; you can deduct management fees, cleaning and laundry costs, and supplies like essentials and toiletries. There may also be additional tax advantages to renting your property as a vacation rental depending on your location and specific circumstances. Consult a tax professional to learn more.


Appreciation


We know that most properties will appreciate in value over time but Vacation rentals have the potential to appreciate even more, particularly in popular travel destinations. This allows you to refinance or sell your property in the future to take advantage of the increased value of your property. We may be a little biased but we recommend putting those funds toward your next Vacation Rental opportunity!


Diversification


Investing in vacation rentals can also be a way to diversify your investment portfolio. Rather than putting all your money into stocks or bonds, owning a rental property can provide another source of income and potential appreciation. Additionally, investing in a vacation rental property in a different city or state can also provide diversification across markets and help mitigate risk in case of economic downturns.


Potential for Passive Income


One of the biggest draws of investing in vacation rentals is the potential for passive income. Many vacation rental hosts choose to hire property management companies to handle tasks like bookings, cleaning, and maintenance, leaving them free to enjoy the benefits of passive income without the hassle of daily management.


In Conclusion


Overall, investing in vacation rentals can offer a wide range of benefits, from potential passive income to personal use, high rental rate, and everything in between. However, as with any investment, it's important to do your due diligence. One of the things constantly overlooked by those wanting to enter the vacation rental industry is underestimating the time it takes to actually manage even just one property. From responding to guest inquiries, coordinating check-ins and check-outs, addressing guest issues, coordinating housekeeping, inspecting the property before the next guest's arrival, and so on. And what about setting up the property as a profitable vacation rental, to begin with? Like how to furnish the property or what essentials to include. Oh and there's the part about making sure you have the proper permits and HOA approval (if applicable). It can be enough to make even a seasoned investor's head spin.


Here at GoTell Getaways, we are here to help guide you through the process and set up your property for success. Additionally, with our different management options, you can choose what works best for your budget and needs. So you can be as hands-on as you'd like to be or sit back and enjoy real passive income with our full-management options. Our mission is to provide you with the 5-star service you'll want to go tell your friends and family about!




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