Have you thought about buying a property near the beach? The mountains? You could vacation there whenever you want, a little home away from home, but it seems out of your reach? Or maybe you just hate finding, and paying inflated rates during yearly events, like our International Gem Show here in Tucson, AZ because everything is full, but wouldn’t imagine buying a house here because it would just sit empty for the rest of the year.
What if I told you: You can have that vacation home, and not only break even, but make a profit!
I have owned a vacation rental for a little over two years now and the gross yields off that vacation rental are over DOUBLE the gross yields of what it was getting as a month-to-month rental. Keep in mind that vacation rentals have significantly more expenses though. But, that means if you bought two homes, lived in one, and managed your own vacation rental out of the other it could potentially pay for both homes!!
Here are all the things I have learned during this time:
1. No more hotel bills when you visit your favorite vacation spot! You have a home there. You can have all your stuff locked away in the garage or a storage cabinet so you feel like you just left.
2. Great money. In general, the yields off a vacation rental are higher than a normal rental. People will pay significantly more for shorter stays.
3. Lower wear and tear. On average you have a lower occupancy rate with more dates that no one is using your appliances, walking on your floors ect. The premises are also being cleaned regularly which helps with this a great deal.
4. There are management companies that will take care of the whole thing for you. These vary widely in how much they charge and the extent of what they do.
1. Most of the time you want to go to your rental when everybody else does. I have decided to stay with family instead of at my vacation rental because I really wanted that 2k paycheck!
2. You might be the one stuck paying all the utilities and bills for the property if your manager does not do that. These homes tend to have everything you do at your home, internet, cable, water, ect. This is mostly just an inconvenience but something to keep in mind.
3. The risk is higher than a month-to-month rental. There are periods of time when you might have no renters, such as low tourist season. You will still have to pay all those bills, and maybe a mortgage, while there is no money coming in. This will need to be planned for by saving back some earnings from better times of the year.
What are your experiences? Do you own a vacation rental or would you like to?