Pro: Extra Income & Tax Breaks
A really sweet perk of owning a vacation rental is the extra income you can earn from renting it out. Depending on whether you choose to rent it out short-term (days or weeks at a time) or long-term (several months at a time), it’s quite possible that you could get enough back to let the property pay for itself.
Con: Another Mortgage Payment & Expenses
Of course, buying a vacation rental comes with a mortgage payment, insurance, property taxes, utilities, and other expenses. These specifics must be taken into account when buying a vacation rental. Additionally, financing for an investment property can cost more since lenders often require a larger down payment and charge higher interest rates on second homes.
Pro: It’s Yours to Use
Being an owner of a vacation home means you get to do whatever you want with it. It’s a great way to save on money since you won’t have to spend on hotels! You can also use the property for business or personal events, meaning you won’t have to pay to rent event space elsewhere.
Con: Marketing and Screening Tenants
Your vacation home needs to be marketed to other tenants if you don’t plan to occupy it most of the time. Marketing can be a time-consuming task, as is screening potential tenants. It’s quite difficult to manage when you intend to rent out for days or weeks at a time. When you have swift and frequent turnovers, you will have difficulty finding numerous tenants to rent year-round.
Pro: Building Your Retirement Fund
One of the best ways to get your retirement fund growing is through investing in rental real estate. Rental property owners often include their rental income or property sale in their retirement plans. The volatile stock market or savings account with little interest are both great investment ideas, but real estate offers a lot of safety and growth that no other mode of investment can offer.
Con: Property Management Takes Time
Owning a vacation rental will take a lot of focus and property management before being able to get a sizable payoff. It’s even more burdensome when you are in charge of keeping your own property clean and maintained, or if your vacation rental is far from your primary residence. Several vacation rental owners end up shocked at how difficult it can be to prepare for each new tenant; this is something you don’t have to deal with when it comes to long-term residential rentals.
Owning a vacation home and renting it out can be a great investment in and of itself. To make the most of your investment, consider hiring a good property management company! Would you like to learn more about smart approaches to managing vacation rental properties? Real Property Management Prime has a top-notch team of Columbia property managers to help you navigate the market as well as keep your vacation rental profitable. Contact us online or call at 410-415-1736 today!