Renting out your vacation home is one of the most common ways of earning passive income and for a very good reason. Owning a property itself gives you a strong financial advantage and renting it out can be quite profitable. While renting out a vacation home sounds very convenient, it also comes with its downsides.
When discussing this topic, you should take one very important thing into consideration: are you already a property owner who wants to know what to do with it? Or are you thinking of buying a short-term rental property? Everyone’s situation is different, and there is no straight line answer. Consider these pros and cons below, but make the final decision on your own.
Pros of Renting Out Your Vacation Home
- Passive Income – Renting out a vacation home brings you a decent amount of passive income. As long as it is higher than the costs you need for the property (such as mortgage and additional expenses), it is a very good way to earn money
- Dependable and Stable Income – When renting out your vacation home, you earn a stable income. Not only is this income stable depending on the location and weather, but the value of the vacation home goes up over time.
- Capital Growth – Property investment is often characterized by steady capital growth. Of course, it depends on timing and the location, but as a property owner, you can expect capital growth in the future while earning money throughout the journey.
If you are considering buying a vacation rental property, then you will find it to have lots of advantages. The key is preparation and knowing how to get started. And always be aware of the downsides of renting out your vacation home.
Cons of Renting Out Your Vacation Home
- Dealing with Guests – This is not the biggest con, but it may bother you the most on a daily basis. Finding good guests and dealing with them can be a challenge on its own. Along with communicating with them and making sure your home is well taken care of is a whole other story.
- Maintenance – you will need to maintain and frequently clean the property to make sure the new guests have a good experience. For example, after a change of guests, you will have to clean and freshen up the place and make sure everything is in order. This will require time and resources from your end.
- Rental and Property Market – When leveraging short-term rental homes, you always face the risk of a rental market and property market crisis. You may not be able to find new guests; the initial value of your home may drastically decrease.
There can be additional factors to consider based on your personal experience. Overall, renting out your vacation home can be very profitable if you play your cards right. There will always be things that are out of your control, such as today’s market, environment, the time of the year, and economy, but on the other hand, you can use different tools to make the most out of renting out your vacation home. For example, using different renting websites and software will help you get the best guests and manage your properties more effectively.
A business model that involves managing multiple vacation rentals has the potential to make so much more profit than a business model that focuses on one vacation rental. Such a business model has a much higher chance of being successful when utilizing property management software such as Lodgable. Overall, make sure to consider all the options and make an informed decision.