Vacation rentals are often bought for the wrong reasons with unrealistic ideas about income and chasing of “tax benefits” which really can be another word for “losing money”.
Often people buy with friends or family which can ruin relations with those you care most about.
Those warnings aside, a vacation rental DOES have some great things going for it.
The forced savings and natural tax deferred inflation protection is in full force with a vacation rental as it is with a commercial office building.
Frequently vacation rentals are in supply constrained areas(due to slow growth environmental issues etc), and if so, they can benefit from the appreciation similar to the industrial and single-family homes.
Income from Vacation rentals can be more tricky. Key: buy properties that don’t have an “off season”. As much as I love Lake Tahoe, owning a vacation rental there is difficult because you basically have two weeks during the winter holidays, 5 to 10 weekends in January and March, if you’re lucky and there is snow that year…rarely a full week rental at those times…if you have a good enough property you might force a 3 day rental.
Really, I’ll soon make a blog post fleshing out my exact experiences and vacation rental tips soon.
Key Concepts:
Location: A property in a place like Hawaii can rent 40 weeks a year if you’re good at it
Business: You need to have an entrepreneurial flair to decorate an place well, and to please renters so that they’ll recommend your specific unit and come back to it themselves each year ideally. That means responding to CraigsList, promoting your rental at school auctions etc, being creative about other advertising opportunities, and all of that even if you have an agent there to give out keys and check up on the cleaning service between rentals.
Vacation rentals in Marin County - We certainly have many of the features – all year demand, supply constraint, and a proven San Francisco proximity and destination. The issues are towns that might fight this activity, and probably most important of all.. very high housing costs which face more competition from hotel rates than in many markets. I’ll look into it more though.. or you can yourself.