Benefits of Owning a Vacation Rental
The trends are showing that investing in a Vacation Rental property with leverage can be a solid financial decision. Yet there is no mistaking the fact that owning a Vacation Rental is a lot of work. In order to reap the benefits, you need to have an excellent, well-kept, clean and organized property with an incredible local feature that makes staying in your property all the more enticing. When all these things come together, there are some incredible benefits that can be enjoyed- take a look!
Added Income
With a property to rent, you’ll have the opportunity to make additional revenue. This can not only help towards paying down any leverage you use to purchase it, but it can also help supplement your income as well. If you were to charge $80/night (after taxes) at your Vacation Rental property, and averaged 8 nights a month, your property would generate $640 per month or $7680 per year. If you intend to stay in your Vacation Rental a few times each year, this is simply just additional income to you. But, if you were going to have a Vacation Rental truly as an investment, you would probably be able to get a higher occupancy, and in most places and a higher rate. Assuming you could get 20 nights per month at $200/night, your property could generate $48,000 gross annually. Yes, there are some operating costs that come out of that, but still this would be a pretty desirable property to most investors.
Asset Diversification
Real estate offers a diversification to your financial assets that is not subject to the volatility of the stock and bond markets. Vacation Rental property is an asset that you can not only see, touch, and feel like other investment property, but you can also enjoy, relax, and make memories all while generating cashflow and appreciating in value over time.
Future Security
When purchasing investment property with leverage, whether it is a Vacation Rental or a typical Long-term Rental, the rents generally pay for all operating costs and the loan payment. So, essentially, you purchase the property with only needing to put a fraction of the cost down from your own funds and your tenants pay for the remainder and pay the on-going expenses. Once the property is owned free and clear, the rents keep coming in each month, no matter where your life takes you. Consider it like your own self-funded pension.