Vacation Rental Ownership

IS IT RIGHT FOR YOU in 2025?

The Vacation Rental space is a great place to start investing in real estate and is a great financial opportunity. If done well, you can not only turn a nice profit, but you can have your own personal vacation spot to use whenever you need to get away from the busy day-to-day hustle. This guide will walk you through the ins and outs of the “how to start a vacation rental investment“.

Pros & Cons

Owning a vacation rental has its ups and its downs. Before considering owning one, you need to think about the pros and the cons before making such a significant investment. First and foremost, keep in mind, rental property investments are not comparable to other interest bearing accounts, the stock market, mutual funds, cryptocurrencies such as bitcoin or other type of investment. They are their own animal and just like any other business need to be treated as such… like a business.

Here are some of the main pros and cons of owning a vacation rental.

Pros

You can make an extra income. This one is pretty straightforward. If you market your rental well across multiple host websites or if you ensure your rental is in a prime location, you are sure to make a steady profit.

Owning a vacation rental gives you your own spot to getaway. You can use the location for special occasions like birthday parties or host holidays, and it pays to purchase a rental in an area you’ll enjoy getting away to.

One of the advantages of owning a rental property is the ability to write off many of the upkeep expenses such as hosting fees, cleaning costs, insurance premiums, and more. Anything that classifies as upkeep can maximize your deductions.

Cons

Actually, having to manage the property is the #1 disadvantage to most. In order to scale a Vacation Rental leasing business you will need to concentrate on growing and to do so you will need a property manager. Owning a vacation home isn’t a hands-off job. You will have to clean, stock, prep, and maintain the property throughout the year, especially if your property is very popular.

You have to market the property to find guests to stay in your home. You’ll need to write up listings, take photos and post to as many host sites as you can handle, as well as invest some time in social media and optimize your listings to reach target audiences.

As a rental owner, you will have to purchase furniture and décor appealing to guests. Styling a guest house can run up costs, and you want to ensure you have durable quality and comfortable fixtures that are on-trend and desirable.

Advertise Your Property

Advertising your property is the number one focus to get your rental booked, and marketing your vacation rental to ensure it stands out is a must. Here are a few easy tips every vacation rental owner should read.

To effectively market your listing, you will want to ensure your property photos are of professional quality. Consider hiring a photographer. The investment is well worth it.

When writing your listing for your property, you will want to ensure it is SEO optimized. You can write and research on your own, or you can hire a writer with a background in SEO to help you ensure your listing is ranked high on prospective guests’ Google searches.

Advertise across all host sites and ensure you have all popular social media up and running. Consider hiring a social media manager to take the task off your hands, but you want to ensure your vacation rental social media is engaging and take the time to respond to inquiries and comments. Engagement creates intrigue.

To maximize your bookings, you will want to list your rental on one or as many sites to book out your place and maximize your earnings. The list of potential host sites continues to grow, and you should analyze each one and its fees before making your decisions.

Airbnb – One of the biggest vocational rental sites and the one more people review when planning out their vacations. This one charges the host 3% and the guests 14%.

Vrbo – They make it easy for vacation rental owners and property managers to advertise their properties and manage bookings online. Vrbo has acquired many vacation rental sites over the years and has quickly taken up the next spot where you should list your vacation rentals. Vrbo charges a listing fee that varies, guests are charged 6-12%, and hosts are charged on a pay-per-booking payment plan that starts at 8%.

Hotels.com – Listing on hotels.com or is perfect to cater to those guests who like to plan their vacations and are unsure if they want a hotel or a vacation rental. Hosts will pay a commission per booking that can vary on location. The fee averages about 10-25%.

Tenant Screening and Background Check

Maintenance and Upkeep

Maintenance and upkeep of vacation rentals make owning a rental time-consuming and not to mention costs. You can’t cut corners with maintenance or care, and there are many things owners don’t consider when purchasing their properties. A few things that will need to be regular maintenance:

Housekeeping and appliance upkeep is the most essential upkeep you will need to manage. Most guests, when checking out, do not leave the place spotless, and you will want to ensure the house is cleaned thoroughly and sanitized.

A Vacation Home security system is beneficial for you and the guest’s safety. Invest in high-quality locks for the windows and doors and install security cameras with motion-activated lights. This protects your property from theft and assures your guests that you have their safety in mind. Don’t forget to have first aid kids, fire extinguishers, and smoke and carbon detectors on hand.

The outside appeal is just as important as the inside. Ensure your property is well taken care of and maintained. Clean the gutters as needed during the fall seasons, check for pest issues throughout the year, and repaint walls or surfaces as the need arises. If your property has amenities such as a pool or a hot tub, that takes a little extra care, such as changing the water and investing in a quality filtration system that needs to be checked at least weekly to ensure it’s working correctly.

Lease Agreements

Lease agreements are there to lay out the terms of the rental agreement and let the guest know what’s is and what isn’t acceptable at your vacation property. You’ll want to ensure you are covered and include thorough details on every term and condition listed. Never cut costs with your lease agreements and hire a lawyer as this is a legally binding document to ensure it’s drafted well to protect you.

A short-term or vacation rental agreement is a lease that is made between a landlord and tenant that is generally between one (1) to thirty (30) days. The agreement is most common for higher-end properties to outline the exact terms and conditions of the rental period. The agreement must follow all applicable State laws and if the housing structure was built before 1978 it must be furnished along with the Lead-Based Paint Disclosure Form.

There are some main components you will want to include in your leasing agreement, such as:

Financial Protections – You will want to include detailed information about costs, who is paying, damage and cancellation fees, and more.

Names, Dates, and Time of Rental – Include the names of the guests and the time of the occupancy of their stay. List your check-in and checkout times and arrange either key exchange or, if you have a code box, how they will receive the code safely.

List the House Rules – Ensure your rules are laid out, such as no smoking, noise restrictions, and even more minor things, such as ensuring dishes are washed or placed in the dishwasher before leaving.

Fees – If you have any optional fees for any amenities for your rental property, ensure you list them in your rental property leasing agreement.

Extended details on: vacation rental leasing. For a detailed look into many sites you can book with, Lodgify covers the most popular hosting sites catering to niches.

Income expectations

Vacation rentals and income can depend on a lot of factors. Your income can vary based on the size and location of the rental and times of the year or even how often it is booked.

You will want to ensure your listing has desirable amenities, fun trendy décor, and you want to try and impress your guests so they leave you positive reviews. The more positive reviews you have, the more likely you will attract more returning guests.

The only way to really be sure is to work hard to book your rental over the years and use that data to develop a forecast. Most vacation rental owners can make at least $10,000 annually, while some more significant income earners make 6 figures.

ROI

When purchasing a vacation, you will need to consider your return on investment or ROI. This is a metric investors use to determine the profitability versus costs of a property. This can be as simple as calculating expected annual income, subtracting the costs and expenses (cleaning fees, insurance, property taxes, etc.), and dividing that by the property’s total price.

When calculating ROI, you’ll want to consider a few factors to take into account. Ensure all numbers are accurate by having a detailed list of expenses and costs to include in your ROI.

You’ll likely need to account for the fact that your rental will not be booked every day of the year, so you will want to account for vacancies. If you opt for a loan, the lower you can manage to pay upfront, the higher your ROI will be for your rental upfront. Keeping detailed information and record keeping on Vacation Rental ROI is extremely important for long term rental success.

Income & Expenses

Owning a vacation rental can provide many tax benefits that people might overlook. As with any business, you want to ensure your income is maximized and your expenses are low. Your income relies heavily on what you spend, and your expenses add up as a vacation rental property owner. Most companies or people who have investment properties use a tax accountant. If you are unsure whether or not to use an accountant then speak with your attorney or ask a tax pro.

You have expenses such as:

• routine maintenance and repairs
• cleaning fees
• salary for the cleaning and maintenance crews
• property management fees
• rental host site fees
• insurances
• marketing
• general supplies, amenities, and furnishings
• legal fees

Many of these expenses can be included in your tax breaks. Look for tax breaks in service fees. You may be able to deduct travel fees to your vacation rental if you perform repairs or maintenance, software, and tools that you pay for to manage your bookings and accounting.

Hire a tax professional who has experience collaborating with people who own rental properties to ensure you get all the tax breaks you deserve and maximize your potential earnings.

Location-Location-Location

Location is truly everything in the world of real estate, and the same is especially true when you invest in a vacation rental. There are many places and tourist spots in the United States to consider when choosing your vacation rental. You will want to research and ask yourself if this is a place you would like to vacation?

When you purchase a place, try to purchase an area that meets one of these criteria:

Mountains – Many people love to visit the mountains year-round. The summer is great for camping and hiking, and in the winter, you’ll attract ski lovers

Beaches – Beach properties are one of the more desirable vacation rentals. When looking to book a vacation, many people look for a place to relax at the beach.

Desirable Weather – Find a place with warm weather year-round for guests to escape cold homes during the winter.

Parks and Attractions – You can’t go wrong finding a location near a theme park or major natural attraction. People tend to visit popular theme parks and wonders like the Grand Canyon all year.

Historical and Cultural Significance – You can choose a place with a strong history or even a variety of cultural significance that tourists love to see.

Managing Turnover Rate

A fast turnover rate means more bookings and more potential earnings. When turning over your property, you have to have the ability to:

• Assess any damages from the previous tenant.
• Thoroughly clean and sanitize the place before the next tenants arrive. This involves scheduling enough time between checkout and check-ins to get all the work needed to be done.
• After a guest checks out, you or your property manager will need to go in and review the rental and ensure no *damages have been done.
• Ensure you have a cleaning service scheduled on the day of checkout. A property manager can help you stay on top of this. A cleaning service needs to be extremely thorough in its cleaning and sanitizing practices to ensure the safety of the next guests.

*If any repairs need to be done, try to get a repairman to complete the work before the next guests arrive to ensure all appliances and safety features are working properly. Streamline your turnovers by having a dependable team of maintenance workers or cleaning crew available to work quickly and efficiently.

Property Manager or Self Manage?

When owning a vacation rental, you’ll have to decide if you want to hire a property manager or manage the property yourself. Both options have pros and cons to go with them, so you want to ensure you are doing what is best for you and your time and budget.

If you decide to take on property management on your own, this is a considerable time commitment. You will have to be available for phone calls to manage bookings, maintenance, and any emergency that might arise. Taking on property management on your own can help you build relationships with your guests and create happier guests more likely to return.

Hiring a property manager takes a log of the intricacies of managing the property off of your plate. You will hire a professional trained to manage guest inquiries, manage and book your rental, oversee all maintenance requests, and schedule cleanings as needed. A property manager is beneficial when you live far from the property. A property manager can reduce risk and assess damages quickly and efficiently.

Overall, hiring a good property manager helps you free up time to focus on other potential investments, spend time with your family, and focus on marketing your rental.

Recession Friendly

Vacation rentals are never recession-proof, but there are ways to ensure your rental stays afloat in a recession. Even in a recession, evidence shows people don’t stop taking vacations. They just might opt for shorter stays and book with multiple families, especially if your home is in a prime location.

If you can accommodate more tenants at a time (bunk beds or hideaway couches), you may see your rental bookings dip but not completely. You may want to consider offering long-term rentals that may be affordable options for people in between housing during the recession. Ensure the experience of your rental brings people in even during a recession.

Pet Friendly or Not?

Many people opt to travel with their pets these days and are often looking to find accommodations that will allow their furry friends to come along. Some risks come with opening up your rental to pets; however, you would be opening up your ability to book more guests with a pet-friendly stay.

• A pet-friendly rental allows you to charge a slightly higher rate and charge as if the pet is an additional guest. Allowing pets opens up your rental to the pet lovers niche and may even bring in many good reviews.
• With pets comes the risk of damage. As with any animal, you never truly know how they will act, especially in unfamiliar territory. If you opt for a pet-friendly vacation rental, try to purchase durable furniture and scratch resistance finishes to minimize damages.
• You may also encounter noise issues. Dogs especially can be temperamental and may bark excessively in strange places, and you might have to deal with upset neighbors.

Owning a vacation rental is a worthy investment, but you want to do your due diligence and research to ensure you are not hit with unexpected expenses that could potentially set you back financially.