Did you know that there are 5.7 million vacation rentals in the United States? Among those millions of homes, an estimated 1.9 million properties are professionally managed. A vacation home is a home (or apartment) separate from one’s primary homestead.
The property is used for recreational purposes – holidays, vacations, or just time away from home. Vacation homes are normally located in a location different from one’s primary home base.
Many people who own vacation homes rent the homes out when they’re not using them as a way to generate profit and even pay off the second home entirely. If you’re considering acquiring a second home for a vacation home, then you may be wondering if it’s truly a smart investment to make. We will explore that further in this guide.
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1. You Already Live in a Popular Vacation Destination
If this is the case, then it might be a no-brainer. If you live in a place that is a popular travel destination, and you have the financial means to invest in a vacation home, then why not? You can acquire a second property in your city and then use that property as an investment and vacation rental.
Hotels Are Unpredictable
Shutdowns, price fluctuations, and overbookings are common. Until you check in there is a level of uncertainty and hotels are never truly consistent. If you already live in a popular vacation destination you can offer something hotels could never offer.
You can tailor your guest experience and ensure they have the same experience every time they book. And if that doesn’t convince you, did you know that AirBnB hosts have seen an 85% increase in revenue from 2019.
2. You Have a Specific City You Frequent on Vacation, And Would Rather Own a Home There Than Rent Each Trip
- Do you and your family travel to the mountains every time you have a free weekend?
- Do you crave the beach when you’re stuck at home?
- Do you work remotely and want to get out of town for the summer without sacrificing the homey vibe you’re used to?
Maybe a vacation home is for you. Constantly renting a vacation home adds up. This could be a prime opportunity for you to acquire a second home. Make sure you understand the difference between a second home vs. investment property so the home is properly accounted for.
3. Maybe a Vacation Home Isn’t for You
Owning a home is no easy feat. There is so much that goes into from maintenance to taxes. What are your intentions for the home? Because everything from mortgage rates to taxes will be different if it is a second home vs an investment property.
You’ll have to be savvy to navigate the field, but financing an investment property is a great way to build passive income. Even if you don’t technically want an investment property and still want all the benefits of owning a second home you can still make money with your vacation home.
Whether you decide to use the home for vacation purposes or an investment property one thing is for certain. You need a property manager. Keeping up with one home is already a full-time job. Keeping up with two homes in two different locations is possible, but it is very difficult.
You should find a good property manager who can take care of the home while you are away. So, even though it will cost money the revenue potential for vacation rentals is still on the rise so it is worth the investment.
Regardless of the path you choose. Now is the time to get a second property. A home is rarely a bad investment and there are steps you can take to stand out in the crowded market. It is a long-term investment but if you are willing to take the risk you could see a great reward.
So, how much should you invest in a second property? Well, that varies from person to person. But, if now is the time. So get started.