Own a Vacation Rental Property Not Only for Personal Use But Also for Business

Vacation Rental Property Business

If you want to achieve financial freedom, one solution is starting a business. There are a lot of business ideas you can start with, but you can start small by selling baked goods or arts and crafts. Others prefer to offer services such as rentals or repairs. But to own a vacation rental property is a type of business that can give you a high profit. Below are few reasons why you should Own a Vacation Rental Property Not Only for Personal Use But Also for Business.

What Is a Vacation Rental Business?

A vacation rental is a type of business wherein a property acquired by an investor is used for rental purposes of short-term travelers. To own a vacation rental property opens windows of opportunities for you to bring home huge earnings. Why? Because it is a proven thriving business. According to Grand View Research, the vacation rental revenue in 2019 was valued at $87.09 billion and is expected to have a 3.4% compound annual growth rate (CAGR) from 2020 to 2027.

Why Invest in a Vacation Rental Business?

Like any other type of business, a vacation rental also has two sides of the coin. To learn more about this venture, here are some of owning a vacation rental pros and cons you need to know.


Extra Income

Of course, the best benefit of having a vacation rental business is the potential income you can earn. Rates and pricing vary on different factors like location, seasonality, amenities, and other inclusions. But one study shows that vacation rentals in popular destinations can have an average nightly rate ranging from $186 to $978. If you’re successful in marketing your vacation rental business, you’ll be surely earning a good return on your investment.

Tax Deductions

One huge benefit of owning a vacation rental business is you can deduct business-related expenses as tax deductions. Make sure that you keep every receipt of the expenses done on your vacation rental as proof. These are some of the possible deductions you can claim:

  • Housekeeping
  • Restocking
  • Maintenance
  • Utilities
  • Hosting Fees
  • Property Management Fees
  • Mortgage
  • Insurance

It’s best to discuss with a CPA or tax professional of your tax obligations and how you can maximize your deductions.

You can convert your vacation rental property to timeshare. If you use your timeshare for personal and business lodging you are qualified for maximum tax benefits. Your timeshare business lodging escapes the restrictions imposed by vacation home rules which is if you rent your timeshare to others, you complicate your tax deduction life. If the time is coming where you now want to cancel your timeshare investment, the best that you can do is to get the best company for cancelling timeshares so you would know all the details on how to properly cancel the account.

Private Getaway

With a vacation rental, you’re not only bound to make more money but also more memories. A vacation rental property is like a second home. No need to worry as to where you and your family will spend holidays unless you want to go someplace new. It’s not only an ideal place to rest but it can also be your retirement home.

Equity Appreciation

A property’s value appreciates in time. Should you decide to sell your vacation rental in the future, you can expect to make more money out of it. Before investing in a vacation home, you must first study both former and current trends in the market you’re buying into. Moreover, don’t hesitate to invest in amenities and other upgrades to boost the property’s value.


Unexpected Expenses

When running a business, be prepared to face unexpected expenses. Circumstances such as items breaking or missing and areas of the property that suddenly need repairs may happen at one point. As a business owner, you should set aside funds to cover these unforeseen costs.

Higher Down Payment

You can get a loan with a 3-5% down payment when buying a primary home. But with a vacation rental, down payment may range from 20-30%. And since you’ll be taking more debt, credit score requirements may also be higher when trying to acquire a vacation rental home.

Higher Taxes and Fees

You’ll owe federal taxes on your rental income when you rent out your vacation rental property for more than 14 days. On top of that, you’ll also need to pay state, local, and property taxes. Each location also has its unique set of laws and regulations when it comes to vacation rentals. It’s important to do research first about local tax laws and if there really is a potential market in your chosen area.

Upkeep and Maintenance

To make sure you’ll get the most out of your vacation rental property, you have to invest in making it look more appealing to your potential guests. Aside from keeping the property attractive with new paint or cool amenities, you will also need to make sure that every part of the home is well-maintained. There should be no leaks in the sinks or the electricity supply should be consistent to name a few. As the owner, you need to be attentive to every detail of your vacation rental property so that your guests will have an enjoyable time during their stay.

Where to Buy a Vacation Rental Property?

A white concrete vacation rental home with a swimming pool

One of the most vital factors when looking for a potential vacation rental property is the location. Your vacation rental will likely get more guests if it is situated in a desirable area. Plus, the location affects the property’s resale and overall value. Check out this list of the best places to buy vacation rental property 2021.

Killington, VT

This place is packed with skiers and snowboarders during winter. However, it’s also a top destination during summer. All thanks to its abundance of fresh air and great outdoor sceneries. According to Rented.com’s 2019 report, the estimated annual income for a vacation rental in this area is around $39,000.

Panama City Beach, FL

For those looking to spend a break on white sandy beaches, this is the place to go. It is a perfect spot for vacation rentals, not only because of the coastal vibe but also for the fun nightlife and great dining experience. Panama City reportedly welcomes 17 million tourists every year, so you’ll be sure to have a steady number of guests should you decide to invest in a vacation rental here.

Smoky Mountains, TN

Some vacationers also long to have a taste of mountain life. The Great Smoky Mountains of Tennessee are the ideal choice as the area offers pleasurable opportunities, including hiking and even fishing. The best areas to buy a vacation rental property here are Gatlinburg, Pigeon Forge, and Sevierville. The average daily rates range from $167 during the low season and $184 on high season.

The Poconos, PA

Another city to explore for nature lovers is The Poconos. There are lots of beautiful lakes to explore for those on a summer getaway and several ski resorts for winter visitors. One research shows that a three-bedroom property in this scenic Pennsylvania city can generate annual revenue worth $23,100 while a four-bedroom property can bring in $28,500.

Central Texas, TX

When it comes to outdoor attractions and water-based recreation, Central Texas has a lot to offer. No wonder many vacationers choose to spend their holidays in this city. In 2019 alone, Texas welcomed an estimated 72.5 million out-of-state visitors. This number is proof that starting up a vacation rental business here is an excellent decision.


To own a vacation rental property is not just for you to have a place you can easily escape whenever you need a break. Maximize your investment by renting it out to short-term vacationers. Whether you manage the property by yourself or work with a property manager, you’ll be sure to get a lucrative source of income from this venture.

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