Buying a Vacation Rental Property – Things You Should Know

Property Management Blog

Investing in real estate can reap you many benefits as well as massive profit, but investing in the right rental property will double your profit and benefit. You may be wondering, which the right rental property to invest in? Well, this is exactly what we are going to cover today.

Nothing can reap you more profit than investing in a vacation rental investment property. This is the best kind, among the many investment properties that will make you double ROI in a limited amount of time. In recent years, vacation homes have become a more popular choice of accommodations. Before these rental vacation homes, people use to rent rooms in hotels and motels, but the trends have changed.

Airbnb, HomeAway, TripAdvisor,, Interhome, as well as are a huge example of the success of renting vacation homes. These are the most popular sites where you can check out the listings for vacation homes and also book them online. According to a recent report, the revenue from vacation rental properties is predicted to hit around $97,010m by 2023. So, if you are looking to buy a vacation rental property for investment purposes, this is the best time to do so.

Although vacation rentals are very profitable, there are still some factors that you should consider before investing in one.


The real estate industry is nothing but the right location. And vacation rental property is no different. To make massive profits and ROI, you need to think about location more than anything else. If you can’t conduct substantial research for location, maybe this isn’t your cup of tea. Pick a town or state that has tourist attraction landmarks such as mountains, lakes, springs as well as national parks. For example, people love to visit the beaches of Florida, so if you are investing there, be as close to the beaches you can to keep your vacation rental property occupied all around the year. Weather is also a considerable factor when investing in a vacation home; you might want to find a place that has a mild climate all year long.

Some of the best states are:

  • Huntington, Vermont
  • Sevierville, Tennessee
  • Buffalo, New York
  • Memphis, Tennessee
  • Hutchinson, Kansas
  • Jonesboro, Arkansas

These factors can seriously increase or decrease the profit of your rental property. The easiest way you can research is to check out sites like Mashvisor’s and Airbnb to now which state and location will be most profitable.

Investment Property Analysis:

The next step after selecting your location is conducting an investment property analysis. Now, this is very important, so read will full concentration. Your successful analyses will get you an ROI as well as a profitable vacation rental property.

With the help of Mashvisor’s rental property calculator, you can analyze potential vacation rentals online.

Financing Opportunities for Vacation Rentals:

Finding finances is one of the fundamental issues about investing in a rental property. Still, when it comes to vacation rentals there, investors have a variety of options that are as follows.

  • Cash-out refinance
  • Home Equity Lines of Credit
  • Reverse mortgage
  • Conventional financing
  • 401(k) loan

For an investor, you will also need to submit an income ratio, strong credit score, as well as some reserve funds to get approval for a mortgage for your vacation rental property.

Costs investing in a vacation rental:

Everything about the vocational rental property is silver and gold, till you start counting the costs that are attached to it. Here is a rundown of the expenses that come along with the many benefits of your vacation rental property. These are regardless of the furnishing and renovation costs.


You will be responsible for paying for utilities such as internet, water, gas, electricity, trash collection as well as cable streaming. An accumulation of these can go as high as several hundred dollars per month.


There is no way you can operate your property without insurance. Insurance not only protects you against natural disasters but also from the damage inflicted by the visitors on your property. You can also pay for any accidents or injuries as vacation rental insurance also covers that.


This includes cleaning and repairs after the visitors and guests leave. Repairing the HVAC system, a leaky roof, a broken window, or replacing a worn-out carpet are the most common examples. These may not occur every so often, but they are to be counted as well when you are calculating expenses.


Buying a property may not be huge work, but when it comes to keeping it occupied, you might want to reconsider the costs. Marketing is one aspect that takes up more money than anything else. Especially when you have a vacation rental if the tourist doesn’t know about it, how will the ever rent it?

Homeowners’ Association (HOA) Fees:

If your rental is in a complex or a multi-unit, you will also need to pay the HOA charges. These are for the basic maintenance of the complex, like the common areas such as the gym and pools. This also takes care of the maintenance of the property as well as the janitorial services.


If you are buying a vacation rental in a state other than yours, you will also need to hire help. Property manager, as well as a caretaker, is a must in such situations. This is an ideal solution because you won’t be able to run back and forth and keep the place problem-free, but this will decrease your profit.

Short-Term Rental Laws:

If this is your first time, you might want to go over the rules and regulations of the sate regarding vacation rentals. Every state has imposed restrictions on rental vacation units, and all investors must follow the guidelines.

These may include:

  • Owner Occupancy
  • Rental license
  • Type of structure
  • Length of stay
  • Taxes


Buying a vacation rental for high ROI is an excellent way to start your real estate career, but there is a lot to learn before you jump in the middle of it. To land safely on your feet, make sure you have done all the research, and you understand all factors completely.

If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty.

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