5 Tips on Smart Investing in Vacation Rental

5 Tips on Smart Investing in Vacation Rental

Vacation rental is a great way to generate passive income and is much higher compared to regular home rentals. This also requires a higher amount of investment compared to a normal home. There are a lot of things that needs to be taken into account before investing in a vacation rental. We will be looking best 5 tips to invest smartly.


1. Choose the Right Location

If you are planning to buy a house for vacation rental, then it is important to understand the type of locations available. There are 2 kinds of locations namely tourist destination and City hotspots. The most common type of vacation rental is tourist destinations. You need to wisely pick a place which will have enough tourists throughout the year. If you invest in a place which is seasonal then you will get rental income only for a small period in a year. For other months, it will be idle which is a bad investment idea. With respect to cities look for places which are business active. Pick tier 2 and 3 business cities where you can afford to buy.

2. Register it as a Rental Property.

Vacation rentals are different compared to renting your home. This is considered more as commercial income than a rental. You need to register this property as a vacation home and fulfill all the legal obligations. Get necessary approvals from local Government bodies including Police Stations for smooth and hassle free functioning of the Vacation Rental.

3. Invest on a Budget

Buying a property in a tourist destination will always be expensive due to high demand and constrained supply. This doesn’t mean you should over spend and buy the best house. Fix a budget which will do justice to that location and also to your ability. Estimate potential rental you will earn and invest accordingly.

4. Tie up with Listing Websites

There are many marketplace websites where you can list your vacation home for rental. These sites are frequented by tourist and hence a good way to get a lot of tenants. One such example is AirBnb. Just register and list your property with photos and rental expected. You can list it for a day or for a week or for a whole month. This is one way to consistently keep getting rental income and make the most of your vacation rental.


5. Tie up with tourist agents

This is the best way to keep your vacation rental occupied. Tie up with local tourist agencies for a monthly contract. Once the contract is in place they will pay you a fixed monthly income irrespective of whether they have tourists or not. This will ensure continued regular monthly income. One drawback is that your property may not be well maintained. It is advised to visit your property once in a while to check its status.

Finally keep in mind this will also be your second home. You can use this as a place to rest during vacation or a place to retire too. Keep this mind and invest smartly.

Submit a Comment

Your email address will not be published. Required fields are marked *