Did you know that Americans spend $101.1 Billion on summer vacations each year?

One of the main expenses for travelers is accommodation. That’s why vacation rental properties are becoming a popular choice for real estate investors. But is buying a vacation rental property for you?

Purchasing a property to use as a holiday rental is a major decision, requiring a lot of research to avoid a loss on your investment. Fortunately, we’ve already done the legwork for you.

Read on to learn about the pros and cons of buying a vacation rental property.

The Upsides

Buying a rental vacation property is a popular choice for real estate investors. Let’s take a look at some of the benefits:

Extra Income

One of the main reasons people invest in vacation rental properties is extra income. You can usually expect a good, steady return on your investment.

Short-term vacation rentals are often more profitable than long-term lets. The amount you can earn depends on the location, age, and size of the property.

Value Appreciation

As with any well-situated or desirable property, you can expect to see its value grow over time.

Year on year, your property will hopefully appreciate in value. This is particularly true if you purchase in a desirable neighborhood.

Your Own Holiday Home

Finally, purchasing a vacation property eliminates the need to pay for accommodation the next time you go on vacation yourself.

And while you may not plan on retiring just yet, a vacation property could become your destination when you choose to do so.

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The Downsides

There are also some potential downsides to consider before you buy. Let’s take a look at them:

Unexpected Expenses

As with any property investment, you will be responsible for the upkeep and maintenance of your vacation property.

This means that if something goes wrong, you could be hit with unexpected bills. You should budget for repairs accordingly.

Fees and Taxes

Depending on where you choose to purchase your property and how long you intend to rent it out each year, you will have to pay the relevant fees and taxes.

You will also have to pay a booking fee if you choose to market your property through a bookings website.

Legal Issues

To effectively run a rental property, you will need to deal with renters, collect payments and deposits, pay taxes, and handle possible liability.

Hiring an attorney to help with legal matters is advisable but will incur an extra cost to your budget.

Buying a Vacation Rental Property: What You Need to Know

So that’s the 101 on the pros and cons of buying a vacation rental property.

While investing in vacation rentals can be a great source of extra income, it’s important to know what you’re getting yourself into first. Our helpful guide points you in the right direction.

Did you find this article informative? If so, check out the rest of our blog for everything you need to know about real estate, travel, business, and more.