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Vacation rentals have only been growing in popularity in recent years, with sites like Airbnb, Vrbo, and Booking.com leading the way. There’s a good chance you or someone you know has rented a property through one of these services, whether it be for an extended vacation or just a weekend getaway. But have you ever considered adding a short-term rental property to your investment portfolio? There are many benefits to owning this type of property, and they can provide excellent returns when properly managed. In this post, we go over some of the advantages of owning a vacation rental property, and why you should consider one for your next real estate investment.
They are growing in demand
As mentioned, the popularity of short-term and vacation rentals has seen an explosion in the few years and that doesn’t look to be stopping any time soon. According to a 2019 Consumer Travel Survey by TurnKey Vacation Rentals, 64% of travelers preferred staying in vacation rentals over traditional hotels. And according to researchandmarkets.com, the global vacation rental market is expected to grow by 5.3% annually from 2022 to 2030. These numbers are great, but what does that mean for you if you own this type of investment property? Essentially, you can expect to see a steady increase in bookings over the coming years, which can eventually lead to better-paid bookings and even property value appreciation.
They are very profitable
Possibly the best thing about short-term rental property is that it provides a very high monthly revenue. In fact, these properties will usually generate the monthly income of an equivalent long-term rental in one or two weekends. If you keep your property well booked, you can expect to see 2-3x the revenue of a standard long-term rental.
Just like long-term rental properties, you can increase your nightly rate for a short-term rental by performing renovations and keeping the home updated. You can also invest in desirable amenities like a Smart TV, Hot Tub, Pool, or Deck to increase your nightly rate even further.
They are a great hedge against inflation
Investors are always looking for smart ways to stave off the effects of inflation and keep their wealth safe. Property usually appreciates over time, and for this reason, many investors consider real estate to be a good hedge against inflation. Vacation rentals, however, have the added benefit of providing solid monthly revenue on top of this regular appreciation. Adding this type of real estate to your portfolio is a wise choice for any serious investor since it can provide excellent income each month while also keeping your investment safe.
They aren’t just for vacations
Short-term rental property is great since it has more uses than hosting guests on vacation. Your property can also be rented for multiple weeks or months, and can bring in steady revenue similar to a long-term property. You may even be able to rent your property out to seasonal and temporary workers if your home is near a city or high population area.
The other great thing about this type of property is that it can easily be repurposed if you decide to change your investment strategy. It would not be difficult to find tenants and turn a property into a long-term rental. You would even have most of the amenities needed to house tenants already. In a similar vein, it would not be hard to find a buyer for a property that is already generating solid revenue from vacation rentals.
RCN Capital
Interested in obtaining financing for a vacation rental property? RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and vacation rental financing for real estate investors. If you are an investor looking to finance a short-term rental property, RCN Capital has competitive loan options available.Connect with us todayto discuss your next real estate investment.