If you’re starting to plan your next real estate investment, a vacation rental property can be a great option. Not only can rental properties help you develop the skills for finding, maintaining, and financing an investment property, but they can also give you a nice place for rest and relaxation if you so choose.
That being said, owning a vacation property isn’t always a piece of cake. If you’re considering investing in a vacation home to rent out for extra cash, take some time to consider the pros and cons.
The most obvious benefit of owning a vacation rental property is simple: you earn money on a consistent basis! There’s numerous vacation rental websites, which allow you to earn even more if you play your cards right. Here’s a few vacation rental platforms to consider:
If you are able to rent out the property for more than 14 days a year, it’s considered a business for tax purposes. While that means you will have to pay taxes on the income it brings in, you can also write off many of the expenses you’ll encounter when repairing and maintaining the property. You’ll be able to deduct many of the ordinary and necessary costs of doing business too. Here’s some items you may be able to write off as a rental investor:
Note: this list is not extensive, so feel free to reach out to an accountant to maximize your deductions.
Compared to other investment options, vacation rentals require upkeep. They’re one of the most hands-on investments you can get yourself into.At minimum, you’ll have to clean, prep, and restock the property between every stay, unless you are willing to hire someone to do this for you. However, hiring a professional company to address the necessary maintenance can become quite costly.
Vacation rental success depends on a strong marketing strategy. At the very least, you’ll need to take the time to list your property on rental platforms, optimize the listings to cater towards the right audience, furnish the home with comfortable furniture, and price the property appropriately for the market. Marketing isn’t everyone’s forte, so this issue does tend to drive away some investors.
Compared to loans for primary residencies, second home mortgages can be a bit harder to acquire. However, there are steps you can take to increase your chances of getting approved for a vacation rental property mortgage. Here are some things to consider:
It’s important to note that financing options vary from lender to lender, so be sure to research what type of financing fits your needs, and then discuss your options with reputable lenders.
Here at RCN Capital, we have flexible options that are suited to your needs. Our short-term loan program offers a 24-month term, with a 12-month extension available, ensuring that our customers have rental property financing that goes the distance. Reach out today to learn more about our financing options.