Pros and Cons of Owning a Vacation Rental Property

Have you been looking for alternate ways to bring in the moolah? Maybe you should consider investing in rental properties in Canada. Granted, it can be a heavy investment, but it might work out for you in the long run. While they were already preferred by many modern families looking to earn money with their extra space, vacation Home rentals properties rose to prominence, even more, when they got the attention of millennial travellers. The adventure-seeking young crowd has started choosing unique stay overs instead of regular old hotel rooms. 

Keeping this in mind, vacation Home rental in Canada can be lucrative investment opportunities. However, these properties come with a fair amount of work and numerous challenges. It is imperative to consider the pros and cons of owning a rental property before investing in one. Luckily, we have done the research so that you don’t have to.\

Best Practices To Run a Short-term Rental

You could be any type of host but these practices will help you derive the most benefit from your investment. 

• Mindset

Your mindset plays a major role in making your short-term rentals a successful business endeavour. The first and foremost factor is to treat it like a business. Next, ensure that you are legally allowed to run a short-term rental business or an Airbnb. Also, keep yourself updated with the rules and regulations around short-term rental listings. Finally, you need to think about protecting your most significant asset – the rental property – from any catastrophic loss or devastating damage. 

• Research

Do you want the vacation home rentals property you have listed to be effective and fill your pockets with money? If yes, you need to be on top of your game with market research. Begin with scanning your competition. Go online on sites like Airbnb and look for rentals close to where you reside. Then, make a list of important information like:

• • Complimentary guest perks
  • Amenities provided
  • Operating hours
  • Cleaning costs
  • Deposits required
  • Discounts offered for longer stays

Compile the data and then have an honest review of the information. How are your vacation Home rentals different from the competitors? The end goal is to identify the best marketing technique for your short-term rental. Try and make your property different from what’s already available in the market. Make your unit’s perks focal points and price them accordingly. Research also helps you narrow down the type of visitors your property will attract. 

• Quality Photography

You can increase the rent to own houses by investing in marketing. The greatest tip right on the surface is focusing on capturing great photos. These images are an integral cog in your selling mechanism. Attract your potential guests with these important tips

• • Use natural light
  • Get external and internal shots
  • Shoot the property photos during all seasons, daytime and night hours. 
  • Include photos of scenery, attractions, and local hot spots 

• Upkeep

Don’t forget to budget for cleaning and maintenance supplies. As a host, you’ll need a budget for things like toiletries, cleaning fees, extra furniture, and decor. 

Benefits of Owning a Rental Property

These perks will inspire you to invest in a fun vacation getaway. 

• Extra Income

Earning those extra bucks is the most obvious upside of owning a rental property. As per a survey conducted, homeowners who rent their vacation rentals on Airbnb earn an average of ₹924 per month. This is just one platform. You can explore other websites like Booking.com, and Vrbo for opportunities of earning higher revenue. Abide by these factors to earn greater tips. 

• • Seasonality and Location

Try choosing a more popular vacation destination that attracts visitors around the year or for more than any particular season. 

• • Inclusions and Amenities

Research and get an idea of what the guests are willing to pay extra for. For instance, a pet-friendly home would allure more visitors who travel with their dogs.

• • Personal Visits

A vacation home is not good for you if you can’t vacation in it. You can always vacation in the rental property by yourself during the off-season. This would help you gain maximum profits from your guests during the off-season. 

• Equity Appreciation

Vacation rentals can help you be smart with your finances for a secure future. Real estate properties usually appreciate in value over time, and vacation Home rentals are no different. The economy and the increase in inflation have an impact on the prices of your property. You can also consider investing in amenities and upgrades that draw guests over time and give the appreciation a boost. According to studies, vacation home rentals with hot tubs earn 15-20% higher revenue. Moreover, you can cash more profits when you sell your home in the future. 

• Personal Getaway

Investing in your favourite ski resort or a cabin, putting your money down on a beach condo or a seaside destination serves more purpose than one. Not only can you make a ton of money but also use it as a private getaway for a vacation. It could either be for a weekend on the coast, a family vacation in the mountains, or a family reunion. Spending precious time with your family and friends is absolutely priceless. 

• Extra Tax Deductions

Renting out your vacation properties can be classified as a business. Hence, the expenses incurred for the business like repairing or maintaining the property are eligible to be written off. You can claim the following deductions: 

• • Hosting fees for websites like Vrbo and Airbnb
  • Housekeeping
  • Utilities
  • Guest supplies
  • Property management charges
  • Occupancy taxes
  • Insurance premiums
  • Mortgage interest
  • Garden or lawn maintenance

The tax law could be difficult to comprehend. It is recommended to consult a tax professional so that you have clarity of your tax obligations and how you can maximise the deductions. 

Disadvantages of Owning a Rental Property

Keep in mind these cons before you make the final decision. 

• Unforeseen Expenses

The pros and cons of rental property are many. However, the biggest con that you have no control over is the unexpected expenses. Hence, after you jot down the estimated expenses (utilities, mortgage, etc.), plan something for the unplanned. The solution? Keeping aside funds to tackle the unforeseen costs. This will aid in managing your cash flow, and protecting the ROI from bearing an unexpected hit. 

• Varying Guidelines

Each vacation spot has varying rules, regulations, and laws concerning vacation rentals. Some destinations support the residents’ efforts to earn extra bucks by capitalising on tourism, while others place strict limitations on their residents aiming to rent out to travellers. This factor can make your home search complicated. The easiest solution is to explore the best short-term rental options on the Internet. Then, talk to a seasoned real estate agent with specialisation in the chosen market. Local agents are extremely knowledgeable about their markets and can assist you with permits and regulations. 

• Property Maintenance and Upkeep

Are you considering managing your own vacation home rentals? Prepare for an onslaught of work. Being an owner, you may also be the front-desk official, repair technician, or housekeeper. Regular upkeep, linen, and towel restocking, repairing broken items, and responding to all of your guests’ requests will be your responsibility. 

• Incessant Marketing

Prior to reserving your vacation rental, guests must first locate it. This necessitates marketing. Start with attractive photos of the property, writing detailed descriptions of your listing that sells, and renovating with accents and furniture that enhance your property while also appealing to millennial guests. The next step is to list your property on every of the leading vacation rental booking sites, such as Airbnb, Vrbo, and Booking.com. From then on, you’ll need to constantly optimise your vacation rental listing in order to attract customers, update your calendars and rate, and respond to reviews and questions. 

• Time Consuming

The main reason why people usually collaborate with professional vacation property management organisations is that owning a rental property can be time-consuming. The upkeep can be taxing—you’ll need to deal with timely upkeep and repairs, but being prepared for every visitor’s stay can be the hardest. If you don’t own the property full-time, it may be a more time-consuming task than you anticipated. 

Wrapping Up

Owning a rental property can ensure you a steady flow of income, but it might also become a long-term investment. There is no denying the fact that the pros and cons of owning a vacation rental property can affect earning potential. However, the benefits surpass the drawbacks. Ensure that you thoroughly analyse the market trends, and invest in prime areas that receive the tourists’ footfall. Invest in the upkeep to maximise your profits.

You May Also Read :

Vacation Home Rental in Toronto	All About Toronto Vacation Rental
Apartment Decor Ideas	Decorate Your Rental Apartment
Tenants Rental Problems	Guide To Tenants Rental Problems
Incorporating Rental Property in Canada	Know How To Incorporate Rental Property

 Frequently Asked Question (FAQs)

What makes a good vacation rental?

A good rental property matches what is promised in the advertisements, accommodates families, promises a relaxed environment, provides sound sleep, and maintains the basic standards of cleanliness.

Can vacation rentals be a good investment?

Vacation home rentals could result in a strategic real estate investment that can offer numerous tax benefits and low barriers to entry. They are also more lucrative than the traditional investment in long-term rental properties.

Do vacation properties make money?

Yes, vacation rentals generate more revenue than long term rentals, a part of traditional real estate investment. The major reason is the guests’ willingness to pay extra for well-furnished vacation home rentals. Moreover, the hosts can also adjust the prices throughout the year.

How much should I invest in a vacation home?

If you do not want your vacation rentals to be a burden, you should follow a simple rule. Do not spend more than 10% of your net worth on a vacation property purchase.

What are the disadvantages of owning a rental property?

Unexpected expenses, time consumption, higher down payment, and investment risks are some of the disadvantages of vacation rentals.