5 tips for investing in vacation rental properties the smart way

It may come as a surprise, but find out that owning and managing vacation rentals is not the same as traditional real estate. Here are five tips for investing in vacation rental properties the smart way!

Deciding to add vacation rentals to your portfolio is a big decision. Not only that vacation rental properties are part of a competitive investment sector, but it is also a money move that will be very different from your other real estate investment decisions.

Now, owning a vacation rental sounds really fantastic. You make money, and you have a place to get away whenever you want, right? But, the truth is that owning a vacation property isn't all sunshine and rainbows. There are specific challenges that come with owning this type of property.

But, don't you worry! This article explores five tips for investing in vacation rental properties that will help you do it in a smart way and avoid future challenges as much as possible. Keep reading below to find out more!

1. Understand the perks of owning a vacation rental

Yes, owning a vacation rental does come with plenty of perks. Like all real estate investments, there are plenty of money benefits there for you as an investor. But, when it comes to vacation rental properties, there are a few added benefits that traditional real estate investors can't brag about.

Here are the perks of investing in vacation rental properties:

Extra passive income

Like all sorts of properties, one of the biggest perks is that you make money. With this type of real estate investment, you also have plenty of platforms that can help you make money from renting your properties to tourists, like Airbnb, for example.

You have your own place to get away

Another major perk of owning a vacation rental is that this means that you get to vacation there, too. You can use the property for your own at certain times when you need to get away for some time, whether that means having a weekend getaway or hosting a friend's bachelor party, or the annual family reunion.

You have a future retirement home

A vacation home is also an excellent solution for long-term wealth. As time passes, this property will help you have healthy finances upon retirement. Plus, it leaves you with two options when you decide to retire: sell it and use the money to cover your future costs as a retiree, or keep it and leave your retirement as the vacation you've always imagined.

Now, it's essential to understand these perks because if you find all these rewarding enough, you'll know that you're making the right decision to invest in a vacation rental property rather than in a more traditional real estate sector.

1. Get a clear idea of your long-term financial goals

Once you know for sure that buying a vacation rental property is right for you, it's time to acknowledge what your long-term financial goals are.

Before you get out on the market looking for a luxurious property to purchase, make sure that you decide what kind of buyer you are. Ask yourself the following questions:

• Is your goal to generate positive cash flow with your investment plan for the property?
• Do you want to invest in a property that will also be your retirement house?
• Do you plan to own a vacation home that pays for itself between your own trips there?

Now, the truth is that it can be challenging to find a vacation rental property that will meet all your long-term financial goals. Yet, once you know for sure what your goals are, it will be easier to find a property that will help you achieve them.

1. Do your research on top destinations

The next essential step in finding the proper vacation rental property to invest in is to do plenty of research on the location. In the vacation rentals sector, location is one of the most important aspects considered by travelers. So, consider this a million-dollar task because it can literally make the difference regarding how much profit you generate with your vacation rental property.

Here's what to consider when looking for a destination:

• The type of travelers/ tourists you want to attract (seaside lovers, hikers, mountain lovers, etc.)
• The type of activities travelers can enjoy there (touristic attractions, trekking/ hiking areas, luxury yacht charters, snorkeling, etc.)
• The destination's popularity (all year round or seasonal)

All these things will determine your vacation rental property's profit potential in a way or another. So, choose wisely.

1. Work with a local real estate agent

As an investor, you're more focused on things like the location's charm, how drawn tourists will be, and likely the best restaurants in town that travelers will look for. Yet, there are for sure plenty of insights you don't know about the area, the property, or the prices there.

This is the help of a local real estate agent that can come in handy.

A local real estate agent will know everything you need to consider to make an intelligent investment decision. They will know how the seasons change there, which potential dangers exist in the area, what competition is there, like hotels or other rental properties, what properties fit your budget and many other essential details.

So, when you decide on a destination before you start looking for a property, first look for a professional real estate agent that works in the area.

1. Work with the right property manager for your properties

Once you find the right vacation rental property or properties, it is time to make one more essential decision that will determine the return of your investment in the long run.

As an investor, it's doubtful that you have the time and energy to manage the vacation rental property yourself. What's more, you may also not even live in the area. So, you'll need an experienced property manager to handle everything about the property when you are out of town, like plumber, housekeeping, and so on.

An experienced property manager can handle all sorts of tasks that leave you enough time to manage all your financial investments wise. They can manage the property, handle bookings and travelers, promote the vacation rental property, and clean thoroughly after every stay.

Look for experienced and trustworthy property managers to work with. This will have a powerful positive impact on how much profit your vacation rental properties generate.