Hey Mike!
Last year I booked a waterfront home for a group of friends and got the same inspiration as you. After looking at all these overpriced homes, I couldn't imagine that it would be hard to make money off these. After a few months of research, I still think it is possible but not any easier than any other type of investment. Here are just a few tips when doing your research.
1) Use VRBO, Homeaway, Airbnb to find hot vacation spots. Where I live, there is a popular island that city people like to use to get away from the noise for a weekend. Although there are many homes on the island, certain spots are obviously more popular. Usually location is the deciding factor. There is a ferry that most people use to access the island. Properties close to the ferry were often booked up for months while those farther away had much more availability even though they offer the same views and size of homes. Looking at the availability calendar when you are looking at individual properties can help you find these "hot spots." Right now (May-September) is the busiest season for these homes (and most likely is in your area too). The areas I consider good have no availabilty until the middle of September. They are often this way by mid spring, as many families make it a tradition to get away from the city at least once a year. Other properties have many gaps in their calendar even though July is coming around the corner. Its possible that these properties will get filled up last minute, but as an investor I would imagine it to be a lot easier if I was fully booked for the busy season months before it starts.
2) Management can make a not-so-good property great and vice-versa. On homeaway/VRBO, the managers' profiles show estimated response time (within a few hours/ within a day/ within a week). The managers that claimed to have the quickest response times generally have more bookings. Some manager, especially those who repsond "within a week," will generally see less bookings. I am thinking they just dont care as much about their profitability and maybe use the homes a lot for personal use. This is completely fine, but if you were in this solely for investment I would place a lot of weight on your management strategy. I usually email 7-10 homes when looking for vacation homes myself. Usually about 60% of them reply in time (within a day) and I book with one of them. There are always a few that call too late. Even though they might have had the better property, they don't call until AFTER I've already placed a deposit on another home.
3) Cleaning fees and deposit fees can be the difference between profitable and not. I was looking at two properties that were basically identical. Both $200/night, but one had a $500 deposit + $250 cleaning fee per stay while the other just had a $200 deposit + $50 cleaning fee. It seems there is no rules or guidelines to how much you can charge on these, but I'm sure it makes a difference and would be important to find a balance between charging too much and too little.
4) Regarding your question on summer vs winter booking, this would depend on location mostly but also the rates you charge on vs off season. Some places just won't be visited in the off season while other places are always booked. Back home, I get a lot of choices and cheaper prices when booking in the winter. However, when I went to Hawaii it was considered their off season but the calendar and rates certainly did not reflect this. I am sure lowering prices during the slow season can get you more visitors, but if the location just doesn't get visitors at that time of the year there is not much you can do but move. Again, the calendar on VRBO can help you predict this.
5) It is true that vacation renters are needy but they also pay a lot more than your typical monthly/yearly renters. We are talking $200-300/night for something that would probably rent for $1000/month. The extra expenses are there but I think the premium that people pay to stay in certain spots should more than makes up for it. From a landlord perspective, I would prefer renters that pay more and expect more than someone who is just looking for the cheapest deal.
Hope this helps. I do not have any real experience buying vacation rental properties but have done months of research and still think it is something I could get into in the future.
