Running a Rental Business

Factors to Consider When Investing in a Vacation Rental

You’ve finally saved up enough money to invest in a vacation rental! But is investing in a vacation rental really the right decision for you? Cost is just one of many factors to think about. In this blog, we will be covering important factors to consider before investing in a vacation rental. How often do […]

By The Turno Team

Last updated: November 16, 2023

You’ve finally saved up enough money to invest in a vacation rental! But is investing in a vacation rental really the right decision for you? Cost is just one of many factors to think about. In this blog, we will be covering important factors to consider before investing in a vacation rental.

couch in airbnb
  1. Proximity to your home

How often do you plan on visiting your vacation rental? This is an important question to ask yourself when considering the location of your property. Having a vacation rental that is in close proximity to your home will make it easier for you to greet guests, inspect the property, and respond quickly in the event of an emergency.

  1. Regulations

Be sure to take into account state and federal regulations for your vacation rental location as they may vary. You will have to consider regulations such as business licenses, housing standards, zoning rules, and more. Check with your city/county or local government to confirm you will be meeting all the requirements.

  1. Cost to furnish

Think about what you will need to purchase in order to provide your guests with a proper “home” experience. There are basic necessities such as a mattress, couch, and dresser; however, there are also other necessities that may not initially come to mind such as trash cans, dish towels, kitchen appliance, etc. All of which will leave you with a large upfront cost.

  1. Management

Decide who will be managing your property. Will you hire a vacation rental management service or will you be managing your property yourself? The average property management fee can range between 15-40%. If you decide to manage your vacation rental yourself, be prepared to dedicate about 8.6 hours a week to this business.

  1. Taxes

Taxes are an important thing to keep in mind when considering investing in a rental. Tax implications of buying a vacation rental will either increase your property taxes or you can possibly reduce tax burdens by using allocated funds. You may want to speak to a financial advisor to determine what tax implications may come from purchasing a rental property.

  1. Upkeep cost

Depending on where your vacation rental is located will change the amount you will have to spend on upkeep cost. If you live in an area with extreme whether such as heavy snow or humidity causing mold, you will have to think about the repairs the property will need. Another ongoing expense you may have to consider is Homeowners’ Association fees. Before you buy a property make sure you have a clear understanding of what you will have to pay month to month after the cost of purchasing the home. No matter where you live, part of your upkeep cost includes paying for your Airbnb cleaner.

  1. Insurance

Insurance can be a tricky aspect of buying a vacation rental property. Check to see if your insurance policy on your current home allows you to extend coverage to you vacation rental home. Due to the liability of having strangers stay at a vacation rental, it may be more expensive than a policy for a primary home.

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The Turno Team , The Turno Team researches and publishes articles designed to provide short-term rental Hosts, Property Managers, and Airbnb Cleaners with insightful, useful resources. Articles written by the Turno Team cover a wide range of STR interests, from the latest industry data and best practices to real-world, practical advice on running efficient, revenue-generating vacation rental businesses in an ever-changing market. Here at Turno, we’re always looking for original ideas and hot new topics. Have something you’re curious to learn more about? Interested in authoring a guest blog? Drop us a line at [email protected].