Investing Wins: Is Investing in Vacation Rental Property a Good Idea?

Are you trying to figure out the best place to put your investment money? Read this article to learn about investing in vacation rental property.

If you’re really looking to build wealth in your lifetime, it’s important to look into ways to make all-important passive income. You can’t really expect to build an empire on a yearly salary alone!

One of the best ways to make passive income is through real estate. Real estate is how moguls of the world have been building their wealth for centuries. If you’re looking to dip your toe into the world of real estate, investing in vacation rental property can be the way to go.

Not only can it be a great way to build wealth, but it can also give you a location to escape to when you need a little rest and relaxation yourself. Trying to determine if this kind of investment is really the right move for you?

Read on and we’ll walk you through everything you need to know.

The Big Perk: Rental Income in Your Wallet

No matter what kind of vacation rental you’re looking into, the potential for massive growth and profit is hard to deny. The average Airbnb host makes around $900 a month, and what you can make is much higher if you live in a high-demand area or book your place more often then most.

That’s a huge amount of money to take home at the end of the year!

Airbnb is also only one of the many big hosting websites out there, so you have many other opportunities to spread your listing around and get it seen by hungry travelers from all around the world. You can look into lessons from the Short Term Rental University to learn more about how best to make a profit from your property.

Even if you plan on enjoying your vacation home, there will likely be plenty of time where it is just sitting vacant. Turning this time into a productive source of income can be a brilliant move.

The money you get from these renters can help you to pay off all the associated costs of owning the property, to begin with, like the mortgage and maintenance.

Image Credit: Prayitno via Flickr CC 2.0 – Vacation Rental Property Investment

Vacation Home Appreciation

Income from rentals won’t be the only way you’ll make extra income. In fact, the large majority of the money you’ll make off a property you probably won’t see until many years later.

That’s because real estate appreciates in value over time. When you finally are ready to sell your vacation home and call it a day, you’ll likely be able to buy it for a much higher price than what you sold it for.

This is a natural benefit that you don’t have to do anything to enjoy. As long as you keep the house in good condition, the value of the home is bound to increase over time— potentially by a great deal, too.

Of course, if you still want to increase the amount of money you can make on this type of sale, there are things you can do.

Adding renovations or various improvements to your home will help to increase its market sale value as well. If you think you’d enjoy a nicer bathroom or an extra bonus room— go for it! You’ll likely see that money back on the eventual sale.

Enjoying Your Vacation Home

It’s not all about profit, of course. What’s the point of all that income if you never get to enjoy anything?

Investing in a vacation home means you’ll be able to enjoy that vacation home yourself whenever you want. If there’s a coastal town or mountain getaway you’ve always dreamed of, this is the time to make that semi-frequent dream vacation a reality.

Who wouldn’t want to enjoy the perks of having a second home? Having a dual-purpose property in this way allows you to enjoy the time there with your family, use it for events or special occasions, and still use it as a profit-generator in the long-run.

It’s truly one of life’s only win-win situations. If you’re on the fence about inverting, imagining that first weekend away might push you over the edge.

Save Money During Tax Time

Investing in a vacation home property won’t only make you money over time, it’ll also allow you to save it. How so? Give thanks to the federal government and the IRS’ current policies.

Similar to your primary home, a vacation home allows you to take on multiple tax deductions when doing your yearly return. These deductions can impact your mortgage payments, your rental income, insurance, and even your property tax.

Though you’ll have to pay taxes on the income you take in, you’ll also be able to deduct a wealth of different operating costs. Supplies, labor, cleaning, repairs, and many more required acts of running a rental property? They can all be written off from your taxes. All of a sudden, doing taxes this year doesn’t seem so bad!

However, in order to take advantage of these many deductions, you’ll need to prove you spend a certain amount of time at your home as a resident.

It’s a good idea to get the help of a professional accountant if you’re looking to enjoy the deductions that a rental home can provide.

Reasons to Consider Investing in Vacation Rental Property

If you’re interested in investing in vacation rental property, the above information can be very helpful in illuminating the perks you need to know about.

Need more investment advice and tips? Keep scrolling STR University blog for more details and information. Thanks for reading!