The invention of self-management vacation rental platforms such as Airbnb and HomeAway among many others has opened up what was previously a closed market to vacation renters.
While there was a time only hotels and established B&Bs could hope to get the kind of trust and business that travelers offer worldwide, today, if you have the space for ivact, you could be hosting as many as 20-30 people every month making a decent income from it.
Yes, vacation rentals have become a lucrative business, and savvy entrepreneurs are taking full advantage of the situation. Take for example the case of dealing with Airbnb. According to their statistics, there are at least 6 million listings on the platform, and on any given night, at least 2 million people are staying at an Airbnb.
Of all the vacation rental owners on the platform, at least half of them make an average income of $500 per month. That number goes up significantly when you own more than one property and attain the “Superhost” status where these properties get more visibility and therefore more bookings.
You can clearly see why and how this business could make a lot of financial sense if done in the right manner.
Why Invest in a Vacation Rental?
From an economic standpoint, owning a vacation rental in the right location makes awesome sense. You basically own a business that brings in income in the form of short-term stays by travelers all the while building up equity in the long term. The advantages of owning your own vacation rental or several are staggering:
- Could be an excellent source of rental income
- You could turn it into a full-time job by owning some rentals and managing others for different homeowners who don’t want to deal with the hustle
- You will effectively be your own boss
- The more you upgrade your homes, the more equity they accrue and the higher your net worth rises
- The best part is that you can actually start right away with the space that you already have in your house
One more advantage to this kind of business is that if you intend to own vacation rentals in different locations, it gives you an opportunity to travel, meet new people and exposes you to additional business opportunities in the process.
Where to Invest in a Vacation Rental
By the numbers, there are certainly some locations that are much better than others when it comes to investing in vacation rentals. Here are some suggestions for your consideration if you were looking to get into this lucrative business:
1. Owning a Vacation Rental on VRBO in Ocean City, MD
- Median Monthly Rental Revenue: From $20 – $200+ depending on location ($ 3,237 for Airbnb)
- Median Home Price: $274,800
According to the data the home values in Ocean City, MD have gone up by about 5% in the past year, and it’s predicted that they will keep rising by another 2.3% over the coming year. Add that to the fact that it’s a coastal town and you have the perfect combination for a wonderful vacation rental investment location.
Your target market will be party-goers, beach lovers and the summer vacation crowds that throng the beaches to soak up the sun.
2. Buying an Airbnb in Ashland, Oregon
- Median Monthly Rental Revenue: $1,600
- Median Home Price: $453,900
Ashland, Oregon is the perfect location for people who want to cater to renters who love the wild outdoors. While the median home prices in the region are a bit steep, the location is quite attractive and can bring in a pretty penny if marketed right.
Ashland has quite a bit to offer including the Lithia Park which is a nature lovers’ paradise, North Mountain Park, perfect for outdoors people and a host of homely restaurants and establishments that are both charming and rather affordable.
3. Renovating a VRBO in Portland, Oregon
- Median Monthly Rental Revenue: $2,000
- Median Home Price: $416,900
Much like Ashland, the median home prices in Portland are a little bit on the high side. That is not to say that you should shy away from investing in this location, with a median rental income of $2,000 (definitely much higher for an Airbnb), you can see the potential for wonderful returns with the right kind of marketing for your property.
As a location, Portland has a lot to offer which makes it easy to market and sell. You could feature attractions such as the Portland Japanese Garden which happens to the epicenter of serenity in this region, a host of historical and highly valued buildings such as the Pittock Mansion, the Oregon Zoo, and the Lan Su Chinese Garden among many others.
4. Get Yourself a VRBO in Destin, FL
- Median Rental Revenue: $50,000 – $66,000 annually
- Median Home Price: $376,100
If you are going to buy yourself a vacation rental property, you want to buy in some place such as Florida. The weather is near perfect, the attractions are too many to list, and the people are absolute party lovers. The median home prices in Destin have gone up 3.9% in the past year, and the data suggests that it might go up by about another 2.2% in the following year. A good investment by any standard.
5. Own a Vacation Rental Home in Lake Tahoe, CA
- Median Monthly Rental Revenue: $2,000
- Median Home Price: $442,500
Home prices in Lake Tahoe seem to almost always go up as they have in the past year. The median home price increased by about 2.3% and is set to go up by another 0.5% in the coming year. California, as a whole, is a wonderful location to own a vacation rental home. There are lots of attractions, excellent weather and a vibrant nightlife for people who like to party.
These are some of the most lucrative locations to buy and own a vacation rental property. Truth be told, with the right kind of marketing, most locations can be just as lucrative, but it helps when the area has inherent attractions that people want to come and see.