Can you Make Money With Vacation Rentals?


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20 thoughts on “Can you Make Money With Vacation Rentals?”

  1. Sometimes the traditional vacation spots you think of are not the best returns for this stuff. High management fees, competition, travel expenses eat up profits. Where they can work better is right smack in the middle of year round city. Where you end up with 80% occupancy and lower fees to manage/self manage. There are some expections where the traditional vacation location get away works but one would need to have the rare property combined with year round and self managed. My bro does quite well with his getaway fish ski Eastern Sierras chalet. It books 12 months ahead regularly. It is rare for the area, insane one of a kind 12000 ft peak , waterfall views and overlooking 5 star spa retreat below with restaurant etc. One mile to fish and ski. If there are 1600 others with same offer that would be an issue.

    • Hi Matt!,
      That is true, a city vacation rental or at least short-term rental would make more sense. That sounds like a pretty awesome place your in the Sierras.

  2. Indeed, it’s not a business buying a vacation house. I think only the time I spend there, the house is off rent. And still I’ll want to change the holiday destination from time to time.

  3. I guess most of the time vacation rentals should stay that way as rentals for you but not to buy. Like you say the only way it makes sense is if you are staying there at least 3 month in a year, or be a regular. Otherwise is a money pit.
    I live in south Florida the ugliest beaches I have ever seen. If you are coming to flag for the beaches you will be disappointed. Any beach out of south Florida is better, trust me.
    Either way, I have thought of vacation homes before, since everyone gets that feel while in vacation. Then I tell myself why would I go to the same place over and over when there are thousands of beaches there. I went with a friend on a small plane to Bimini and those beaches are just like the above , even clearer far away from the shores. The plane was a rental so, let’s say something with beach front in Bimini Bahamas is around 400k I prefer buying a used aircraft for 100k rent it out at 100$ Per hr just to help pay maintenance fees and go every other week to Bahamas, Naples, Orlando, Tampa. .. Etc… From south Florida. And it’s a plus since you can’t beat the views from the skies.
    Either way that’s me, I prefer renting in different places. In December I want to go to Lake Tahoe.
    I know I will then have the urge to buy there lol

    • Hi Andy, the beaches on the gulf aren’t as nice, but the prices for a beach front vacation house are better and its really hard to find any non condo beach front houses on the other side that aren’t multi million. My wife and I like Ft lauderdale when we don’t have the kids.

      I always get the itch to buy too, even though I always end up realizing it is a bad deal.

  4. If you like key largo or nearest keys you can find cash only, small houses , beach front 1500 to 2500 sq ft for 800k to 1 million. I would only suggest it if you want to retire away from the city, traffic and everything else. Otherwise the Florida keys are boring.. Mainly old people with money. I guess within a month you can actually go to all the restaurants in around 30 miles north or south, that’s just an example.

  5. So true. We have been tempted so often to buy a house/condo in the Rockies, but every time we do the math, it doesn’t make sense financially. We could stay at the Ritz every time we go ski (we don’t) and still have more money left at the end of the year than if we would own a very average 2 bedroom condo. Tempting, but so not worth it

  6. Hi Mark,
    Thanks for this great post!
    I’m a Canadian real estate investor and flight attendant who currently owns 4 rental properties in Florida. I have two condos in Fort Lauderdale and two houses in Kissimmee. They are all rented to long term tenants. I’m looking to buy a duplex or triplex in Fort Lauderdale in order to do short term rental and to live in one of the unit two weeks per month. I’m mostly looking for great cash flow as all my properties including the next one will be 100% financed. I think that short term rental would be great for me because I have higher mortgage payment to do and I could also escape cold canadian winter and live in FLL during at least the winter. I know that short term rental require more expensest, that the market is quite competite and that incomes are less stable then long term rental but I also feel like it could be a much better return on investment. Duplex and triplex that I’m looking at are between 250k-350k. Based on other investors, monthly expenses are between 2000k-3000k depending if you have a pool or not. Monthly income are between 6000k-7000k per month after vacancy. Could you please tell me what do you think of my idea. Thanks in advance!
    JP

  7. sorry Net Operating Income is between 6000k-7000k. The gross rental income after vacancy is evaluated between 8500-10 500k.

  8. @Jean-Phillipe,
    Keep in mind that the IRS doesn’t allow you to take most deductions/expenses if you live there more than 14 days per year. It is considered a second home, not rental property. And you still have to declare the rental income with your income.

    I’m not saying the numbers don’t work, just that you need to be aware that you won’t get the same tax advantages.
    Good luck

  9. Mark,
    Thanks for providing the details for running the numbers on vacation property. The beach is a tough place to make money because of wear and tear, and insurance. But there are situations where the numbers do work.
    For example, ski resorts and lakes. The sales prices are lower and the management and HOA fees are lower.
    Also, if you’re really intent on the beach, you can get into a condo for less than 25% for all fees. Management is lower (for a good size condo) because they have to run it like a hotel anyway.

    Lately, just owning a place at a large city can make money. Hotel space is generally short ‘(vacancies are very low) and business travel is up.

    Thanks for the article.

  10. In regard to the beach front or near beach vacation rental numbers don’t seem to work at all for condos BUT for Cash buyers on Multi’s it SEEMS to work. Buying a 3 fam and renting all but one place gets you a place to stay for free or close to it. But then again you could just rent all 3 and use that income to score short term rental deals all over the world.

  11. Boy, not my experience at all with vacation rentals. I found a great area where I get 275 days a year with reliable local support. My return is better than the current Trump Bump. And I pulled $22k cash out this year. Initial investment $225k. Just do your homework.

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