For those considering investing in a vacation rental, the potential benefits are undeniable. Not only can you earn equity while someone else pays off the mortgage, but you can also enjoy great tax advantages and even use the property yourself. But how do you choose the best place to buy a short-term vacation rental? Exploring the best vacation rental markets is a great starting point.
The Importance of Location For Vacation Rental Properties
The location of your vacation rental property plays a crucial role in its performance. While primary cities like San Diego and Miami have been popular among investors, their popularity has led to a decrease in availability. As a result, investors should consider alternative cities or lesser-known locations that offer similar earning potential.
According to the National Association of Realtors (NAR), sales of investment homes have been steadily increasing over the past seven years. Lawrence Yun, NAR's chief economist, stated, "Steadily increasing home prices and strong rental demand appear to be giving more individual investors assurance that purchasing real estate will diversify their portfolios and generate additional income if they decide to rent out the home."
Here are some key factors to consider when choosing the right investment property:
-
Personal Use:
- Consider whether the investment holds more personal or financial importance, as this can affect your strategy.
-
Rental Income:
- Research the vacation rental markets that are conducive to producing a steady rental income.
-
Appreciation:
- Look into markets that have a track record of property appreciation over time.
-
Expenses:
- Take into account both routine expenses and unexpected costs to avoid cash flow issues.
-
Taxes:
- Be aware of local, state, and federal property taxes, as well as taxes on rental income. Look for potential tax write-offs specific to vacation rental property.
-
Risk:
- Evaluate potential risks such as adverse weather conditions or market crashes that could impact your investment.
-
Insurance:
- Protect yourself by obtaining the appropriate insurance policies for your property and location.
-
Legality:
- Ensure that your chosen location allows vacation rentals and comply with local zoning laws and homeowner association rules.
-
Property Management:
- Decide whether to hire a property management company to handle tasks such as tenant turnover, maintenance, and marketing.
-
Marketing:
- Develop a marketing strategy to attract guests, including listing your property on multiple platforms and staying competitive in the market.
-
Partnerships:
- Consider partnering with friends or family members to expand your investment opportunities but ensure clear contracts and legal structures are in place.
Vacation Rental Market Conditions
The vacation rental market experienced significant fluctuations due to the COVID-19 pandemic. However, as travel restrictions gradually lift and life returns to normal, the market is expected to rebound.
In 2022, the best vacation rental markets include:
- Berkeley, New Jersey
- Englewood, Colorado
- Levittown, Pennsylvania
- Covington, Georgia
- Abilene, Texas
- McGaheysville, Virginia
Best Short Term Rental Markets 2023
Looking ahead to 2023, the top new markets for short-term rentals are projected to be:
- Reading, OH
- Forest Hills Boro, PA
- Delhi Charter Township, OH
- Port Allen, LA
- Pleasantville, NJ
- North College Hill, OH
- Richmond Heights, OH
- Kenmore, NY
- Portsmouth, VA
- Silverton, OH
Summary
While a great vacation rental market doesn't guarantee success, considering the factors mentioned above can help investors make informed decisions. It's essential to research and analyze market trends and indicators to find the right investment opportunity. By staying updated on the best vacation rental property markets, you can maximize your chances of success. Remember to always conduct thorough due diligence and consult with professionals in the field.
Note: The information presented in this article is for educational purposes only and should not be considered as financial, tax, legal, or accounting advice. It is always recommended to consult with professionals before making any investment decisions.
Ready to start taking advantage of the current opportunities in the real estate market? Click the banner below to enroll in an online training class and learn how to invest in today's real estate market!
Credit:
Original Article (No External Details)