Due to the craving for financial freedom and independence, the need to invest funds has never been more necessary than now. One sector that has continued to garner attention from investors in recent times is the vacation rental industry. This sector is famous for its numerous investment possibilities and low-risk features, and this has made it a center of attraction for budding investors.
Before the industry’s evolution, vacation homes majorly served as getaway spots for individuals and families seeking respite from the ever-noisy and stressful city life. People would save up and build or purchase different rental properties in the countryside and journey down there when they need to unwind.
Now, the narrative has changed significantly. Not only do people invest in these real estate gems, but they’re also cashing out big out of them. With the drawbacks and losses incurred in the financial markets due to the global pandemic that had been ravaging since last year, real estate professionals predicted the industry’s collapse.
However, it didn’t happen. Instead, the industry continues to grow, and with the rollout of vaccines that commenced in late 2020, the growth of vacation rental properties continues to boost.
The above analysis implies that one of the best investment decisions investors can adopt is to get involved in the short-term rental market in 2021. However, to record significant success in this market and generate a viable return on investment, there’re factors to consider. But, before we go further, let’s see some of the benefits you can derive by buying a vacation rental property.
Benefits of Investing in a Vacation Rental Property
Generation of High Return on Investment
When you invest in a vacation rental property, you get to enjoy a steady stream of income and return on investment. This benefit even becomes more pronounced when you situate it in a prime location. With the return from your investment, you can conveniently get all your expenses covered without as much as breaking a sweat. It caters to your ultimate goal of maximizing profit and making lots of money from your investment.
You can even adopt some of the numerous home improvement styles and tips from Strategies Online, a home design blog, to make it conducive and homely for guests. Doing this will help you gain more and boosts the rating of the property.
An investment in real estate is one of the safest you can ever have. The main reason for this is that it typically serves a dual purpose – if you don’t rent it out, you can always spend time there with your family or friends. Besides this, a vacation property doesn’t have an expiry date, making it suitable for long-term investment and income-generation plans.
You Get to Enjoy Tax Advantages
Investing in a vacation rental property has a series of tax benefits. You get to enjoy a series of deductions, write off depreciation, investing in a tax-free or tax-deferred mode when using specific schemes or mechanisms.
Now that we’ve seen some of the benefits you get to enjoy when you buy a vacation property, you need to know the factors to consider before making such a commitment. These factors will help you make informed decisions on your investment journey.
Factors to Consider When Investing in a Vacation Rental Property
Even if you invest in one of the best short-term rental markets in 2021, you’d only be setting yourself up for failure if you didn’t make adequate provision for expenses in your plan. They range from routine maintenance, mortgages, and utilities to emergencies and unplanned repairs.
While they may look insignificant initially, they can be overwhelming in the long run. So, before embarking on a spending spree, project your expenses and make provisions for emergencies and unexpected issues.
Tax is an instrument of the state, and you must pay. Although it can be advantageous sometimes, it can get you overwhelmed with time. Situating your investment in one of the best places to buy vacation rental property 2021 will likely cost you more in tax. So, if you’re considering purchasing a vacation property, ask yourself if you can afford the tax payment involved.
Return on Investment
The goal of every investment is to yield massive returns over time. To this end, your investment has to meet locational and quality standards to ensure it meets your financial expectations. Buying your property in a prime location enhances its value and enables you to see more returns.
Best Places to Buy Vacation Rental Property in 2021
There’s no limit to the benefits you stand to derive from investing in a vacation rental property, especially when you situate it in a high-brow area. Besides helping you pay off your existing mortgage, it’s instrumental to taking care of the numerous expenses you’re likely to incur in maintaining the property.
To ensure you invest in the best and most lucrative short-term markets in the United States, we’ll be examining five of the best places to buy vacation rental property in 2021.
The Poconos, PA
This part of Pennsylvania is famous for its charm and natural endowments. It boasts some of the best vacation property investment potentials with a high booking rate. The median rental revenue for this area is $36,254, the listing price amounts to $180,581, and its estimated cap is 14%.
Waterfront properties near Arrowhead Lake or nearby Lake Wallenpaupack are places to look out for in your investment journey. It’s currently the best place to buy rental property in the US.
Blue Ridge, GA
Blue Ridge is the hub of Southern life and a must-visit tourist destination. From apple picking and fishing to horseback riding and mountain biking, there’s no shortage of exciting elements of tourist attraction in this place. It’s one of the best places to invest in vacation rental property in the US. The median rental revenue for this area is $47,042, while $260,476 is the listing price. It also has an estimated cap of 13%.
Pigeon Forge, TN
Pigeon Forge is a highly lucrative destination for vacation property investments. Its natural beauty makes it a prime tourist location. By procuring your rental property here, you’re sure of getting a high return on your investment. Median rental revenue is $42,085 with a $221,610 listing price and an estimated cap of 13%.
Here, the median rental revenue amounts to $42,500, while its listing price is $262,265. The estimated cap of this area is 11%.
Hot Springs, AK
Close to the Hot Springs National Park, this area is another hotspot for viable vacation property investments. It has a median rental revenue of $22,739, a listing price of up to $159,408, and an estimated cap of 10%.
The benefit of purchasing a vacation rental property goes way beyond the structure, amenities, warmth, and excitement it offers. It lies more in the investment value it possesses and the financial gains you stand to enjoy over time.
The idea of buying a property and listing it on the short-term market has an appealing note to it. Investing in such an estate can be fun and highly rewarding. If you’re looking to put your funds to good use by becoming a vacation property investor, here‘s an excellent place to start.