In summer 2023, 85% of Americans said they planned on traveling, and 44% said they’d travel more than once, too. In addition, most said they’d travel domestically, which means that accommodations are in demand. If you have disposable income, then these facts may have you thinking about buying a vacation rental. But is this type of real estate investing worth your time and money? In this article, we’ll discuss the top pros and cons you should consider if you want to invest in resort vacation properties.
Pro: Potential for High Returns
Depending on where you purchase your vacation home, you may see high returns. If you stick to well-located and well-managed properties, then it’ll be more of a sure thing. Plus, there’s potential for appreciation in value, especially in popular tourist destinations.
Pro: Personal Use
You’re probably one of those Americans who vacation every summer, so you can save some money if you invest in a rental. It provides you with security if you want to travel on a whim, as you’ll have a secure, clean, and reliable place to stay for your vacation.
In fact, if you keep the property long enough, it may just pay for itself. Essentially, you’ll get free accommodations, thanks to the profits you’ve made from tourist rentals.
Pro: Tax Benefits
Depending on your location and the local tax laws, there may be tax advantages associated with owning and renting out vacation properties. Make sure you do your due diligence and understand what they are before taking on such a massive financial burden, as it may not be worth your time in some cases.
Con: Seasonal Demand
Vacation properties may experience seasonal demand, leading to periods of high occupancy and profitability, followed by slower seasons with lower or no income. Economic downturns can also impact your income severely, as people will most likely cut back on extraneous spending.
Con: Initial Investment and Financing
Buying a property is no small feat. Most people won’t be able to afford it outright, so you’ll need to secure financing. Even if you can afford it, the purchase will take a large chunk of your bank balance.
If you aren’t able to get a mortgage for a vacation house, then consider getting a timeshare property instead. You can rent out your timeshare plus stay in it when you wish. Not only does it cost less, but you can also weigh up timeshare resale vs timeshare cancellation if you decide it’s not for you in the future.
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Will You Put Your Money Into Resort Vacation Properties?
If you’ve got the money, then, generally speaking, resort vacation properties are great investments. It’ll give you an extra source of income, and when you want to get away from regular everyday life, you’ve always got somewhere to stay.
However, ensure that you do thorough research and carefully pick where you buy property. Because the location can affect how successful you are, it’s best if you go with safe choices, such as historically popular destinations.
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