Disadvantages of owning an investment property
Unexpected expenses
As in life, stuff happens. Things break, wear down, go missing. Same with your vacation home. After you carefully estimate projected expenses (mortgage, garden and lawn maintenance, insurance, utilities, etc.), have a plan for the unplanned. The smartest (and easiest) solution? We recommend setting aside funds to cover unforeseen costs. This will better allow you to manage your cash flow and protect your ROI from taking an unexpected hit. Having the right vacation rental management partner is also key. With Vacasa, you can rely on a local team to maintain your property on your behalf.
Learn more: Advice and tips from a vacation rental investor
Varying local vacation rental laws and regulations
Every destination has different rules, laws, and regulations surrounding short-term rentals. Some cities place stifling restrictions on homeowners’ ability to rent to travelers, while other destinations support their residents’ efforts to capitalize on tourism. This can easily complicate your home search. Your best bet? Refer to our latest list of top vacation rental markets. This list only features destinations that both allow short-term rentals and are big draws for travelers. Then, work with an experienced real estate expert who specializes in vacation rentals in your chosen market. Local real estate agents know their markets inside and out and can assist with regulations and permits.
Learn more: Explore Vacasa’s vacation home real estate services
Taxes and higher insurance
When you rent out your vacation home for more than 14 days out of the year, you’ll owe federal taxes on your rental income. That is in addition to any local, state, and property taxes. If you’re considering a beach condo or house, you may be charged steeper insurance due to possible adverse weather conditions.
First, we recommend mapping out all these extra costs with your CPA beforehand. Once you’re ready to rent out your property, take advantage of dynamic pricing, which will automatically price your nightly rate based on travel demand, market conditions, events, and more. This makes sure you’re reaching your peak revenue potential—and not leaving money on the table.
Learn more: How dynamic pricing helps you earn more
Property upkeep and maintenance
Thinking of managing your vacation rental on your own? Brace yourself for an avalanche of work. As the owner, you might also fill in as the front desk agent, the housekeeper, the repair technician, and more. You’ll be responsible for things like regular maintenance, restocking linens and towels, repairing any broken items, and answering all of your guests’ requests. Partner with a full-service vacation rental management company like Vacasa to take those responsibilities off your shoulders. They’ll have a team watching and working on your property, making sure that your home is kept pristine and in top condition for every guest stay.
Learn more: What’s included in Vacasa’s full-service vacation rental management
Nonstop marketing
Guests have to find your vacation rental before they can book it. That requires marketing. Right out of the gate, that means taking eye-catching property photos, writing compelling listing descriptions that sell, and decorating with furniture and accents that both complement your destination and appeal to modern guests. Then comes listing your home on all the major booking sites like Vrbo, Airbnb, and Booking.com.
From that point on, you’ll have to continually optimize your vacation rental listing to appeal to the most customers, update your rates and calendars, and respond to questions and reviews. When you hire a full-service property manager, they’ll take care of all these marketing tasks. At Vacasa, we go even further by running digital marketing campaigns (like emails and ads) to keep our homes in front of travelers.
Learn more: Vacasa’s digital marketing strategies that get guests booking
