Vacation Rental Investing: Today’s Challenges and Solutions

Getting Started with Short-Term Rentals

Do you want to grow your rental income and turn your investment property into a passive income machine? Short-term rentals offer higher profits and greater flexibility than traditional rental properties, but they also come with unique challenges. Let these tips guide you to a smart short-term rental investment. 

Challenges in vacation rental investing today

High nightly rates and quick turnover make vacation rentals an attractive prospect for investors, but what should new real investors know before they buy?

  • The biggest drawbacks of rental property investing are difficulties securing financing, property management demands, and dealing with troubled renters.
  • Guest management challenges catch many first-time investors by surprise. Guests have high expectations for service and convenience, and investors must balance those demands with a property’s profitability.
  • Investors also must contend with a complex network of short-term rental regulations that vary by location. These include outright prohibitions to vacation-rental-specific licenses and taxes.

Maximizing short-term rental profits

From property selection to marketing, these are the must-know tips for vacation rental profitability.

  • Location is by far the most important factor in short-term rental profitability. The best vacation rental markets have affordable home prices and high guest demand.
  • It’s also important to minimize vacancy rates. Adjusting nightly rates and minimum nightly stay keeps properties booked through seasonal swings. Strong marketing with quality photos and good reviews also boosts occupancy.
  • Must-have amenities include fully-equipped kitchens, WiFi, TV, and free parking. Properties with in-unit laundry, pools and hot tubs, and proximity to local attractions command a higher price.

Avoiding short-term rental problems

Vacation rental guests occupy a property for a short time, but they can create big problems if left unchecked.

  • Tenant screening isn’t only for traditional rental properties. Background checks avoid problem tenants by examining guests’ rental and criminal histories.
  • Smart tenant selection also avoids upset neighbors. Planning ahead for noise, parking, and trash goes a long way to maintain good relationships with nearby homeowners.
  • Well-lit and maintained properties are less likely to attract crime and vandalism. Before installing a security system, understand the surveillance laws governing rental properties.

Vacation rentals can be profitable, but too often investors see short-term rentals as a quick path to passive income. In reality, managing vacation rentals profitably requires more than a great location and an online listing. Understand the challenges facing vacation rental investors today so you step into the short-term rental market ready for success.


This post was written by Guest Blogger Virginia Cooper. To read more content and learn about her work, check out her Learn a Living website.
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