It’s rare a week goes by that I don’t hear from a property owner asking if it’s worthwhile for them to rent out their property as a vacation rental. While we can approach this question from a earnings perspective, we’ll save that for another article and instead look at all of the other reasons to rent and not to rent your property as a vacation rental.
Pro: Flexibility. When renting a property long term the property is no longer really in your possession. So when you need to get in to make a repair, inspect, or really do anything with the property, you have to arrange it with your tenants. If you need to fumigate your property then you’ll also be on the hook for putting your tenants up in a hotel while they aren’t able to use the property. With a vacation rental if you need to do anything with the property, all you have to do is block out some dates and you can use it or do with it whatever or however you need.
Con: Stability. With a long term tenant you have more stability with a good idea of how much revenue your property is going to be bringing in. Vacation rentals income can change from month to month or even week to week or day to day.
Pro: Maintenance. While many people would argue that all renters abuse the property they rent (whether it’s as a vacation rental or long term rental) with a long term rental tenants also tend to neglect the property more too and the only time you really get to fix things is in between when they move and that can be years at a time. With a vacation rental your property is constantly cleaned and maintained by the people you select.
Con: Investment. With a long term rental you rent the place as is, no need to do anything with the interior besides maybe spiff up the walls and make sure the kitchen and bathroom are in order. With a vacation rental you need to furnish the unit complete with kitchen appliances, electronics and accessories and that can cost a fair chunk of change. So be prepared for some investment.
Pro: Problem tenants. Every property owner or manager has to deal with problem tenants and there’s nothing worse than knowing you’ll have to deal with them for 11 more months. There may on occasion be problem vacation rental guests but they’re much easier to deal with and they’ll be out of your hair much more quickly.
Con: Work. Managing a vacation rental is just more work. Instead of having to vett a renter every few years you now have to vett them every week. Responsible vacation rental managers should be ensuring ever guest will be respectful of their property and the neighborhood. On top of that you’ll have to make sure linens and towels are constantly washed, and amenities like kleenex, paper towels, dish soap, salt, pepper, cooking oil, shampoo, conditioner, soap, etc are always refilled.
Pro: Income. Vacation rentals can make more money than a long term rental. In my case we have a property that’s more than a hundred years old and without the extra income we wouldn’t be able to keep the property in the good condition it’s in. Not to mention that long term rents wouldn’t cover the mortgage of our rental, so we’d be losing money on a property we’d like to keep. Like with other, this is a way to hold on to property that would otherwise be lost because of such high housing prices.
Con: Income. Believe me when I say you won’t retire off of a vacation rental, the income is higher than a long term rental but so are your costs and for most people who try using their property as a vacation rental, the income doesn’t justify the investment of time or money. I’ve crunched the numbers for plenty of property owners interested in turning their property into a vacation rental and for most of them the numbers just don’t pan out.
So many people romanticise using their property as a vacation rental but when you actually start doing you’re faced with the harsh reality of some good reasons to do it and a lot of extremely compelling reasons not to do it.