Enjoying time in a place that you love, surrounded by your loved ones – that’s truly what life is all about. It’s all too easy to get bogged down in the details of finding a suitable vacation home or to be overwhelmed by the high rental costs and end up skipping it for years altogether. One of the benefits of buying a vacation rental property is that it makes your dream vacation easy and free.
Many people don’t realize how accessible owning a vacation rental property can be. You don’t necessarily have to take on dual mortgages to own a vacation rental property. Why? Because it can essentially pay for itself while also generating you additional income.
1. Generate Rental Income
One of the top benefits of buying a vacation rental property is that renting it out when you are not using it will allow you to generate rental income. In this way, the house actually provides you with its own steady source of income. Depending on where you are buying your vacation home, short term rentals during the peak season can cover the mortgage expenses and leave homeowners with a nice financial boost.
Renting out your vacation property generates income that you can use to pay your mortgage payments and any other expenses. This essentially means that you are having others pay off your loan while you still get to capitalize on the equity your asset gains over time.
2. Build Equity Through Appreciation
In addition to making you money in the short-term through rental income, another one of the benefits of buying a vacation rental property is that it can potentially make you a lot of money in the long run. While the housing market can fluctuate, real estate tends to appreciate in value over time. Even modest appreciation can add a lot of equity to your investment.
Combine appreciation with the fact that you may be able to pay your loan down entirely with the income you make from short term rentals, and you have a recipe for not just a free vacation home, but a money-making investment. If and when you are ready, you can usually sell your vacation property at a higher price than you paid for it, allowing you to cash in on the profit.
And, what is neat about increasing the income through short term rentals is often times investors will buy an asset based on it’s ability to generate income. In essence, the more income you are able to generate for yourself, the more appreciation you would enjoy as you added that value yourself. How liberating!
3. Take Advantage of Tax Benefits
A rental property is considered a business, which makes it eligible for a variety of tax benefits. You may be able to write off things such as mortgage interest, maintenance and repair costs, property management expense related fees, money spent on marketing and licensing, etc.
The tax laws around vacation rental properties are different in each state, so make sure to consult a tax professional to make sure you are taking maximum advantage of your tax benefits.
4. Prepare for a Happy Retirement
Who doesn’t dream of retiring where they like to spend their vacations? Maybe by the beach, or on the lake? Or in the mountains, everyone has what they consider “Paradise”.
Another one of the benefits of buying a vacation rental property is that it can help you prepare for a happy retirement in your dream home in a financially responsible way.
If you have considered a plan where, upon retirement, you sell your current home and move full time into your vacation rental property, then you’re probably pretty financially savvy. This plan could save you a lot of money in the long-haul. You will begin reducing your mortgage debt on your vacation rental property long before you move in full-time. Plus, when you sell your current home, you can use the profits to pay down your mortgage debt even further. This can reduce either the longevity of your loan, your monthly payments, or both!
5. Anytime Access to a Free Vacation Home
When talking about buying a vacation rental property, anytime access to a free vacation home can’t be overlooked as a benefit. Putting time aside to take consistent vacations with your friends or family is so important. When you’re the owner of a vacation home, planning a vacation could not be easier. You will have your choice of dates, and you won’t have to pay the hefty rental fees. Best of all, you will get to enjoy your vacation in a home that you love and that is familiar to you! Think Pride of Vacation Home Ownership!
Buying a vacation rental property is a big decision that extends beyond your finances. You are not just investing in a rental property. You are investing in a place where memories can grow over the years as you vacation with your loved ones. The income that this investment can produce makes it much more accessible than you might immediately think. If you are considering purchasing a vacation rental property, reach out to our team so we can help you make an informed decision.