We’ve all considered it: Wouldn’t it be nice to buy that condo on the beach, rent it out, and have it available from time to time to use for ourselves? Don’t lie; I know you have.
Take it from me – someone who is living that dream right now – it’s not going to be all roses and rainbows. In fact, it will be a series of headaches interspersed with some great times. Will it be right for you? Turns out it’s all about expectations.
What to Expect When AirBNB-ing
Short term rentals (STRs) can be a huge income source. More than most real estate investments, they depend on location. Maybe it’s vacation rentals directly on the beach. Maybe it’s weekly rentals for traveling nurses right across from the hospital. There’s many more great cases of gold mine STRs.
If you look at a potential purchase from one of those lenses, then you can maximize income from the purchase. Sure, they can be seasonal, and you have to factor that in to the price. The risk is that many of these properties are being sold at retail prices. That house by the beach is being sought after by plenty of second home people, who don’t care about the income, and can pay much more. That drives up the price and can be a bad investment for you.
And since STRs are all about location, there will be less of them. And the competition for them will be more. This also drives up the price and can make them a bad investment. Nonetheless – if you do your diligence – some diamonds can be found.
What About Renting Out Your Vacation Home?
That’s the dream, right? You get to make all kinds of money renting it out but reserve it for when you want to vacation in your place, for free! What a great deal. Too bad it doesn’t work that way. I’m sure there are some lucky individuals out there who made it work. I tried. I have a great condo in Florida right near the beach and on the intracostal waterway. It’s a great place to visit and it makes some money.
The problem is I like to visit it as well. And I like to visit it when everyone else does. So, the best seasons, if I’m visiting, it’s not free. It takes away that income I would have gotten. Which means I’m paying full price. The alternative is for me to go on the off season, when it’s cold.
You can’t make money by using your own vacation rental. But that doesn’t mean you shouldn’t do it. If you want a vacation home which is subsidized by rental income. And if you don’t mind having strangers living in your vacation home from time to time. And if you don’t mind dealing with the city and hurricanes and special assessments, then you might find benefit from renting out your vacation home. Just don’t call it a STR.
