How to Hack Your Vacation-Home Dream into a Reality.
There’s nothing quite like having a personal retreat or home away from home that you can call your own. Who wouldn’t want to own a place to relax, recharge, and create cherished moments with family and friends anytime you want?But how do you make it happen?
Most people consider vacation home ownership a luxury — something they dream of and save for but ultimately feels a little out of reach. It’s undoubtedly true that owning a vacation property can be luxurious and that you should always strive to make sound purchases within your financial reach.
However, if you are a homeowner looking to invest in something new or are currently reconsidering your investment options, there are ways to hack vacation home ownership from a luxurious pipe dream into an investment reality.
Offset the Costs of Vacation Home Ownership With Rental Income
We get it. When you envision your dream vacation home, you might not have pictured other people staying there. But chances are, your dream spot is probably someone else’s too.
Purchasing a vacation home that can double as a rental property when you are not using it is a super effective way to generate income and help offset the often prohibitive ownership costs of owning a vacation property.
Here in beautiful Alberta, where we have spectacular mountain settings that draw in tourists from around the world all year round, there are many opportunities to invest in vacation homes that also serve as excellent rental properties.
It’s also worth noting that since COVID, vacation home destinations like Canmore or Banff, have seen the highest price appreciations in Alberta. Popular vacation destinations such as these create high-demand rentals that allow you to earn significant investment returns in the long term.
Finding the Right Vacation Rental Property
When investing in a vacation rental home, considering features that allow you to monetize the property is essential.
Research market trends and consult a Realtor®. You will want to hone in on sought-after and desirable areas with growing markets where your investment may yield long-term financial gains.
In addition, details like curb appeal for potential renters, access to nature or nearby amenities, and whether or not the property is zoned for short-term rentals are all crucial considerations.
Familiarize yourself with local rental regulations and zoning laws. Some areas have restrictions on short-term rentals, limiting your ability to rent out the property for shorter durations (typically 30 days or less). Ensure compliance with local codes before finalizing your investment.
If you’re willing to be strategic about location and timing, it’s possible to find a great vacation property that serves your needs, increase your quality of life, and generates income at the same time,
Ensuring Long-Term Success
Vacation rental ownership is still home ownership, not a passive revenue stream.
Like all real estate assets, somebody must maintain the property to hold its value. Owning a vacation home entails various expenses, including mortgage payments, property taxes, insurance, maintenance costs, restocking supplies and buying furniture. It's crucial to factor in these ongoing expenses when considering the financial viability of the investment.
You’ll also want to consider seasonal demand. Plan for the future and ensure you have a rainy day fund that can insulate you against rental challenges such as ‘black swan’ events like COVID-19, where tourism of demand can temporarily come to a screeching halt.
Last but not least, effective management is key. You can save up to 30% of your gross revenue by forgoing a management company and handling management yourself. Still, you must ensure an exceptional guest experience to get the most out of your rental property. Achieving good reviews and ensuring quick response times will allow you to charge more and increase your SEO ranking on popular sites like Airbnb and VRBO.
Investing in a vacation home can offer a unique blend of personal enjoyment and financial opportunities.
By considering the pros and cons, conducting thorough market research, and implementing smart management strategies, you can maximize the potential of your investment property and own a dream vacation property for you and your family to enjoy.
Think you’re ready to invest?
If you need help, advice, or assistance finding the right property, don’t hesitate to reach out!