Is it a Good Time to Invest in Vacation Rentals

Is it a Good Time to Invest in Vacation Rentals? – Vacation rentals have taken off as one of the most popular investments in recent years, providing investors with an opportunity to purchase a vacation home that is paid for by the cash flow from short-term vacation renters throughout the year. Whether it’s a property that is combined for personal use and passive income or entirely designated as an income source, vacation rentals can be a lucrative investment that require little ongoing work.

You may be wondering if now is still a good time to invest in a vacation rental, with rising interest rates and rumors of a real estate bubble popping. Here’s what you need to know about the timing to invest in vacation rentals.

Is it a Good Time to Invest in Vacation Rentals?

Understand the Costs Involved

Investing in a short term vacation rental involves some one time upfront costs and ongoing expenses. The upfront costs include:

Ongoing costs for the property might include:

Make note of these costs to help inform the occupancy rate and nightly fee you will need to make the investment profitable.

Realistic Anticipation of Profit

Are we in a bubble?

As you read headlines and listen to people chatting about the real estate market, you will hear people wondering if we are about to experience another “popping bubble” in the world of real estate. People who lived through the 2008 market crash are concerned about some similarities that we have seen in the market recently.

Real estate experts agree that we won’t need to worry about a popping bubble. While we are going to a deceleration in home price growth, the shady lending practices that led to the massive spike in home prices and subsequent mass foreclosures are no longer legal. With new, more strict lending guidelines in place, we will not see the crash we did in 2008.

If you invest in real estate, it’s true that you may see the value of your investment fluctuate on paper as the economy levels out and the housing market corrects, but if you can afford the investment you will continue to see the benefits of investing in vacation rentals.

When you own a vacation rental, one of your most significant costs will be the mortgage on the property. As long as this is a monthly payment that you can afford, and realistically anticipate having covered by revenue, there is no reason to be concerned about rising interest rates. You can cover the cost of your mortgage with your revenue and plan to refinance when the market shifts in your favor.

Markets with Steady Demand

Not all vacation rental markets are created equal. Some vacation rentals will see a decrease in demand with economic changes, and may suffer from a significant decrease in occupancy rates. Other rentals will see a decrease in demand, but continue to see steady occupancy. What’s the difference between these two? A primary factor is a location.

For example, a beach setting will always draw vacation goers. While some people may postpone their vacation for another year, there will always be enough people to rent a vacation home near the beach. Panama City Beach condos see a steady demand throughout the year, especially during Spring Break and summer seasons, and are one of the best places to consider investing.

Want to begin the search for a vacation rental in Panama City Beach? We can help! Contact us any time.

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