Buying a second home and using it as a vacation rental is a big decision, but it doesn’t need to be. Asurent has put together some pros and cons of owning a vacation rental. First lets talk about the pros then we will get into the cons later.
Pro 1 A Vacation rental can be very profitable if it is ran correctly. You can use the home as extra income. When looking to purchase a vacation rental always think about these three important things; location, neighborhood, and type of home.
Pro 2 If you want to run it correctly you should run your vacation rental as a business. Start a new bank account and only use it for your rental. You will then have a better accounting of all expense and income. At the end of the year you can turn your expenses, restocking purchases, mortgages paid, property taxes, property management services and insurance into your CPA.
Pro 3 You own your own rental home and can stay whenever you want! That’s right, you just landed your very own anytime vacation spot! All you need to do is get time off to enjoy it.
Now that the “Fun” part of owning a vacation rental is out of the way lets talk CONS! Many people are extremely turned off by the cons.
Con 1 Expenses can be costly. As an owner you are responsible to pay for restocking, utilities, listing you rental, and the most expensive… furnishing the rental. You want to lower your vacancy rate so you will need to furnish your home to the location it is in. Example don’t furnish your New York high rise like a log cabin. It just doesn’t fit.
Con 2 Taxes and Licensing. You will have to claim your rental income and expenses to the feds and state. Your location will also determine if you have to pay local occupancy tax. Here is an example of what a transit occupancy tax return looks like click here. You will also have to make sure your property has the proper licensing and permits at the time you start advertising. If you don’t have a good accounting system you could miss out on thousands of write offs.
Con 3 Lots of upkeep and footwork. It is well known if you do not respond to each and every inquiry about your rental you will not get a booking. You need to be available at at times of the day and sometimes night to respond. Each time a guest leaves you need to schedule housekeeping, restocking, and possibly maintenance. You need to find time to create a good listing with videos, photos, and property description. The hardest thing to do is find time to manage your rental and update your calendar.
Don’t worry we can help !!
The cons don’t sound so great do they? Don’t worry we can help. We will lower the cost of expenses like restocking by bundling purchases in bulk with our other properties. This lowers the cost for everyone. When your home is vacant we use technology to lower your utility bills. We have professional accounting software to track all of your properties expenses, income, vacancies and more. At the end of the year we send you or your CPA a Cash Flow report for Tax ease. Don’t want to be on your phone or computer all day waiting for someone to ask you a question. Don’t worry we have you covered there too. We handle all bookings, calendars, pricing, housekeeping, maintenance and restocking.
If you are interested in owning a rental or vacation rental contact us today!! 541 816 4140