Vacation rental properties. Are they right for you?

There are many pros and cons to owning a vacation rental property. If you're interested in real estate investing, it can be a great place to start generating income or have the perfect getaway. Here are some things to consider.

The biggest pro to a vacation property is the extra income. If you live in an "in demand" city you can make up to four times as much rental income by using sites like Airbnb, VRBO and Homeaway. These sites have taken over earning potential and how we vacation as a whole.

If you rent your vacation property for more than 14 days, it's considered a business, which means you're eligible to write off a lot of your expenses. Here's a quick list of write offs.

· Listing Fees

· Cleaning

· Repairs/Maintenance

· Property Insurance

· Advertising

· Loan interest

· Utilities (water, gas electric, tv, internet)

A1099-K will be sent to owners who have more than 200 reservations a year and who earn over $20,000 a year in rental income. If you have taxes withheld from your payouts so you can claim your withholdings on your return, rental sites will send you a tax form. The average amount withheld is somewhere around 24-28%

A vacation home can be a great way to build long-term wealth and ensure you have healthy finances upon retirement. Or keep it as a family rental. Now, let's talk about some of the cons. I can tell you, there are not many but here they are.

You have to manage your property. In fact, this is probably one of the most "hands on" investments you'll ever make so be prepared to get tackle the extra workload. Sure, there are plenty of property management companies out there you can work with to manage the turnover but they will cost you somewhere between 25% - 30% Those end up being big numbers so decide what direction you want to go and what you can afford.

Be prepared to pay for expenses and repairs when needed. You cannot rent a home that needs repairs for liability reasons. All properties must meet guideline requirements set by each hosting website. You will also need to check your city guidelines and HOA's if applicable. They may have strict regulations that require permission, special permits or not be able to rent all together.

As a real estate agent, my best advice is to come up with a strategy for your investment and how you want it to work for you. The goal is to maximize income as a rental investor. Assess the property and make sure it meets all criteria to ensure the safety of its guests. If you're interested in purchasing a rental property call Veronica today at (619) 417-9052 or email at info@VsellsSD.com

Sources:

https://www.taxslayer.com/blog/complete-tax-guide-airbnb-homeaway-vrbo-hosts/

https://www.lodgify.com/vacation-rental-guide/property-management/fees/#:~:text=While%20the%20industry%20average%20is,the%20way%20up%20to%2050%25.