Real Estate Investing
Vacation Rentals: How Profitable Are They?
In the past, vacation rental owners had to perform the necessary maintenance tasks and market the properties to find guests or pay someone in the locality to do so on their behalf.
Bookings were low and the cost of maintaining the vacation homes was high. Thankfully, the firms that manage vacation rentals are using new technologies to eliminate these issues and deliver a comprehensive service on a high level that the vacation rental industry has not seen.
Many travelers are avoiding staying in hotels in favor of vacation rentals.
Why Vacation Rentals?
Some of the benefits of vacation rentals include:
- Variety – Vacation rentals offer different decor, amenities and views among other things. Travelers select their own vacation rentals and preferences based on their budget and how they want to define their vacation such as close to the beach or a golf course among other locations.
- Additional space – Vacation rentals are more spacious than hotels and are therefore popular with people traveling with their families.
- Comforts of home – Vacation rentals provide the comforts of home and some of the things that a typical home does not have. There are multiple bedrooms, comfortable living rooms and adequate space to sprawl out. Vacation rentals are more comfortable than staying in the bedroom of another person like with Airbnb.
- Privacy – Vacation rentals have private entrances and private balconies. Therefore, patrons do not have to walk through the lobby after returning to their unit.
- Cost effective – Since vacation rentals are spacious, families often rent them together. This makes the homes more cost effective than hotels.
- Easy booking and check out – Technology such as online payment platforms enable guests to save time. They do not have to wait in line to check in or out.
Improving Vacation Rental Technology
Technology has played a huge part in making the short-term rental market grow. Online listing firms such as Airbnb make it easier for guests to book the home they want to stay in.
With this software, you can manage rental channels. These include HomeAway, Expedia, and Airbnb using one app or platform to reduce management time and increase profits. This means that you can manage your property without having to enlist the services of a professional management firm.
Are Vacation Rentals Really Profitable?
Investing in vacation rentals is an excellent way to earn passive income.
A survey done by HomeAway, which is a short-term rental marketplace, found something interesting. People who rent out second homes earn more than 33,000 dollars annually in rental revenue. On the other hand, at Airbnb, the average vacation rental owner collects yearly rental revenue of about 11,000 dollars.
Most of the vacation rental owners using the Airbnb platform don’t perform as well. They may only rent out only a single bedroom or rent out their homes irregularly. They do not treat their homes as true vacation rentals.
Do the Math
It is not that straightforward to figure out the amount of money your vacation home can bring in. However, online tools can enable you to calculate the potential cash flow to your property.
You can use these tools to calculate the average daily rental rates, revenue, and occupancy rates. By using these projections, you can then subtract items such as interest, PITI, management fees and maintenance expenses. Then you’ll get a cash flow forecast.
Evaluate the Location
The other factor that will determine the amount you will earn as rental revenue is the location. If you buy a vacation home, which is close to a popular destination like a ski resort or beach community, then it is likely that it will bring in a higher rental income. An excellent location close to a major airport or a vacation spot that people visit year round will have the best impact.
Assess the Scene
Apart from the accessibility and popularity of a destination, you also need to consider the setting. For instance, it is more cost effective to invest in a vacation home located in the mountains compared to a beachfront vacation home. However, such a home is not likely to bring in as much income as a beachfront property can.
The peak season for vacation rentals lasts about 12 weeks.
The trick is trying to rent the vacation home during the off-peak periods or when you do not want to live in the house. Try your best to keep your vacation home occupied by advertising it on platforms like HomeAway and Airbnb. You can even seek advice on the best ways to keep a property occupied from a property management firm that manages vacation homes.
Set the Price Right
To maximize occupancy, you should price your vacation home well. You can price your propertyslightly lower than similar properties so that it will be occupied more frequently. Furthermore, you should keep an eye on events like festivals and conventions that occur close to the location of your vacation home. When the demand is high, take advantage of it and adjust your rental charges accordingly so that you will not miss out on revenue.
Vacation homes are unique in that they are both an investment and a lifestyle upgrade. While they perform equally as well as conventional rental properties, they offer the benefit of having a place to stay for your own vacations.
A vacation home can bring in a good return on investment if you can keep it rented out most of the year. If you hold the vacation rental for many years, then you will make a return, which is comparable to or greater than you would have made if you had invested in stocks.
This article originally appeared on IdealREI. Follow them on Facebook, Instagram and Twitter.
By Sheryl Chapman
As we all know, the economy can be unpredictable at times. Recession is a common phenomenon that can affect the investments in your portfolio.
But don’t worry, there are some sectors that are likely to perform well—even during a recession. Here are five recession-proof investments that you can consider adding to your portfolio.
(Editor’s note***********:************ If you wanna learn how to start investing for retirement, check out the free lessons inside the academy! 📺)*
1. Consumer staples
Consumer staples are products that are essential to our daily lives, such as food, household goods, and personal care items.
These products are in constant demand, regardless of the economic climate. Companies that produce these items, such as Procter & Gamble and Coca-Cola, are considered recession-proof investments.
These companies have a stable revenue stream that can weather economic downturns.
2. Utilities
Utilities are another recession-resistant investment. People need electricity, gas, and water, regardless of the state of the economy.
Utility companies, such as Duke Energy and American Electric Power, have a steady stream of revenue and provide investors with a reliable source of income.
3. Healthcare
The healthcare industry is recession-proof because it provides essential services that people cannot do without. Companies that provide healthcare services or products, such as Johnson & Johnson and UnitedHealth Group, are likely to remain profitable during a recession.
4. Gold
Gold is a safe-haven investment that many investors turn to during times of economic uncertainty. Gold prices tend to rise during recessions because it is seen as a store of value. Investors can buy physical gold, gold ETFs, or invest in gold mining stocks.
GUIDE: 3 Ways To Invest In Gold In 3 Minutes Or Less 🔑📲
5. Treasury bonds
Treasury bonds are considered to be one of the safest investments during a recession.
These bonds are issued by the US government and are backed by the full faith and credit of the government. Treasury bonds provide a fixed income and are considered to be a low-risk investment.
In conclusion, these five investments are considered to be recession-proof because they provide essential products or services that people cannot do without.
Adding these investments to your portfolio can provide stability during times of economic uncertainty.
Airbnb has revolutionized the travel industry by providing an affordable and unique way for travelers to experience different destinations.
With over 7 million listings worldwide, it’s safe to say that Airbnb has become one of the most popular ways for travelers to find lodging.
However, as a host, one of the most challenging decisions you’ll face is determining the right price for your listing.
Pricing your Airbnb listing correctly is critical to your success as a host, as it can make or break your profitability.
Here are some tips to help you price your Airbnb listing for maximum profit:
Know Your Market
Before you set your price, it’s essential to research the market in your area. Look at other listings in your neighborhood, paying attention to the size of the property, amenities, and location. Check the availability of your competitors and the average price they charge. This information will help you determine your pricing strategy and ensure that your listing is competitive.
Consider Seasonal Demand
Seasonal demand plays a significant role in the pricing of your Airbnb listing. During peak seasons, such as holidays, festivals, and major events, you can charge higher rates. Conversely, during low seasons, you’ll need to lower your prices to attract guests. Keep track of events happening in your area and adjust your prices accordingly.
Offer Discounts
Offering discounts is an effective way to attract guests and increase your occupancy rate. Consider offering discounts for extended stays, early bookings, or last-minute reservations. You can also offer discounts to guests who leave a positive review or refer new guests to your listing.
Calculate Your Costs
To ensure that your pricing strategy is profitable, you need to calculate your costs. Take into account expenses such as cleaning fees, utilities, maintenance, and taxes. Factor in your time and effort as well. Your goal is to set a price that will cover all your costs while still allowing you to make a profit.
Be Flexible
Finally, be flexible with your pricing strategy. Test different prices and see how they affect your occupancy rate and profitability. Monitor your competition regularly and adjust your prices accordingly. Remember that the market is constantly changing, and your pricing strategy needs to adapt to stay competitive.
In conclusion, pricing your Airbnb listing for maximum profit is a crucial aspect of your success as a host. By researching your market, considering seasonal demand, offering discounts, calculating your costs, and being flexible, you can set the right price for your listing and maximize your profitability.
Happy hosting!
5 REITs that own iconic buildings you can buy today
Real Estate Investment Trusts (REITs) are companies that own and operate income-generating real estate properties.
Investing in REITs has become an increasingly popular way to own a piece of the real estate market without having to buy individual properties.
And you can buy them in the next 5 minutes on the NYCE app…with $5 or less.
Here are five REITs that own iconic buildings across the United States that you can invest in today:
- Empire State Realty Trust, Inc. (ESRT) – ESRT owns the famous Empire State Building in New York City, as well as several other properties in the city.
- Vornado Realty Trust (VNO) – VNO owns the iconic 555 California Street building in San Francisco, which was once the tallest building on the West Coast.
- Boston Properties, Inc. (BXP) – BXP owns several iconic buildings in the United States, including the John Hancock Tower in Boston and the Salesforce Tower in San Francisco.
- SL Green Realty Corp. (SLG) – SLG owns several iconic properties in New York City, including One Vanderbilt, which is currently the fourth-tallest building in the city.
- Macerich Company (MAC) – MAC owns several high-end shopping centers across the United States, including the iconic Santa Monica Place in California.
************************************************************************************************LEARN: How to own real estate with $1000 or less.
Investing in REITs can provide diversification and potentially higher returns than investing in individual properties. However, as with any investment, it is important to do your research and understand the risks involved.
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