Guide to Owning a Vacation Home Rental Property

As Covid restrictions ease and people travel locally and internationally, the demand for short-term rental property is rising. With remote work, people travel for extended periods, and staying in a hotel for weeks can be inconvenient. More people are looking for homey, unique accommodation rather than staying in hotels.

Owning a rental home that you can rent for vacations and short-term leases may seem like a lucrative investment, but before you buy a property, there are some things you must consider.


The location of your vacation home rental property is vital. Not only do you need to consider popular tourist destinations, but also think about points of interest close by and access to transport.

Properties within walking distance of restaurants, bars, beaches, and shops are sought after. If it is too far to walk, look for properties close to a bus stop or the subway, as guests may be put off if they need to pay for expensive taxis to get around.

Another consideration with regards to the location is seasonality. Ideally, you want to own a property in an area that attracts guests to stay all year round rather than just for a season. It does not make business sense if your property is only booked during the summer and is empty for the rest of the year.

It’s a Business

Buying a home as a vacation rental is different from purchasing a family home to live in. A vacation home rental is a business and must be treated as such. You’ll need to market your property all year round and compete with other vacation homes in the area.

Unlike long-term rentals in the real-estate industry, vacation rentals form part of the hospitality industry. When pricing your rental property, you must take into account expenses that come with hospitality, like daily cleaning services and utilities.

Laws and Regulations

Before buying a property to rent out for vacations, you must familiarize yourself with the rules and regulations. In some areas, you are not permitted to turn your home into a vacation home for short-term leases.

While others allow it, there are often strict regulations. Residents often feel that having new people in and out poses a security risk, and tourists can be pretty noisy, so the homeowners association may place restrictions on the terms of vacation rentals.

On the other hand, some areas encourage short-term rentals to boost tourism.

Pros and Cons of Owning a Vacation Rental Home

Like anything, there are pros and cons to owning a vacation rental home.


Owning a vacation home in a popular tourist area is very profitable, especially if it’s booked out for most of the year. List it on a few vacation rental sites to maximize the booking rate.

Since the vacation home rental property is a business, you’re entitled to tax deductions for the money you spend on maintenance and repairs. Some deductions you can claim include insurance premiums, garden maintenance, guest supplies, and utilities.

  • The property will appreciate in value

In most cases, real estate increases in value. So the value of your investment will increase as the years go by, as long as your property is well maintained.


Depending on where the vacation property is, insurance premiums may be higher. For example, the insurance on a beach house will be higher than a house in the suburbs. Before buying insurance, compare homeowners insurance to get an idea of prices.

Vacation homes require regular maintenance to ensure the property meets guests’ standards. If you live close by, you can do basic maintenance and repair work yourself to cut costs. But if this is not an option, you may need to hire a contractor or property management company.

Unexpected expenses can include breakages, wear and tear or simply things that go missing that you have to replace before a new set of guests arrive, so set aside money for unplanned expenses.


Guide to Owning a Vacation Home Rental Property was last modified: June 23rd, 2022 by Andrina Bell