Investing In a Vacation Rental: Is It Well Worth The Effort

(MENAFN- Comserve) Shibuya-ku, Tokyo, Japan, Japan, Nov 20, 2021, 22:34 /Comserve / -- If the idea of becoming an Airbnb entrepreneur appeals to you, and you seriously consider becoming a host, you first want to be aware of the possible cons and pros of engaging in such activity before you make a decision.

Having some kind of investment would never go amiss. After all, if the investment proves to be profitable, you will be able to achieve financial freedom and can finally lead the life of your dream.

One of the popular ways to put own money to good use and make it payback is becoming an owner of a short-term rental home – those delightful accommodations touted on such platforms as Airbnb and similar.

Even if you have a single room to spare in your house or apartment, you can lease it out as a short-stay abode and enjoy some extra cash. If you own a second home, you can turn it into a full-fledged vacation rental property and laugh all the way to the bank.

But just virtually everything in this world, investing in a vacation rental business has its benefits and implications. If the idea of becoming an Airbnb entrepreneur appeals to you, and you seriously consider becoming a host, you first want to be aware of the possible cons and pros of engaging in such activity before you make a big decision.

The Positives Of Investing In A Short-Term Rental Property

Real estate is one of the best investments to imagine. Indeed, the market is ever-increasing, while property units are getting more expensive day after day. It means your holiday rental lodging will hardly lose its market value, even if not taken care of properly. There are several other perks militating in favor of investing in a vacation rental business.

An additional source of income

The greatest aspect of owning a vacation rental is the opportunity to make extra money. Who doesn't like extra dollars in their pocket? Everyone does. An average Airbnb host can make nearly $900 per month, while entrepreneurs in hot tourist destinations can make leaps and bounds more. Vacation rental hosts prefer to advertise their properties on many booking websites to increase their chances of making a deal and, consequently, getting more earnings.

Your own spot to spend a holiday

Possessing a vacation rental home means having a snug place you can relax at any time. You can use this property to throw parties, accommodate friends, host family get-togethers, or just as your own secluded getaway to escape from the stressful reality. In the future, you can use this rental as your retirement home or even present it to your children, so they will have their own dwelling place without taking out a mortgage!

You can waive business-related expenses

If you continuously rent out a property and gain some profit from it, you are considered a businessman, so you must pay taxes on the generated income. But being a legit, tax-compliant Airbnb entrepreneur also means that you are allowed to write off a good deal of the expenses you will incur while keeping the property lovely and functional.

You can waive virtually any business cost. It is also possible to deduct the fees charged by online platforms where you publish your offering. Tax-paying rental investors are allowed to deduct such business expenditures as cleaning costs, utility costs, insurance premiums, supplies, mortgage interest among others.

The list of possible deductions will vary by region, so it is wise to consult a financial advisor to learn about local tax regulations and benefits that apply to your specific situation.

Vacation rentals are a breeze to manage

As a vacation rental homeowner, you are committed to providing your guests with superior service. Many beginner entrepreneurs may think that delivering an excellent client experience is hard – and be perfectly mistaken.

Many powerful rental management software solutions can do the entire hard work for you, saving you tons of money and effort associated with running a short-stay property. For instance, Hosty, a sophisticated vacation rentals app , is designed to streamline virtually every aspect of running such a business, including guest communication, calendar synchronization, reviews management, task assignment, pricing management, KPI reporting, and even Airbnb SEO.

A rental management software tool creates a connection between your listing (the website where you advertise) and the software itself. No matter how many properties you run or how many booking platforms you use, such software allows you to manage multiple properties across multiple sales channels from a single dashboard, without jumping between screens. The outcomes of using the best Airbnb management software include:

  • the elimination of human errors while managing a property and assigning tasks to the crew,
  • the optimization of repetitive, time-grabbing operations,
  • smooth communication with your clients and prospects,
  • a higher ranking on booking platforms,
  • an increased occupancy rate,
  • perfectly synchronized availability calendar,
  • reports on the strengths and inefficiencies of your business performance.
The Negatives Of Investing In A Vacation Rental Property

Operating a short-term rental business is not all sweetness and light. You may have many thorns on your side when you decide to buy a vacation rental unit. You want to consider possible drawbacks, too, if you want your venture to be a success.

Need to allocate some money for emergencies

Just like in your primary home, things in your short-stay rental can break down or just stop working at any moment. You as a host are interested in fixing the break as soon as possible, as not to lose the clientele. And bringing the order back does cost money. While managing regular expenses like utility bills, restocking, and tax payment is quite easy, predicting what will get broken next is impossible. A good rule of thumb is to set aside a certain amount of money from each deal, such as 1% of one completed booking, to be able to cover unexpected repairs and maintenance.

Get ready to splurge on extra fees and taxes

In most jurisdictions, you will not have to pay scot and lot on rental income if you rent out your property for less than 14 days a year. But if you lease out your property for more than 14 days, you will need to pay federal taxes on earnings from such an activity. But it does not stop at that. Expect to pay a bevy of other fees, including state, local, and property taxes. Depending on local tax regulations, you may need to obtain a business license and also have to pay sales or hotel taxes. Most booking marketplaces, including Airbnb, also charge a commission from hosts for offering brokerage services.

A need to handle an avalanche of work

Taking care of a vacation rental accommodation or a serviced apartment may require a serious time and effort commitment. From managing reservations and replying to the endless waves of inquiries, to arranging upkeep and maintaining a good rating across all platforms, a property host is overwhelmed with responsibilities.

Implement comprehensive rental management software like Hosty to your business processes to take those nasty responsibilities off your shoulders. Such a nifty tool manages your property through and through, making sure you continuously deliver the ultimate guest experience and maintain a stellar host reputation.

Digging into marketing

Your rental must be visible and well-rated on the platform where you post it, so prospects can get hooked by your offering and book it. This requires clever marketing. This means you need to take eye-catching photos of your real estate, write a persuasive description of the property, and use various verbal tricks to attract guests.

To encourage bookings, you will have to continually optimize your vacation rental listing, update rates and calendars, and respond to questions and reviews. Advanced rental management software solutions like Hosty come with an SEO module to allow you to take care of all marketing tasks and keep your listing attractive.

Vacation rental units can be a good way to generate stable income and amass some wealth for the future. But they also have certain disadvantages. Before investing in a vacation rental business, research your local rental laws, study the market you are going to compete in, and make sure you have enough time and resources to dedicate to your venture.

The dynamic nature of business environment in the current global economy is raising the need amongst business professionals to update themselves with current situations in the market. To cater such needs, Shibuya Data Count provides market research reports to various business professionals across different industry verticals, such as healthcare & pharmaceutical, IT & telecom, chemicals and advanced materials, consumer goods & food, energy & power, manufacturing & construction, industrial automation & equipment and agriculture & allied activities amongst others.


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