Most property investors choose to invest in property that they purchase and rent or purchase and hold until the value increases. Today more investors are turning to vacation rentals as a way to make some money. It used to be that for vacation rentals to be profitable you had to buy expensive property in a tropical paradise and then rent it out, today with the likes of VRBO and Airbnb all of that has changed. That leaves you with the question of whether to invest in vacation rentals or buy and hold regular property. Let’s look at the advantages of both.
Buy and Hold
Buy and hold properties are simple, you find a decent property then you purchase it and rent it out or hang on to it until the price goes up enough to justify selling it. That is it in a nutshell, you sell your property and collect your cash. It has been one of the simplest business models to make money in real estate forever. But it has its disadvantages too.
First, finding a good deal especially in a seller’s market can be difficult. The market is unpredictable you can get stuck with property you can’t sell because the market has changed. Lastly you are limited in the amount of money you can make per deal. Rental income is subject to market conditions and you can’t change what you charge easily.
It used to be that for a vacation rental to work you had to buy property in Florida or California, you paid an exorbitant price for it and you also were stuck with the burden of seeing that it gets rented. Vacation rentals always seemed to an investor like a lot of work for very little reward. The rentals were seasonal and your income was unpredictable. But most of that has changed with sites like Airbnb.
Today making money from vacation rentals is much easier than it used to be. You can earn an income with Airbnb with a simple one bedroom apartment, you don’t even need to purchase the property. Today short term rentals are all over the world you don’t need property in a tropical paradise and it is far less seasonal. Youc an cater to both vacationers and business travelers alike. If you are unsure how to make money with an Airbnb then here is a guide.
Vacation rentals are still going to be work it isn’t quite passive income like a buy and hold property is, there will be tenant turnover. You can still make some big profits with vacation rentals.