If your goal is to find short term vacation rentals for sale that will ensure a profitable return, our guide can help you get started on that.
Table of Contents
- Are Short Term Vacation Rentals Profitable?
- What Is a Good Return on a Short Term Vacation Rental?
- 3 Things to Consider When Finding Short Term Vacation Rentals for Sale
- 10 Cities With the Most Profitable Short Term Vacation Rentals for Sale
- What Is the Best Short Term Vacation Rental Company to Use?
- How to Get the Most Money for Your Short Term Vacation Rental?
With the scope of today’s real estate market, it is easy to lose track of what is a priority—and what’s just a passing attraction. Modern-day investors are presented with more opportunities than they were a decade ago.
Now, you’ve likely noticed that investing in short term vacation rentals for sale is becoming popular again. However, is it a legitimate venture or a trap for investors? And on a related note, how can you find rentals that will actually pay off?
We’ve been asking the same questions. So, we’ve done our fair share of research—and we believe we’ve found the answers.
If you’re an investor eager to step into the real estate market and search for vacation rentals for sale, keep scrolling.
Are Short Term Vacation Rentals Profitable?
Without a doubt, they are. Short term vacation rentals for sale are hands down, among the best ways for an investor to earn a generous income within a short period of time. In fact, a well-planned investment can provide the investor thousands of dollars on a monthly basis.
Let’s not forget the factor that led to such an overturn in statistics—the pandemic. COVID-19 caused major disruptions that could be felt in every corner of the US real estate market—but it seems like the tourism industry is slowly getting back on its feet.
Amid the continuing relaxation in travel restrictions, vacation rentals are again experienced a huge boom—with tourist trends prioritizing vacation stays in remote places.
The Benefits & Risks of Real Estate Investing
Short term vacation rentals are a popular choice in 2022—and will continue to be a trend in 2023. It does not automatically give you the “green light” to just step into the real estate market and buy the first investment property you come across, though.
That’s not how you secure a profitable investment.
The first and necessary step should be to look at things from a bigger angle—take into account the benefits and risks of investing in such a property. Let the following factors serve as a guide to whether you are up for this investment venture or not:
The Benefits:
- Generating additional income
- Enjoying tax benefits
- Owning a vacation home for you and your family to enjoy
- Enriching your investment portfolio
The Risks:
- Larger down payments and higher interest rates
- Not all states are rental-friendly
- Guests can damage your property
- Risk of property not rising in value
As you can see, investing in vacation rental properties shouldn’t be taken lightly. So, be sure to go through all the above points—and analyze each in more detail.
And remember:
Although vacation rentals belong to the category of “short term” properties, such investments should still provide you with a considerable income in the long term.
Related: How to Estimate Rental Income on Short Term Rentals Using Mashvisor
What Is a Good Return on a Short Term Vacation Rental?
And now, for the million dollar question:
What is considered a good return on a vacation rental?
If you are eager to invest in a short term vacation rental for sale, then it’s imperative that you fully understand the difference between a “profitable” and “unprofitable” investment. The one indicator that can tell you the truth straight away is cash on cash return.
In investing, cash on cash return represents the income earned on the money invested. It’s a key measure of your vacation rental’s profitability and a predictor of its future performance.
So, what’s considered “good” cash on cash return in vacation rentals?
Anything in the neighborhood of 7% would be ideal, but don’t get your hopes up. Sometimes, even with round-the-clock snooping, the best you come across will be 4%. That’s fine, too—just remember not to settle for less than 2%.
3 Things to Consider When Finding Short Term Vacation Rentals for Sale
Before you make an actual offer on a vacation rental for sale, there are a couple of things you must consider—mainly your budget, location, and property management strategy. We’ll give you a brief overview of all three below.
1. Budget
Obviously, your budget plans should take the first place on this list. Before you even think about real estate investing, you need to take some time to go over your finances. Research your “financial health” and see whether you’ll be able to push through this investment plan.
Here are some points that you’ll need to go over:
- Associated taxes
- Utilities
- HOA dues
- Furnishing
2. Location
A favorable location will undoubtedly help your rental thrive—but there is more to it than just picking a place you like.
You need to take other factors into consideration, including the following:
- Do you want this rental to be close to your own private residence?
- Are you looking for rentals by the seaside?
- Are you comfortable with traveling long-distance to visit your rental?
Once this officially becomes your property, you’ll get a whole new set of obligations—and it is important that you factor those in when deciding on a location.
Related: 75 Top Locations for Airbnb Income in 2022
3. Property Management
Property management applies to overseeing your property and making sure that everything’s going according to plan.
Now, it is a much bigger responsibility than most investors realize—especially if the rental is located in a busy tourist area. It automatically means that you’ll need to visit more often than expected.
That brings us to the following question:
Do you want to be your own property manager—or do you want to hire someone to do it for you?
The first one puts a bit more responsibility on you—while the second one takes some money out of your pocket. So, weigh your options—and decide what works best for you.
If you’re looking for a profitable investment property for sale, click here.
10 Cities With the Most Profitable Short Term Vacation Rentals for Sale
If you’re sure that adding short term vacation rentals to your investment portfolio is the right move, here are 10 US cities that, according to Mashvisor’s August 2022 data, should be on your priority list:
1. Brighton Heights, PA
- Median Property Price: $251,880
- Average Price per Square Foot: N/A
- Days on Market: 22
- Monthly Short Term Vacation Rental Income: $3,183
- Short Term Vacation Rental Cash on Cash Return: 8.49%
- Short Term Vacation Rental Cap Rate: 8.79%
- Short Term Vacation Rental Daily Rate: $150
- Short Term Vacation Rental Occupancy Rate: 57%
- Walk Score: 62
2. Forest Hills Boro, PA
- Median Property Price: $194,117
- Average Price per Square Foot: N/A
- Days on Market: 59
- Monthly Short Term Vacation Rental Income: $2,786
- Short Term Vacation Rental Cash on Cash Return: 8.14%
- Short Term Vacation Rental Cap Rate: 8.50%
- Short Term Vacation Rental Daily Rate: $123
- Short Term Vacation Rental Occupancy Rate 63%
- Walk Score: 61
3. Delhi Twp, OH
- Median Property Price: $235,156
- Average Price per Square Foot: $148
- Days on Market: 27
- Monthly Short Term Vacation Rental Income: $3,142
- Short Term Vacation Rental Cash on Cash Return: 8.09%
- Short Term Vacation Rental Cap Rate: 8.37%
- Short Term Vacation Rental Daily Rate: $115
- Short Term Vacation Rental Occupancy Rate: 55%
- Walk Score: 57
4. Rio Grande, NJ
- Median Property Price: $318,900
- Average Price per Square Foot: $245
- Days on Market: 52
- Monthly Short Term Vacation Rental Income: $3,965
- Short Term Vacation Rental Cash on Cash Return: 8%
- Short Term Vacation Rental Cap Rate: 8.21%
- Short Term Vacation Rental Daily Rate: $301
- Short Term Vacation Rental Occupancy Rate: 52%
- Walk Score: 52
5. Warr Acres, OK
- Median Property Price: $123,574
- Average Price per Square Foot: $90
- Days on Market: 36
- Monthly Short Term Vacation Rental Income: $1,751
- Short Term Vacation Rental Cash on Cash Return: 7.68%
- Short Term Vacation Rental Cap Rate: 8.47%
- Short Term Vacation Rental Daily Rate: $111
- Short Term Vacation Rental Occupancy Rate: 55%
- Walk Score: 56
6. Sansom Park, TX
- Median Property Price: $249,616
- Average Price per Square Foot: N/A
- Days on Market: N/A
- Monthly Short Term Vacation Rental Income: $3,166
- Short Term Vacation Rental Cash on Cash Return: 7.59%
- Short Term Vacation Rental Cap Rate: 7.85%
- Short Term Vacation Rental Daily Rate: $162
- Short Term Vacation Rental Occupancy Rate: 56%
- Walk Score: 40
7. West Allis, WI
- Median Property Price: $219,161
- Average Price per Square Foot: $154
- Days on Market: 36
- Monthly Short Term Vacation Rental Income: $2,861
- Short Term Vacation Rental Cash on Cash Return: 7.51%
- Short Term Vacation Rental Cap Rate: 7.79%
- Short Term Vacation Rental Daily Rate: $116
- Short Term Vacation Rental Occupancy Rate: 69%
- Walk Score: 56
8. Port Allen, LA
- Median Property Price: $244,378
- Average Price per Square Foot: $175
- Days on Market: 16
- Monthly Short Term Vacation Rental Income: $2,763
- Short Term Vacation Rental Cash on Cash Return: 7.41%
- Short Term Vacation Rental Cap Rate: 7.66%
- Short Term Vacation Rental Daily Rate: $131
- Short Term Vacation Rental Occupancy Rate: 55%
- Walk Score: 49
9. Fargo, ND
- Median Property Price: $219,410
- Average Price per Square Foot: $112
- Days on Market: 40
- Monthly Short Term Vacation Rental Income: $2,650
- Short Term Vacation Rental Cash on Cash Return: 7.33%
- Short Term Vacation Rental Cap Rate: 7.69%
- Short Term Vacation Rental Daily Rate: $122
- Short Term Vacation Rental Occupancy Rate: 69%
- Walk Score: 32
10. Brooklyn Park, MD
- Median Property Price: $380,650
- Average Price per Square Foot: $186
- Days on Market: 73
- Monthly Short Term Vacation Rental Income: $4,136
- Short Term Vacation Rental Cash on Cash Return: 7.22%
- Short Term Vacation Rental Cap Rate: 7.38%
- Short Term Vacation Rental Daily Rate: $141
- Short Term Vacation Rental Occupancy Rate: 56%
- Walk Score: 69
With Mashvisor’s tools, you can continue your search for profitable short term investment properties for sale—according to your preferences. Start your investment journey with us.
You can use Mashvisor’s tools to search for profitable short term investment properties for sale, based on your preferences.
What Is the Best Short Term Vacation Rental Company to Use?
After seeing the numbers, you are well aware of the popularity of short term vacation rentals for sale. It seems that such types of properties are slowly but surely, helping the US housing market make a full recovery.
Let’s not forget that investors and hosts still need bookings in order for their investments to be profitable, though.
You might’ve finally taken down that “For sale” sign, but your work is far from over. You need to advertise your property to the maximum and attract guests.
How to do that?
By putting them on vacation rental websites—platforms that are responsible for helping you get the most out of your rental. Here are the top three choices:
1. Airbnb
Out of the three, Airbnb is the platform with the largest number of rental hosts, with more than seven million listings in over 220 regions.
Potential guests tend to view Airbnb as a top-tier website because it offers them freedom of choice, while hosts turn to Airbnb because they can create listings there free of charge. It is easy to see why It’s one of the fastest-growing rental websites online at the moment.
2. VRBO
The second place goes to Vacation Rental By Owner—or VRBO for short. And as the name suggests, the site is best-suited for hosts who actively own or manage a short term vacation rental. VRBO recently merged with HomeAway—but the idea behind it remains the same.
Do note that, since it is aimed at owners, only private apartments and houses can be listed on the platform.
3. Booking.com
On Booking.com, more than 1.5 million room nights are booked every single day—enough said. The website was initially known for listing hotel rooms. However, in recent years, as the interest in short term vacation rentals grew significantly, Booking.com followed suit.
Do note that the platform charges a 15% commission for every booking—so think twice.
Related: The 10 Best Real Estate Websites for Investors in 2022
How to Get the Most Money for Your Short Term Vacation Rental?
The last thing we will focus on today is how to maximize the profits from your vacation rental for sale. Here’s the thing:
Improving your vacation rental in 2022 looks different than it did in 2018 and 2019. Believe it or not, travel and tourists’ expectations are changing considerably, and hosts must adapt to the new reality.
Since you’re likely aiming to maximize your returns, here are some tips that can be of help:
Adjust Your Rent
Seasons are not the only thing that’s changing with vacation rentals for sale—the rent rate is also a variable that you need to pay attention to here.
Pricing your vacation rental appropriately might just be crucial to your business. If, for instance, you overprice your rental and refuse to lower your rental rates, you’ll be losing money left and right.
Do some research on the rentals around you and adjust your rent to be “budget-friendly” for your guests. It is bound to drive your numbers up.
Photography Sells
The first thing you should do once your rental is officially equipped and ready is to take care of the photos. Yes, photography sells, and you should always try to make your rental look better and stand out from the other listings out there.
If you’ve got the skills, grab your camera and start clicking. However, if you’re not the best at taking photos, leave it to the professionals. Choose the best shots and post that on the website. Believe us—the right angle and lighting will make your rental a sensation.
Final Thoughts
We’ve successfully wrapped up the topic of how to find short term vacation rentals for sale that will earn a good return. We’ve also mentioned quite a lot of noteworthy arguments and evidence—so it might be time for a recap.
Firstly, it’s important for investors to be certain of the profitability. And with vacation rentals for sale, there’s no room for doubt or second-guessing. They are a profitable venture that can bring in a significant profit.
It’s a lucrative opportunity, that’s undeniable—but it’s not for everyone. Before you begin this “investment adventure,” be sure to consider certain factors, such as down payments, interest rates, potential profit, and local laws and regulations.
Also, take some time to get into the core of your budget plan, the location of the property for sale, and property management options. They will affect your final decision more than you realize.
If you’re still up for it, then it’s time to check out some locations. Currently, the most profitable locations for vacation rentals for sale are Brighton Heights, Forest Hills Boro, and Delhi Twp, to name a few.
Once you officially take down the “For Sale” sign and the property is yours, what should your next step be? Advertisements on Airbnb, VRBO, and Booking.com, among other sites. On that note, you need to make your listing stand out—but even more importantly, you need to make it budget-friendly for your guests.
To assist you in this search for investment properties for sale, you can rely on Mashvisor’s Property Finder tool. Our tool is specifically designed for real estate investors and can help them search through the entire US housing market to find the best deals.
