6 Reasons Why Own a Vacation Home/Rental Property

A vacation home is typically defined as a single-family residential property that’s located in an area that is not similar to one’s original home. A vacation home can be used by the individual who owns it, or it can be rented to guests for a profit. These are just two of the many reasons why everyone should at least look into owning another property, particularly a vacation home. 

#1: A Second Home 

As mentioned above, one of the biggest reasons to invest in a vacation home is to have a vacation home! You can choose the home to be located in or near your favorite vacation destination. You won’t ever have to worry about hotel accommodations again when you have a second home near your favorite vacation spot.  
Depending on the size of the home you choose, you can host just your immediate family or some extended family members as well. Owning a vacation home allows you to create new traditions with your loved ones. 

#2: Earn Passive Income 

Probably the main reason why people invest in vacation rentals and other types of real estate is to earn rental income. Renting your second property to tenants/guests allows you to earn a second stream of passive income, meaning that you don’t have to work as hard at getting this income as you do with your primary source of income. The key to a successful vacation rental is to choose a location that attracts tourists (preferably year-round), market the property effectively to attract renters, and be an attentive and respectable property owner/landlord. 

#3: More Home Equity 

Most people are aware that real estate increases its value over time, and while this is true, some factors can make a property’s value decrease. To ensure that your vacation home appreciates, you’ll need to do some research. Things like bad neighborhoods and foreclosed homes are factors that lead to depreciation— and they can’t be controlled. When it comes to vacation rentals, you’ll want to make sure that your property is in a prime location, near popular amenities in that area. 

#4: Receive More Tax Benefits 

Homeowners know about the tax breaks they get just for owning a home, and you’ll receive these same benefits when you own a vacation home. However, the tax breaks aren’t the same when using this property as a vacation rental (although you may be eligible for certain tax benefits as the owner of a rental property), so make sure that this is being used as a second home to receive the same tax breaks. Mortgage interest and property taxes can be deductible when using your property as a second home, and property management fees and maintenance fees may be deductible when using your property as a rental. Just be sure to check your laws regarding taxes and homes before doing this. 

#5: Save for Retirement 

If you choose to use your vacation home as a rental property, the extra money you save can be used for retirement. You can save this money or use it to help pay down debts, so you won’t have to worry about that when it comes time for you to retire. You can also choose to make your vacation home your retirement home by selling your current residence when you’re ready to retire, and you can use that money to pay down the mortgage of your vacation home. The possibilities are endless when it comes to using your vacation home to help with future financial plans. 

#6: Your Dream Home 

Maybe the home you’re currently living in isn’t exactly your dream home, but now you can achieve this dream. If you’ve always dreamed of a bungalow on the beach, a cabin in the mountains, or a cottage by a lake, you can hire a custom home builder to build your dream house for you. Like with saving for retirement, you have the option to rent to guests temporarily to help pay for building expenses, or you could sell your current home/use that home as a vacation rental.  
No matter how you look at it, owning a vacation property can be beneficial for just about anyone. However, it’s important to note that if you do choose to use your vacation home as a rental property you must comply with all short-term and long-term rental regulations as they apply where your vacation property is located. Not following these laws can result in more money lost than gained. 
 

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