How To Make Money Buying Vacation Rental Properties


Whether you are talking about short-term accommodations on Airbnb or more traditional seasonal lodgings, vacation rentals are more popular today than they have ever been. Travelers appreciate the freedom vacation rentals award their schedules and their pockets. Vacation rental property owners, on the other hand, are intrigued by the cash flow advantage short-term rentals have over their longer-term counterparts. At the very least, vacation rentals can charge a premium for their services. That is, of course, if their owners know how to make money on vacation rental property.

6 Tips To Maximize Profits On Your Vacation Home Investment

It is entirely possible for a vacation rental property to be profitable if the appropriate steps are taken. In order to increase your own odds of realizing vacation rental success, try staying as true as you can to the following tips:

  • Pick The Right Location
  • Choose Your Property Type
  • Make Smart Upgrades
  • List Your Property
  • Market Your Property
  • Cater To Your Guests

[ Want to own rental real estate? Attend a FREE real estate class to learn how to invest in rental properties, as well as strategies to maximize your cash flow and achieve financial freedom. ]

Buying a vacation rental property

Pick The Right Location

The area in which a vacation rental is located is the single most influential performance indicator. It’s the home’s location that’ll most likely draw tenants to the property—not the other way around. Therefore, vacation rental property investors will first need to determine where they want to invest before they even begin acquiring assets.

It is entirely reasonable to suspect that the location of a short-term rental will play an integral role in its profit potential, which begs the question: What dictates a good location? Better yet, what do investors need to look for in a market to make a purchase with confidence?

While there are countless things to look for in the perfect vacation rental property location, there are two universal factors that must be taken into consideration:

  • Market Profitability
  • Proximity To Local Attractions

Profitable Market

Prior to buying a vacation rental, prospective investors need to determine the health of the market. A market analysis, in particular, can go a long way in telling you a lot about what to expect from a location. Using a combination of historical and current data, proceed to evaluate every aspect of the community. Doing so should reveal price trends that can help determine your own property’s potential. Consider a number of factors: property prices, sale prices, recent improvements, property characteristics and the overall neighborhood.

Close To Attractions

Vacation rentals are no exception to the golden rule of real estate: location, location, location. Where a vacation rental is located is nothing less than pivotal for its success. That said, a good spot for a vacation rental isn’t exactly the same as a traditional rental. Whereas long-term rentals tend to rely on traditional fundamentals, the short-term nature of vacation rentals requires something more. Today’s best vacation rentals, in particular, are the direct result of their close proximity to popular destinations. Vacation rentals near popular attractions are more likely to remain in service and profitable.

Choose Your Property Type

Short-term vacation rentals aren’t solely relegated to the stereotypical log cabins and beach-front luxury homes that grace magazine covers. In fact, a vacation rental has less to do with the type of home, and more to do with the standard duration of its leases. As a result, vacation rentals can consist of just about any type of home; the majority of them, however, fit into at least one of three categories:

  • Condominiums
  • Single-Family Detached Home
  • Multifamily Property

Make Smart Upgrades

Rehabbing a vacation rental isn’t as simple as making a few upgrades here and there. It is not enough to make upgrades for the sake of making upgrades, either. Instead, vacation rental owners need to make the right upgrades, or those that coincide with the best return on investment (ROI). Every upgrade must be made with a single purpose in mind: to add value to the property. Therefore, choose the upgrades to your own vacation rental wisely.

Not all upgrades are created equal, which begs the question: What upgrades should you make on your own vacation rental? The answer will reveal itself with a quick look at nearby “comps”. Your competitors will dictate the upgrades necessary for your home to remain competitive. More specifically, however, any upgrades you make to a vacation rental should be done with the intention of making it slightly better than similar homes nearby. That way, your own home will stand out from the competition.

Again, don’t make upgrades for the sake of making upgrades. Doing so will most likely result in wasting your time and money. Subsequently, don’t proceed to excessively update your home. Spending too much on respective projects will also detract from your bottom line. To make smart upgrades, simply see what your competitors have in their own homes and make your respective amenities slightly better.

List Your Property

Not unlike a traditional rental property, vacation rentals must be marketed to the broadest audience possible. The more people that see the listing, the more likely it is to be leased to a short-term tenant. Therefore, if you want to avoid vacancies and run a profitable vacation rental, you will need to list your home on as many outlets as possible. Below you will find some of the best places to list your vacation rental:

  • Airbnb: As perhaps the most popular platform, Airbnb lets you rent out your vacation property to tourists looking for alternatives to expensive, corporate hotels.
  • VRBO: Otherwise known as Vacation Rental by Owner, VRBO is an online classified site where vacation owners advertise their property so tourists looking in that area can see it.
  • Hotel Program: Some hotel management companies will allow you to purchase a condo or room in their facility and rent the space out whenever it isn’t being used.

Market Your Property

Listing your vacation rental on online portals is only one step of the marketing process, albeit a big one. However, it’s far from the only thing you will need to do if you want to avoid vacancies at the most important times of the year. In fact, you could argue that a vacation rental is only as good as the marketing strategy used to announce its existence to potential renters. If you’re serious about maximizing your vacation rental property’s potential, look into marketing your asset in more ways than one.

In addition to the online portals I mentioned above (Airbnb, VRBO, etc.), your rental property should also be on:

  • Your Own Website
  • Each Social Media Platform
  • Craigslist
  • Zillow
  • Trulia

As far as offline marketing strategies, it’s always helpful for vacation rental owners to place signs on their physical properties. If the home is in a good location and a popular area, it should receive enough foot traffic to generate interest. The sign should suggest the home is available to rent and give onlookers the necessary contact information.

In the event you are looking for a more passive investment, try hiring a third-party property management company; they will do all the marketing for you. In fact, a good property manager will do their best to prevent your vacation rental from going without tenants. Of course, their services will cost a percentage of the rent that is generated, but the peace of mind is often well worth the added expense.

Cater To Your Guests

Of course, the process of finding tenants only represents half the battle; once you have found them, you will need to keep them. That’s where the final step to making a vacation rental property profitable comes in: catering to the guests. In order to run a successful vacation rental, you’ll need to make each and every guest happy with their stay. Not unlike quality customer service, hosts will need to cater to their guests in order to generate goodwill. Do your best to give them everything they need. Anticipate their needs by offering linens, food, wine, and anything else they might expect to see in their own home. Perhaps you could even go above and beyond by offering them a guide to the city or a bike to see it on. Doing so, at the very least, will result in happy tenants—tenants who are more likely to come back and refer the home to others.


Learning how to make money on vacation rental property can be a tricky endeavor if you are new to the industry. However, the days of trial and error are long gone. These days, there are several steps investors can take to increase their odds of running a profitable vacation rental—namely, everything listed above.

Key Takeaways

  • Buying a vacation rental property can be a great move for those who know how to make it profitable.
  • Starting a vacation rental business begins and ends with one thing: the bottom line. Regardless of where the home is located, it must be profitable.