Owning A Vacation Rental Property: Underrated Markets That Could Pay Off


Owning a vacation rental property has become synonymous with the American dream. At the very least, a cash-flowing rental property can easily turn out to be one of the best long-term investments you have ever made. What’s more, owing a vacation rental property in a prime location could increase your profits exponentially. With the rents most geographical locations are demanding now, it’s no longer a question of whether or not you should own a rental property, but where?

National rents are on a level unlike we have seen in quite some time. With home prices restricting many homebuyers from actively participating in the market, a large contingent of would-be buyers have no other choice but to rent. And therein lies the issue: there is currently an incredible demand for rental properties due to restricted inventory in the buyers market. As the laws of supply and demand dictate, today’s outrageous rental asking prices are nothing more than a product of the current environment — it’s that simple. Rental properties, or at least those that own them, currently earn a premium in just about every city, and owning a vacation rental property is no exception to the rule.

In fact, owning a vacation rental property may be easier and more profitable than ever before, and 2017 is living proof of that. If for nothing else, the expansion of the economy has coincided with unprecedented growth in the private accommodation sector. As recently as 2015, “nearly one in three U.S. travelers stayed in a privately owned short-term rental, up 24% from 2010,” according to Phocuswright. Not only that, but Forbes has reason to believe “growth in the private accommodation sector is actually outpacing growth in the travel industry as a whole.” Industry experts and pundits alike are of the consensus that the private accommodation sector we know today could be worth upwards of $36.6 billion by the end of next year. At the very least, that bodes incredibly well for anyone thinking about owning a vacation rental property.

“These days more Americans are avoiding hotels,” says inventor and real estate investor Tai Dang, who works with Vacasa to manage his portfolio of 17 vacation properties on the Oregon Coast. “Vacation rentals are more social. You want to walk on the beach and cook dinners with friends and family, not hang out in a lobby.”

There’s no doubt about it: people are becoming more familiar with the idea of a vacation rental investment property. Vacation rental properties have positioned themselves quite well, but I digress. It’s not enough to simply buy a vacation rental property and hope it produces. While many have realized success in today’s market, there are several factors you need to take into consideration before you think about owning a vacation rental property, not the least of which is location.

It’s the golden rule of real estate: location, location, location. The location of a rental property will play a significant role in how it performs. If you are thinking about owning a vacation rental property, be sure to vet the location accordingly. If you aren’t exactly sure of where you should start looking, I’ve got a couple suggestions you may want to consider.

As I said before, rental prices favor landlords just about everywhere you go, so you need to find a rental property in a location that has the intangibles. In other words, your home needs to be in a place people want to go. Perhaps even more specifically, your vacation rental should be in a place that offers travelers everything they desire in a rental platform: quality, cost, and value to provide a terrific travel experience. The following list includes some of the country’s top destinations for travels while paying special considerations to cost and amenities. So, if you are thinking about owning a vacation rental property, you may not need to look any further than what is listed below.

Where Owning A Vacation Rental Property Could Pay Off

Vacation home

Fort Worth, Texas

Fort Worth is a vibrant city that has become synonymous with cowboys and culture, but its reputation precedes it. Not only has Fort Worth become a popular tourist destination because of its unique “ambiance,” but it’s also quite affordable for those looking to go on an enjoyable vacation. In short, Fort Worth offers travelers a lot of “bang” for their “buck,” and vacation rental property owners aware of their situation could capitalize on a rather lucrative opportunity.

Vacation rental property owners can not only take solace in the fact that the Fort Worth market has the demand necessary to thrive, but that said demand should permit them to make a better return on investment (ROI). In fact, The average apartment rent over the prior six months in Fort Worth has increased by $22 (2.2%). Vacation rentals, on the other hand, demand a premium, and could therefore benefit landlords even more heading into this summer.

Perhaps even more importantly, however, is the possible introduction of a bill that would actually ban restrictions on short-term home rentals in a number of Texas cities, not the least of which include Fort Worth. According to the Texas Tribune, Senate Bill 451 — if passed — “would prevent Texas cities from banning or restricting short-term rentals,” which is big news considering vacation rentals have become the epicenter of a rather polarizing topic. At the very least, the very proposal of Senate Bill 451 suggests vacation rental properties have a future in many Texas cities. Unfortunately, the same can’t be said for every city boasting rental properties. So if you plan on owning a vacation rental property anywhere you may want to pick a location with a future — not one at risk of being subject to too many rules and regulations.

Albuquerque, New Mexico

Not unlike Fort Worth, Albuquerque offers vacation goers the authentic mix of architecture, artwork, and cuisine of a large city, but at a small town price. All things considered, vacationers find that Albuquerque represents a great value. This culturally rich city is also amongst the most affordable, as the secret hasn’t gotten out — yet. It’s worth noting, however, that Time Inc’s Money Magazine named Albuquerque one of the best places to travel in 2017. That means owning a vacation rental property in The Duke City could result in huge dividends for savvy real estate investors.

In addition to attracting more tourists, Albuquerque has also seen rents increase by as much as 4% in the last six months. “As of May 2017, average apartment rent within the city of of Albuquerque, NM is $888,” according to Rent Jungle. Those vacation rental property owners aware of this trend could find the summer of 2017 to be their best yet if they play their cards right.

Pay special considerations to what travelers covet the most in Albuquerque: value. If you can manage to offer a good vacation rental at an attractive, cash-flowing price, you may find yourself with a very valuable asset with plenty of demand.

Las Vegas, Nevada

Las Vegas has become synonymous with the glitz and glamor of a rather affluent nightlife scene, and for good reason: Las Vegas Boulevard, or more commonly referred to as The Strip, hosts some of the most luxurious hotels this planet has ever seen. It shouldn’t surprise anyone to hear that Las Vegas is a popular destination — for both domestic and international travelers. That said, a new breed of traveler is on the horizon; one that isn’t necessarily looking to confine itself to the hotel-lined streets of Sin City.

Due, in large part, to the advent of online websites that promote the private accommodation sector, vacation rental properties are all the rage in Las Vegas at the moment. And, not surprisingly, demand for Las Vegas has made owning a vacation rental property in the popular destination all but a sure thing.

Coming in at number seven on Money Magazine’s best places to travel in 2017 list, Las Vegas combines relatively inexpensive amenities with a great time. Of course, you are certainly welcome to spend a king’s ransom if you feel so inclined, but Vegas can be done at a discount for those who wish to do so. And, not unlike the other cities on this list, most people traveling to Vegas are looking to do so for a reasonable amount. So if you own a vacation rental property in Las Vegas and can price it reasonably while still maintaining positive cash flow, there is a good chance you won’t have to ever worry about a vacancy.

Owning a vacation rental property is essentially what you make of it. And, as far as I am aware, the best way to make the most out of your own asset is to buy it in a location that has promising demand. That said, most of the popular cities have seen the prices of their own vacation rentals skyrocket in conjunction with rents. Fortunately, there are other cities — those I mentioned above — with just as much promise. Whatever you do, don’t let them pass you by without at least considering what they have to offer.