Should You Buy A Vacation Rental?

It's summertime, and everyone wants to go to the beach. Its paradise, no stress, beautiful beaches and weather, who wouldn't want that? It might not be feasible to move to the beach or your vacation spot of choice, but what about a rental? Here are some pros and cons to vacation rental properties.

Pros

Place to stay and someone paying down your mortgage at your dream location. This can be a great way to reach your goal of living part time near the beach. If you are profiting or at least paying all the bills at your beach rental, it can be a perfect business idea. You can then decide when you'd like to visit, and the whole trip would be free as you already own the building!

Generating an income is a real possibility with vacation rentals. In Pittsburgh, most people will not want to pay a high daily, or weekly rate just to visit the city. If there are tons of attractions and a beautiful beach, people will pay good money to stay there. If done properly, you can be a great residual income in a high demand area.

Size of the property is also a factor. Many beach rentals are very small, but still bring in a great return. People don't need a mansion to be near the beach, they just want somewhere to crash and enjoy their vacation! You can renovate a property much faster, and for a lower budget as opposed to a 3,500 sq foot house. That can make your investment dollar go much further to possibly purchase additional rentals.

Cons

Cost to maintain the property is very high. The insurance required will be extremely expensive in itself as they are prone to storms and hurricanes. This will be a guaranteed monthly expense that must be accounted for. The cost to ensure a house near the beach would be 2-300% higher than an average city in the area. Also, there will need to be a constant cleaning service as people will be partying or coming in from the beach. There will be expected repairs needed as well for this type of guest.

Absentee owner can be difficult enough if you live in the area you own a rental, but imagine several states away. With the lack of contacts in the area or ability to quickly go to the house to handle any issues, this will add an additional cost and make managing it quite difficult. Many times investors will hire a property manager for the property instead to alleviate this concern.

Higher prices to buy property. Just as the demand is high to rent and vacation in these areas near a beach, the price to buy a property is even higher. If you are looking to buy property in a high tourist location, you can expect the price tag to go into the millions. When buying or selling a house in Pittsburgh, the average sale of a home is under $145k. This means it will take a larger investment to acquire much less property compared to the greater Pittsburgh region.

So just like any decision there are pros and cons. It takes a certain type of investor to be willing to accept the risks of vacation rentals, but can definitely be a profitable venture. As CashForHomesPGH continues to expand, we will be looking into this market. For the time being we have no problem staying local and buying homes for cash all around the Pittsburgh area!