Three Deadly Circumstances That Could Kill Your Vacation Rental Home Investment

Vacation Rental properties have been around for ages and are in my opinion, one of the absolute best real estate investments you can purchase. Just like with any other investment there are risks associated with buying and owning one. I have listed the three biggest factors that can affect your vacation rental investment.  The key to avoiding issues like these is to have a knowledgeable and experienced vacation home Realtor working on your side every step of the way.

Vacation Rental Bans

This is by far the one most critical issues that can affect your vacation rental investment. Vacation rental bans have fortunately, not been on the rise in the last few years. However, the last thing you want to do is purchase the perfect vacation home only to find out after the day of closing that the HOA is pushing to ban short term rentals in that neighborhood.  The best thing to do to avoid this is to make sure you throughly investigate the condition of the HOA in that neighborhood with short term renting.  Often times even if there are more absentee owners than not the ones who are local generally get the majority of the vote for bans like these.  Do your research up front or make sure you have a good Realtor who specializes in vacation rental homes to investigate the neighborhoods for you.

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Tourism Industry
Without tourism there would be no need for vacation rental properties so naturally this industry drives the market.  One of the worst things that can happen to your vacation rental property is that tourism comes to a screeching halt in your area and your home will not rent out. I have seen this happen about two years ago when the economy plummeted into a recession. Tourism slowed down so much that vacation homes across Florida were sitting vacant almost 50% more than before. Owners could not afford the hefty carrying costs of owning the property and homes started foreclosing left and right. Though there is nothing you can do to control the economic conditions, you can control where you decide to purchase a vacation home.  Make sure you buy in an area that has a large enough base of attractions that will draw people from all over the world so when the economy slows in America you can depend on renters from abroad to drive the market.

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Natural Disasters

This is a huge deal! Imagine owning a vacation rental property in Louisiana before the hurricane wiped everything out.  Certain areas are a higher risk than others for natural disasters. Make sure you research the weather trends in an area that you are considering purchasing a vacation home in before you commit to buying.  You may find that specific locations have been more prone to hurricanes, blizzards, tornados and other natural disasters than others. Like the economy you cannot control the weather but try and consider the risk involved with each area and weigh the pros and cons carefully.  The last thing you want to do is purchase a vacation rental home and have thousands of dollars in damages from a natural disaster the next year.

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There is no perfect spot to purchase a vacation home but doing your research ahead of time will help weed out any potential pitfalls you could run into.  Make sure you consult a good Realtor who specializes in second home invesments before you commit to purchasing anything.

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