Rental Basics in Tahoe City>Question Details

Aaron Wilson, Real Estate Pro in Tahoe City, CA

What are the pros and cons of owning a vacation rental?

Asked by Aaron Wilson, Tahoe City, CA Wed Jun 6, 2012

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Well, since the person who asked the question IS a full time real estate agent, I'm guessing he's taking it pretty seriously.
Aaron, since you've got an insider's view of the market, this should be an even better opportunity for you than for most. When I bought my vacation rental 14 years ago the plan was to use it more for ourselves than to rent it. As time has marched on, that's turned around and we rent it more than use it. We have seen significant appreciation in the value of the property, enjoyed some income revenue and had a great place to spend vacation time. On the down side, things can go wrong, utilities bills and mortgage payments keep coming even if renters don't and sometimes people don't treat your property as well as you would expect or want them to. Very personal subject, so what's right for you and what's right for me and what's right for the next guy/gal may not be the same thing. But, all in all, I'm very pleased that I made that purchase. Best of luck in your decision.
3 votes Thank Flag Link Wed Jun 6, 2012
In my opinion there are mostly cons and vacation homes are best for somewhere where money is not an object and major costs will not impact you. Many people have the urge to buy a vacation home when they visit a beautiful area they fall in love with. I think the best advice is to resist that urge and just rent:

-It can be very costly to manage a vacation rental with the turnover and occupy a lot of your time'
-many people find they don't make it up to their rental as much as they like because of time and distance issues
-when you don't have a vacation home, you can vacation in different areas of the U.S. and world and not worry about having to use your rental
-vacation home area tend to be much more severely affected by economic downturns (you may not be able to rent it and the prices can fall much more severely then job centers)
-maintenance and repair issues are much more of a challenge from a long distance.
1 vote Thank Flag Link Sun Jun 23, 2013
We also bought our house to use as a second home. We found we weren't using it as much as we'd like and thought it would be nice to have it generate an income for us. So we started renting it out as a vacation rental. The tax laws are very tricky, local and federal, and you have to have the stomach for dealing with the damage to your property that comes EVERY season. I enjoy speaking with my guests and hearing what is bringing them to the area, then later, how much fun they had.

Check us out!
0 votes Thank Flag Link Thu Apr 2, 2015
I think the situation will differ greatly based on location, the property itself, home amenities, and year-round rental potential. I've only owned my Phoenix vacation home for 7 months now, but so far, so good! If possible, try to manage the property yourself as managers will never give guests the level of personal customer service you would. Another little talked about benefit... anyone out there interested in a vacation rental swap? My Phoenix home is below:
0 votes Thank Flag Link Wed Jan 1, 2014
Making money and having a second home. Possible damage from renters and not being able to use your home whenever you want!
0 votes Thank Flag Link Sun Jun 23, 2013
PROS: Learned how to fold "hotel" corners with a flat sheet.
CONS: Having to learn how to fold "hotel" corners with a flat sheet!

Just teasing! Since we live in the area of our vacation rental we also do ALL the work. Saves a great deal of money but take a great deal of time, especially during the summer months!

Visit our website: www.
0 votes Thank Flag Link Mon Oct 1, 2012
Not to contradict you Sasha, but I disagree with the statement that rentals "certainly won't cover the mortgage payments". That depends on the market and the property. Many vacation properties I've seen have covered the mortgage, and some leave you a nice paycheck after all the costs are paid. Condo-Hotels, for example, typically cover the mortgage service, taxes, insurance, condo fees, management fees and leave some money in your pocket at the end of the year (in some cases as much as $30k+). Check out my blog on Resort Condo Hotels:…
0 votes Thank Flag Link Fri Jun 8, 2012
Hi Aaron,
The pro's of owning a vacation rental are obviously the income you will receive from the rental.
Another Pro is when you decide to sell you can use a 1031 Tax exchange and this will defer your taxes when you buy another investment property.

Con's Depending on how often you want to use your property it may not bring as much income as you might have hoped. It certainly won't cover the mortgage payments, but it will help. Also keep in mind that either you will have to market and take care of the property and clean up with collecting deposits etc... . If you hire a local rental company the will handle everything, and will take about 30% of the gross income. Not everyone is cut out to rent their 2nd home as a vacation rental. The property and furniture will get damage and there is wear and tear on the property. However it is a great way to supplements some of your over all costs.

I hope this helps.
0 votes Thank Flag Link Fri Jun 8, 2012
This is a serious question which shouldn't be answered in a cavalier manner. There are definite concerns that any well advised investor will have to answer with the help of their CPA or tax accountant, their attorney or legal advisor, and their real estate professional. There are very strict IRS rules about the characterization and use of a rental vacation home. There are special County Taxes that can carry over when purchasing a former rental and that carry forward when selling a rental.There may be conflicts with Home Owner Associations, and any number of other serious hurdles. The best advice is to contact an experienced full time real estate agent that can provide the kind of guidance and direction needed to safely guide you through this type of transaction.
0 votes Thank Flag Link Wed Jun 6, 2012
There is NO CONS in Real Estate, Specially if you buy now!
Low Prices and Low Rates are available. Plus, rents have increased in case you need to lease it.
0 votes Thank Flag Link Wed Jun 6, 2012
I think the only con would be not being able to use your own property whenever you want, but with some planning it is possible to maximize personal use and make money during peek seasons.
0 votes Thank Flag Link Wed Jun 6, 2012
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