A new market has emerged as companies make short-term homestays in private homes available. Property investments that yield a favorable return on investment have become increasingly popular.

In particular, investing in vacation homes offers frequent travelers an excellent opportunity to have comfortable accommodations in their favorite vacation destination while being real estate investors.

If you’re debating whether you should be involved in the vacation home real estate market, check out the benefits of investing in a vacation home.


Comfortable Accommodation

According to a Realtors association survey, vacationing is the main reason for purchasing a vacation home. Buying a home in a frequently-visited place allows you to vacation like a local and become a community member.

Because you already have a place to stay with your personal belongings, packing will be much easier. You can keep all the comforts and necessities you usually bring on a holiday in the safety of your own home. You’ll also spend less time booking places to stay and use that time planning itineraries and other ​​essential travel logistics.

The comfort and familiarity of having a private sanctuary are sometimes reason enough for others to take the leap and invest. However, when you are not using your vacation home, consider renting it out to others for an additional income stream. This then leads us to the second point.


Additional Income Stream

Vacation homes can generate potential rental income because you likely will only stay in them at selected times of the year. The payment can be used to pay for the maintenance and upkeep of the home.

It is, however, essential to note that rental income, especially for vacation homes, can be unpredictable and hard to rely on for expenses like your mortgage. To help solve this, take the time to research the best locations and neighborhoods. Like any real estate investment, location is the key to making it highly lucrative. You can also factor in size and the amenities of your property, which can significantly affect the rental income.

Related article: Factors to Consider When Investing in a Vacation Rental


Retirement Plan

Another way to look at this investment is from the viewpoint of retirement. A vacation home can help diversify your assets, which is why many experienced investors include properties in their portfolios.

In the long run, owning a vacation home can benefit you if you turn it into your primary residence. Especially if you’re ready to live in a new, more exciting country during retirement.

Related article: Important Matters to Consider When Retiring Abroad


Property Appreciation

A further advantage to investing in vacation homes is that their market value is most likely to appreciate over time. The short-term rental market, especially in highly coveted locations, has higher rates of return in the long term and a faster growth trajectory.

Looking for vacation houses with unique sceneries, easy access to public transportation, and significant landmarks can be especially advantageous. Being wise about your investment’s location, accessibilities, and amenities can help ensure and optimize your ROI.


Tax Benefits

In most places, a vacation rental property is considered a vacation rental business. This means that most expenses on your property, like insurance, repair costs, and maintenance, can be considered tax write-offs. This is especially helpful for property taxes and mortgage interests.

It is important to remember that every city has laws and arrangements. Some cities have strict rules on how often you can rent your second home in a year to qualify for tax deductions. Mostly, rental income from the vacation home over a particular period must be reported on your tax return. However, expenses like mortgage interest, real estate taxes, utilities, and maintenance fees can be deducted. Learn the process and consult with your accountant to make the most out of this benefit.


Create Fond Memories

As mentioned above, the main reason to invest in a vacation home is to have a home away from home where you can relax, unwind, and spend time with your family and friends.

While the real estate market can be a significant investment, a dedicated go-to destination holds a special place in your loved ones’ memories. Weekends and holidays in your vacation home can be extra meaningful for years and generations.