Have you ever considered renting your property as a vacation home? There are many good reasons to invest in a vacation rental, and in this article we tell you what are some of the considerations you should take into account. The first thing you should know is that, like any important financial decision, there are many things that you must evaluate before making the decision.
For example, did you know that property management fees for vacation rentals can be three times what you would pay a property manager to manage a long-term rental property? But, even if the cost is a bit high, the benefits obtained are completely worth the investment made.
With that in mind, here is a summary of the considerations and benefits of renting a vacation home, as well as what you should know about taxes and other issues before starting your rental plans.
Is it convenient to rent my house as a holiday home?
The short answer to this question is yes. However, doing so could have significant tax implications, and it is important that you take this into account. If someone decides to rent your property, it must be occupied for at least 14 days during the year or 10% of the number of days this property is for rent.
No matter how a rental property is classified, you will need to report rental income on your tax return. However, this is something that can be deducted from taxable rental income. The investment property depreciation deduction can also be used. This strategy could have a great impact on the tax liability.
How do I know if I can rent my house as a vacation home?
Another question that you must answer before making the decision to rent your property is whether it is authorized to be rented as a holiday home. For this you will need the help of experts and professionals in the field who can give you the best advice.
Many vacation destinations have rental restrictions, so you need to know the laws that govern the rental and real estate industry in the region. You also have to take into account that some condominiums or homeowners associations have rental restrictions.
So if you are planning to rent your vacation home, make sure you have permission. In many places the penalties for illegally renting property are quite severe, and law enforcement efforts are widespread. A local real estate agent will need to determine if a particular property is profitable and what restrictions exist.
How much does it cost to hire a vacation rental manager?
Another thing to think about before renting your home as a vacation home is whether you want to self-manage it or hire a property manager to do it for you. It can be extremely difficult to manage a vacation rental if you don’t live close to the property. There are too many things that need to be coordinated personally. For example, you should make sure that the property is clean, or that you are available to deal with any maintenance problems that arise.
You must bear in mind that managing a vacation rental requires much more time than managing a long-term rental. Think of it this way. If you are buying a duplex as a rental property, the property manager has to find a tenant, get them to agree to a one-year lease, and take care of the occasional maintenance problems. With a vacation rental, the manager needs to constantly market the property, coordinate regular cleaning and maintenance, and take care of vacationers’ problems.
The best way to manage a vacation rental property
Hiring a property manager to oversee your vacation home rental can be a significant added cost, but the peace of mind you gain is an investment the owner will appreciate in the short term. A manager can promote the property more effectively, and the resulting increase in occupancy and average rates can help offset the rate.