If this New Year has your focus on investing in real estate it’s important to know the differences between a vacation rental and an investment property as what it means to own one.
What is a vacation rental?
The term vacation rental is used to describe a privately owned furnished home, apartment or condominium that is rented out for short periods of time. Typically a vacation rental is for rent on a weekly or during off-season on a monthly basis.
Families and other vacationers often use vacation rentals as an alternative to hotels to get larger accommodations offering better amenities. Vacation rentals are rising in popularity because of their ability to offer more space and more privacy at a cheaper price than a typical hotel room.
It’s becoming increasingly popular for people with properties in vacation spots to rent them out for periods of peak vacation times such as spring break, the summer months or winter holidays. The appeal of additional income from a place you already consider home, is attractive to many.
If you have a property you’re considering turning into a vacation rental it’s important to have your home ready with everything a vacationing family would need. Read our other blog posts such as “Vacation Home Interior & Exterior Checklists”, “4 Surefire Ways to Make Your Vacation Rentals Stand Out Online,” and “Well-Stocked Vacation Rentals Get Far Better Reviews.”
Lots of photographs, well written descriptions, and awesome reviews are all very important in keeping a vacation rental occupied 100% of the time you have it available.
What is investment property
Investment property is a house, apartment, or condominium that you’ve purchased for profit gain. It could be a property that you purchase, rehab and then re-sell for a profit or it could be a property you purchase with intentions of renting it out.
Regarding tax purposes, if the owner’s time spent in the second property is limited to 14 or fewer days or 10 percent of the time it’s rented out to other people, it’s considered a full-time rental or investment property, where the ultimate goal is to generate income.
Vacation Rental vs. Investment Property
With an investment property the goal of owning the property is purely to use to make money full time without ever living in it themselves. With a vacation rental, it’s a property that is usually a vacation home or second home that the owner can rent out short term to vacationers when the owner is not using the property.
We hope we’ve clarified the differences between a vacation rental and an investment property. You might just be surprised to discover you already own a vacation rental that you just happen to call “home.”