How Practical is it to Invest in a Vacation Rental Property?

Vacation rentals like VRBO and Airbnb have taken this generation by storm and opened a new avenue for Real Estate investorsto earn a substantial income. But to get successful, you need to be acquainted with certain rules that have been mentioned here.


Tactfully purchasing the property is the key to making the most of the deal of renting it on vacations. Given below are the steps that must be followed before closing the transaction of property for investment.

Leave No Gaps while Researching

The availability of property listings are abundant on the web portals but picking up the one that would bear fruit for you, is a hard nut to crack if not done in the right way. Factor in capitalization rate and other elements determining the Return on Investment, price range and location. You are required to consider the following:


  • The ongoing rental rates in the market
  • Affordability of the rates
  • The demand for the location
  • Rates of local occupancy
  • Proximity to tourist attractions


Profit is the Final Word

Buying a property without judging its income potential will leave you in the lurch instead of letting you rejoice. A thorough analysis of the current rate of vacancy and rental income in the particular location where you desire to invest is an essential move. Only then you will be able to calculate if these outweigh your monthly financing and operational costs otherwise the investment won’t be profitable.


Don’t Forget the Additional Charges

The following expenses will get added to your cost of property purchase:

  • Occupancy taxes
  • Property taxes
  • Insurance
  • HOA fees
  • Utilities
  • Tax levied on Rental Income
  • Licences
  • Mortgage payments
  • Charges for property management


A Getaway When Not on Rent

To purchase the property, choose a location which, can be reached through short journeys on flight or car so that you may visit it at intervals during a year or on weekends. Your vacation expenses will reduce while the property will get monitored so that no discomfort is faced by tourists when they put up in here during the peak season.

Financing Options Available

You would surely not be using up all your savings without caring for future financial goals and thus, would opt for a loan. Listed below are the types from which you can select:

  • Portfolio loan
  • Balance sheet loan
  • Short-term loan
  • Conforming loan
  • Multi-family loan




But identifying a financing option that is ideal for the property you have purchased demands the suggestion of an expert. Without a clear understanding of the taxes levied on property, rental income and occupancy, it would not be possible to select the right vacation rental assuring you with a profitable income. This is where the role of a property management company comes into play. Visit for not only an insight of Kolkata Real Estate but any other advice or assistance you need in purchasing or selling a property.

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