The Ultimate Vacation Rental Property Resource

Last Updated: December 2023

Vacation rentals have been around for a long time but have recently become a very popular alternative to traditional hotels thanks to online travel booking platforms such as AirBnb. These accommodations range from high-end luxury homes to a spare bedroom in an apartment and can include homes, condos, villas, apartments and even tents or boats. Below we take a deep dive into everything you need to know about vacation rental properties.


What is a Vacation Rental Property?

Vacation Rental Property Definition

Vacation Rental Property

A vacation rental is the renting out of a furnished private dwelling residence such as an apartment, house, or professionally managed resort-condominium complex on a temporary basis to tourists as an alternative to a hotel. 

Vacation Rental Properties Explained

Vacation rental properties are like temporary homes you can stay in while traveling. Instead of booking a hotel room, you can rent someone’s apartment, house, or even a unique space like a treehouse. This type of rental property is popular because they offer a more local and homely experience, often with the comforts and conveniences of a real home. This means you can cook your own meals, have more space, and maybe even a backyard or a pool. Many travelers prefer them for longer stays or family trips because of the extra space and facilities. It’s like moving your life briefly to a new place, making memories in a homey setting.


Short-Term & Long-Term Vacation Rentals

Short-Term Vacation Rentals

A short-term vacation rental is the leasing out of a furnished living space for a short period of time – this can range from a few days to weeks.

Long-Term Vacation Rental

A long-term vacation rental is the leasing out of a furnished living space for a period of time that is generally one month or longer.

Short-TermLong-Term
Duration of StayDays to a few weeksSeveral weeks to months or years
PurposeVacation, business trips, quick getawaysExtended stays, work relocations, sabbaticals
PricingUsually per night or weekOften monthly, with discounts
Tenant ResponsibilitiesMinimal; mostly cleanliness & house rulesOften includes utilities, maintenance, etc.
Lease AgreementsLess formal, sometimes just online termsMore formal with detailed contracts
Wear & Tear on PropertyHigher due to frequent turnoversTypically lower with more stable occupancy
Income Stability for OwnerCan fluctuate by seasonMore stable, consistent income
FurnishingUsually fully furnishedCan be furnished or unfurnished
Utility PaymentsOften fully includedTypically separate, paid by tenant
Relationship w/ Owner/LandlordLimited interaction via platformsCloser, with direct communication

14 Types of Vacation Rentals

Vacation rental is a broadly used term, but within this asset class are several types of unique sub-classes that each have their own special characteristics. We explore the most common types below.

Vacation Homes

These are entire homes that owners rent out either directly or through platforms such as Airbnb or Vrbo. They are ideal for families or large groups who need more space and facilities, like a full kitchen.

Condominiums & Apartments

Condos and apartments can range from studio units to multi-bedroom spaces. They often come with added amenities such as pools, gyms, and security.

Aparthotel

A property that has housing for both short term guests (i.e. -hotel) and also apartments for longer term guests (i.e. apart-). Aparthotels sometimes have hotel services like housekeeping and on-site dining.

Bed & Breakfasts (B&B)

These are private homes where the owners rent out individual rooms to guests, which will also typically include breakfast in the rate.

Hostels

While traditionally known as budget accommodations for backpackers, many modern hostels now offer private rooms and more upscale amenities.

Glamping

A blend of “glamorous” and “camping”, glamping offers the outdoor experience of camping but with added luxuries. Yurts and upscale tents are common accommodations for glamping.

Villas

A villa usually denotes a luxury property, often found in tropical or coastal destinations. They often come with private pools, gardens, and top-tier amenities.

Chalets

These are wooden houses or cottages typically found in mountain regions, especially popular in ski destinations.

Beach Houses

Situated on or near the coast, these homes offer direct access to the beach, making them perfect for sunbathers and ocean lovers.

Lodges

Often found in wilderness or park settings, lodges offer rustic comforts and are great bases for outdoor activities.

Cottages & Cabins

These are typically located in more rural or natural settings. Cabins are popular in mountainous regions, while cottages are common in coastal or countryside areas.

RVs & Campervans

While primarily a mode of transportation, many people rent these vehicles for the dual purpose of travel and accommodation.

Boats & Houseboats

Floating accommodations, often moored in marinas or on lakes, offering a unique stay on the water.

Farm Stays

These are working farms that offer accommodation. Guests can often participate in farm activities and enjoy fresh produce during their stay.

Vacation Rental Property News


Vacation Rental Investing

Vacation Rental Investing Strategies

Vacation Rental Investing

Vacation rental property investing has gained traction as travelers increasingly seek homely experiences over traditional hotel stays. This form of investment revolves around acquiring properties in popular travel destinations or areas with unique appeal. The objective is to generate consistent rental income and potentially benefit from property appreciation over time. Successful investing requires keen market insight, understanding tourist trends, and effective property management. Moreover, as the vacation rental industry evolves, investors continually adapt their strategies to align with changing traveler preferences and market dynamics.

Financing Vacation Rental Properties

Financing Vacation Rental Properties

The complexity of financing vacation rentals usually depends on how it is being purchased. If it’s purchased as a “second home” for occasional owner use, getting a loan is usually not too difficult. If the property is being purchased as a full time vacation rental business, securing an investment property loan can be more complex. Some lenders may require proof of business history, a larger down payment, and significant reserves. Interest rates are typically higher and location also matters since properties located in primary real estate markets or major tourist towns are more palatable to lenders. The good news is that lenders can start relaxing some of these requirements, once a borrower demonstrates a good track record of experience.


Managing Vacation Rentals

As mentioned above, self-managing an active vacation rental can be like a second job. If you don’t mind taking the late night “Why is the Wifi not working?” phone calls or coordinating cleaning crew  schedules, then maybe self managing your vacation rental is a good fit for you. However, for those who might not have the time nor want to take on another responsibility, hiring a vacation rental property management company might be another option.


Marketing Vacation Rentals

Where to Rent Vacation Rental Properties Online?

Airbnb
Expedia
Booking.com
VRBO

When looking to rent vacation properties online, there are several popular platforms that help connect property owners and travelers. These platforms often offer a wide variety of unique accommodations such as urban lofts, remote treehouses, entire homes or condos. They often facilitate booking reservations, collect payments and integrate traveler reviews for future renters to make better informed decisions based on past guests’ experiences.


Vacation Rental Agreements

Lodgify Vacation Rental Agreements

Vacation rental agreements have surged in significance with the rise of platforms that cater to short-term property rentals. These agreements serve as a contractual foundation between property owners and guests, ensuring clarity on terms of stay, payment, responsibilities, and more.


Vacation Rental Tools

Top Vacation Rental Companies

Booking Holdings Inc.
Airbnb
Expedia Group Inc
Tripadvisor

The largest vacation rental companies have revolutionized the way people experience destinations, providing more personalized, spacious, and often cost-effective alternatives to traditional hotel stays. They leverage technology to connect property owners with travelers, facilitating unique stays ranging from urban apartments to secluded beach houses. As the industry grows, these companies continue to innovate, offering enhanced features like flexible booking options, immersive local experiences, and increased focus on safety and cleanliness, further shaping the future of travel.


Vacation Rental Property FAQ

What Makes a Property Suitable for a Vacation Rental?

A property’s suitability for a vacation rental largely depends on its location, amenities, and overall appeal to potential renters. Ideal locations are often close to popular tourist attractions, beaches, or natural beauty spots, and offer easy access to local amenities like restaurants, shops, and public transport. Additionally, properties that are well-maintained, comfortably furnished, and equipped with modern amenities such as Wi-Fi, air conditioning, and a well-appointed kitchen tend to be more attractive to vacation renters.


Legal and regulatory considerations for vacation rentals vary significantly based on location and include compliance with local zoning laws, obtaining necessary permits or licenses, and adhering to specific safety and health regulations. Property owners must also be aware of tax obligations, such as income tax on rental earnings and potentially local tourist or occupancy taxes. Additionally, regulations may dictate the length of stays, the number of occupants allowed, and adherence to community rules in areas with homeowners’ associations or similar governing bodies.


What are the Typical Operating Expenses for a Vacation Rental?

The typical operating expenses for a vacation rental include regular maintenance and cleaning costs, utilities like electricity, water, gas, and internet, and property management fees if using a service. Additional expenses encompass insurance premiums, which may be higher for short-term rentals, and marketing costs associated with listing and promoting the property on rental platforms. Property owners should also account for periodic expenses such as repairs, upgrades, and property taxes to ensure the rental remains competitive and well-maintained.

More Types of Rental Real Estate

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