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.
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What is a Vacation Rental Property?
Vacation Rental Property Definition
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. They’re 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.
| Feature | Short-Term | Long-Term |
|---|---|---|
| Duration of Stay | Days to a few weeks | Several weeks to months or years |
| Purpose | Vacation, business trips, quick getaways | Extended stays, work relocations, sabbaticals |
| Pricing | Usually per night or week | Often monthly, with discounts |
| Tenant Responsibilities | Minimal; mostly cleanliness & house rules | Often includes utilities, maintenance, etc. |
| Lease Agreements | Less formal, sometimes just online terms | More formal with detailed contracts |
| Wear & Tear on Property | Higher due to frequent turnovers | Typically lower with more stable occupancy |
| Income Stability for Owner | Can fluctuate by season | More stable, consistent income |
| Furnishing | Usually fully furnished | Can be furnished or unfurnished |
| Utility Payments | Often fully included | Typically separate, paid by tenant |
| Relationship w/ Owner/Landlord | Limited interaction via platforms | Closer, 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.
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Vacation Rental Investing
Vacation Rental Investing Strategies
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
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.
Vacation Rental Marketing
Where to Rent Vacation Rental Properties Online
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.
Author
My name is Ryan – I’m an investor, real estate developer, and property manager with hands-on experience in all types of real estate from single family homes up to hundreds of thousands of square feet of commercial real estate. RentalRealEstate is my mission to create the ultimate real estate investor platform for expert resources, reviews and tools. Learn more about my story.