For many, investing in real estate is a prudent way to protect wealth and increase one’s personal revenue streams. Owning a short-term vacation rental in a prime location may seem like a wise use of your money, but like any other type of real estate investment, there are potential drawbacks as well. Before you sign on the dotted line or make any commitment regarding your money, you will benefit from understanding more about the potential positive and negative implications of this choice.
Vacation rentals are popular options for travelers who wish for a more home-like experience while they are away. Owning this type of property involves more than just the cost of upkeep, and there are both legal and financial implications to owning a rental. If you are considering this option, it is prudent to first do sufficient homework.
Benefits of owning a vacation rental
There are specific reasons why many property owners choose to invest in the ownership of short-term vacation rentals. In addition to the income the owner may earn when travelers rent the property, other benefits to short-term rental ownership include:
- Appreciation in the equity the owner has in the home
- Additional tax deductions
- Available vacation property for owner’s use
One of the main factors that could determine the profitability of this decision is the location of the property itself. It is critical that the vacation rental be in a location that is logical, easy-to-find and safe, as well as in an area that is close to the most popular attractions.
Drawbacks of owning a vacation rental
Before you take this step, you will want to consider the potential negative implications of owning this type of property. Some reasons why short-term rental ownership may not be right for you include:
- Unexpected expenses and the cost of upkeep
- Complex rental laws and issues with zoning
- Property taxes and higher insurance rates
If you want to own a Pennsylvania rental property, you will also have to consider the commitment it takes to market the property on various sites, deal with renter complications and be ready to react if there is an emergency at the property.
Your long-term interests
Owning short-term rental property can be a costly decision, but it may be a wise use of your resources. Before you commit, you may find it beneficial to discuss the potential drawbacks and benefits of this type of real estate transaction with a knowledgeable professional. An assessment of your case can provide insight regarding the ways you can protect your long-term interests.