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Making Money With Vacation House Rentals

making money with vacation house rentals 1If you like making passive income, then you may just love making money with vacation house rentals! Not only do you get to enjoy these properties yourself, but you can make money on them year-round. Sound like a dream? It’s not. It could be your reality.

Making Money With Vacation House Rentals

What are the steps to making money with vacation house rentals? How can it actually be accomplished? And what could be the results?

Is it worth it?

In short, it’s not super difficult and YES, it’s typically absolutely worth it!!

Here’s some tips to make it happen.

1) Choose Your Area

Envisioning the area you can see yourself vacationing probably isn’t too difficult an image to conjure up. However, before you start favoriting all those MLS listings that match your budget, it may be a good idea to do additional research on your ideal location first. 

Beach, mountains or metropolis, it’s important to get a feel for the real estate market in the area you’re considering.

  • How robust is the vacation rental market in the area?
  • Is this a highly sought-after tourist location?
  • Are you close to major shops and eateries?
  • Is there accessible transportation or ride sharing options? 

These are just some of the questions you should be exploring before jumping in.

Decide on the property type

Condo, flat, single family home? Which one of these is your preferred living arrangement? If you aren’t comfortable in your own vacation home, chances are, your guests won’t be either.

  • Are you looking to find a property managed by an HOA community, or do you prefer to be on the outskirts of the main hub?
  • Is your ideal property in a prime, higher-cost location, or are you seeking something a bit off the beaten path and more accessible to smaller budgets?

As you seek out potential properties, take a close look at the crime in the area, the history of property tax increases and what it would cost to have a property management company look after your rental if you would prefer not to manage it yourself. 

All of these factors should be thoroughly researched before considering how you can start making money with a vacation rental. 

Related: Single-Family Rental: Focusing on Rental Property Investments

2) Consider the Costs of Making Money With Vacation Rentals

While I’ve touched on some cost considerations above, there are a few more to consider before jumping into owning and making money on a vacation rental. 

Since this property isn’t slated to be your primary dwelling, you’ll need to be sure to have a full 20% down and take into consideration the higher cost of insurance on an income earning property.

You should also think realistically about how long you plan to keep the property since the cost of buying and selling is pretty significant.

  • In fact, what is your plan for the property if you decide not to vacation in that particular location anymore?
  • Will you still be committed to managing it?

Don’t forget to factor in those costs as well.

making money with vacation house rentals 2Educate yourself on local laws and taxes

Another factor to consider before making money on a vacation rental is to do your research on local laws and required taxes. Some communities may have strict noise ordinances and curfews, while others may not have enough rules in place to keep the peace and order. 

And while vacation rental platforms will collect some local taxes and fees for you, taxes are complicated and each state and municipality will have its own terms. You will need to do your research before moving forward. Platforms like Airbnb can walk you through where to begin.

Add up the cost of furnishings

Finally, even though this won’t be your primary residence you will need to furnish it like you live there.

Vacation rentals that come fully-equipped are the ones that get rave reviews and referrals, so don’t skimp on the small stuff.  Invest in nice sheets, fluffy towels and every kitchen gadget you can think of that will make someone feel like they are living in the lap of luxury. You may be surprised by which items you can include in your tax write-offs.

Related: Top Strategies to Get More Profit From Your Rental Property

3) Choose your hosting platform

Now that you’ve decided to move forward and have a solid idea of the type of costs involved in getting started, it’s time to start promoting your property!

At this point, there are two solidly established platforms for marketing your property. AirBNB & VRBO (the latter of which was purchased by Homeaway before Homeaway was purchased by Expedia).

While both platforms are known for excellent customer service and support, as well as property protection, there are a few notable differences between them.


  • Boasts the most listings here in the US and around the world.  As of 2017, AirBnb host 4 million listings in over 191 countries.
  • Promotes alternative property options such as RV’s, Yurts, in-law suites, and single room rentals.
  • Allows for last-minute, one-night bookings. 
  • Charges 3% commission to host while clients front the cost of additional fees.


You could choose to forgo both of these platforms and create and market your own website for your property. With the combined use of Facebook advertising and word of mouth, you may be able to book a full season. If you are more of a DIYer, this may be a pretty sweet option for making money with your vacation rental. 

Related: The Rental Property Wealth Calculator: Your Path to Millionaire Status

4) Start slow and grow

Now that you’ve decided how you plan to list your property, it’s time to check out other local listings and aim to price your place within market value.

Airbnb will suggest a nightly rate that should have you booked in no time! As a new host without any reviews, guests are taking a risk booking your place. If you want to get that calendar filled and the reviews rolling in, new hosts recommend offering a lower-than-average nightly rate to make sure you can book the property ASAP. Then, you can raise your prices slowly over time, or just plan to price right under your closest competition to ensure you never have any vacancies. 

Last, but not least, there is one very import thing about making money with vacation rentals that you need to keep in mind:

At the end of the day, you are in really in the hospitality business.

So no matter how good…

  • that projected monthly cash flow looks,
  • how beautiful the home appears with professional photos,
  • or how much you can’t wait to hang out at your own property…

…if your guests aren’t happy, you won’t have a very successful vacation rental property.

Whether you hire someone or manage it yourself, if a guest asks for extra sheets or towels, complains that the window AC unit isn’t working or thinks the place did not meet advertised expectations, you must be prepared to deal with it immediately. 

Yes – some complaints will likely be unwarranted and ridiculous, and if they leave an unfair negative review, you will have a chance to share your side of the story right on the platform. However, your viability as a successful vacation property owner relies solely on guest reviews, so keeping them happy and wanting to come back time and time again is your number one job!

So now that you have a better idea of what’s involved, does this still sound like a dream opportunity you’d like to pursue? Do you already own a money making vacation rental property? Tell us below! 

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AUTHOR Kerah Kemmerer

Hello! I'm Kerah. I'm a writer and personal finance enthusiast with a background in marketing. I'm also a wedding and portrait photographer, part-time RVer and a lover of simple and minimal living. Always up to some project or adventure over @krisandkerah on Instagram.

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