Investing In A Vacation Home? Read This First

Buying a second home is a great way to spend your money – especially if you intend to use it as a vacation property, both for renting out to holidaymakers and using it yourself. Not only does it make your life easier regarding getting away fro a break in the perfect location, but you can also make a significant amount of money from your investment.

There are, however, a few things you need to do if you want to ensure your vacation home is appealing to your guests, gives you the right experiences, and delivers the best returns. We’re going to explore some of the basics with you right now, so before you sign any papers, read on to find out more.

The math

While real estate of any kind is often seen as a fantastic investment opportunity, there are no guarantees. And it’s worth understanding that once you buy it, there is no liquidity there for you to use at all – and you may not be able to sell it on for a profit. You have to make sure that you can afford a second home, as once you sign those papers your money is squirreled away for the foreseeable future –  a few years at the very least. You also need to consider that buying the prime slice of real estate is only the first of many expenses. You will need to pay utility bills all year round, property taxes, costs for furnishings and much more besides. If you live a reasonable distance away from the property, you will also need to account for HOA payments, too, as you need someone close by to manage the vacation home.

Getting rental income

Your vacation home will also cost you money in marketing and advertising, as it is vital to keep it filled as much as possible throughout the year. Without any marketing at all, it’s going to be incredibly difficult to get any income at all, let alone enough to cover your home loan payments. You will also need to set aside money for cleaning up after your guests leave, and keep a few dollars back for breakages and upgrades. All of these little costs can soon stack up, and you have to be able to estimate them over a year, before working out your rental price. And don’t forget, there is a limit to the amount of money you can charge for your vacation home. Depending on the location you choose – more on which in a second – you will be limited by market prices.


The location is the single most important thing to consider when investing in a vacation property. While it might be your favorite spot in the world, other people who will be your customers may not feel the same. There aren’t too many people that wouldn’t profit from owning a condo on Seven Mile Beach, for example, but for less mainstream locations you may struggle to find enough people to attract to make it worth your while. Given the average American only has two weeks of vacation time every year, you have to ask yourself a few serious questions. First of all, will the time you spend in your vacation home be worth the expense? And is the location enough to appeal to people every weekend of the year? Don’t forget, unless you are paying cash, every day your property isn’t filled with guests, it is likely to be costing you money.

Security and safety

When your vacation home is empty, it acts as a magnet for thieves. You have to have protection in place to ensure that your property remains secure all year round. Surveillance cameras are a sensible idea, of course, although you need to make sure they are unobtrusive as this kind of thing can often put off guests. At the very least, you should have a robust alarm system that links up with a local security firm should anyone break in. Your HOA may provide a security plan as part of their service, so it’s worth raising this in your discussion before choosing a provider. It’s not just thieves and burglars you need to watch out for, too – it’s general safety issues that could end up causing massive amounts of damage to your home. For example, what happens when a water pipe bursts, or your boiler breaks? If no one is around to make regular checks on your vacation home, it could end up costing you a lot of money.

The business

You also need to ensure that you are running a vacation home as a business. In this sense, it is just like being a landlord, so you need to formulate a proper plan. As we mentioned above, you will need to consider marketing and advertising – either privately or through a service like Airbnb – but there are plenty of other issues to consider. Will you set up a website, for example, and how are you planning on taking bookings? Plenty of services are available, of course, but these tend to come at – yet another – cost. You must be able to build up some local connections, too – builders, tradespeople, and domestic cleaners all need to be arranged and vetted to ensure they provide the perfect service.

Your guests

Finally, as your vacation home business progresses, be sure to listen well to your guests. They will be able to tell you what you are getting right and wrong and give you many clues for where you can make improvements. Guest books are an ideal tool to collect such information, as are online reviews and you can also collect names and email addresses for further contact. Customer surveys, follow up emails, and even anniversary messages are an excellent way to keep in touch with your clients and find out how their trip went.


Buying a vacation home is a dream for many people. But make no mistake about it, it’s not just a case of investing in a property in the perfect location – there is a lot more work that needs doing. The commitment can be huge, and you will need to be able to devote time – and more money – into creating a productive and profitable vacation home. Good luck!

Leave a Reply

Your email address will not be published. Required fields are marked *