20 - How to Evaluate a Vacation Rental Market, Part 1 of 2

Vacation rental properties have become a popular way for families to skip the cramped accommodations of a hotel and rent out larger spaces when they head to the beach, mountains, woods, or even into many city centers.

Many people want the independence of a vacation rental but they don’t know how to evaluate the market and if it will work for them.

When you are looking into purchasing a vacation rental property and listing it on Airbnb and VRBO, it is important that you know how to evaluate the market for them so that you can get the best value in your purchase.

How to Evaluate a Vacation Rental Market

1. Obvious Point: Research the State, Local, and HOA Restrictions
   • This should be fairly obvious to anybody considering STR investments
   • Know any applicable restrictions on renting, duration, and frequency
   • Know and plan for the taxes
2. Avoid Extreme Seasonality
   • Many vacation markets have seasonality, and that’s OK! (Think: the ski house or the beach house)
   • A high performing vacation rental, however, should have some appeal and marketability year round
   • With too much seasonality, there’s additional risk, (e.g. weather, global pandemic)
3. Plan for the Shoulder Season
   • Having a valuable shoulder season helps drive up your profitability.  If the high season covers your expenses, the shoulder and off-seasons are your profit.
   • Think as a shoulder season renter.  They have more options for amenities and location.  Will yours be attractive to them?
   • Avoid places whose location or attractiveness are people’s second choice.

Join Jason Muth and Attorney / Broker Rory Gill of NextHome Titletown and UrbanVillage Legal in Boston, Massachusetts for another episode of The Real Estate Law Podcast!

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