What makes a good location for a Vacation Rental property?

schoolhouse no. 1

When we purchased our Schoolhouse No.1 more than 10 years ago, we didn’t know what a vacation rental home was. We had never heard of VRBO and Airbnb was just couch rentals in California.

Now in 2021, particularly after COVID related travel restrictions and shifts of where people would like to spend their vacation time; vacation rentals have become very popular and a strong investment strategy. This method of property management is certainly not passive. But if done well can be a profitable way to own real estate. And if you purchase in a location where your family would like to also vacation, it becomes win-win. You have a place to stay for your own vacation and the rental income might be able to cover the cost of owning the home.

Other than your own favorite place to travel, what other pieces of information are important when choosing a location to purchase a vacation rental home?

There are “drive to” locations and “fly to” locations. Orlando, Florida would be considered a fly to vacation area, most people would typically arrive there via air travel. Very strong rental market but susceptible to fluctuations on air travel- as we saw during the pandemic shutdown. Not many people were comfortable to travel via plane. Drive to locations such as the Smoky Mountains or here in RI would not be as reliant on airfare travel and actually saw an increase in business in the last year as people decided to vacation closer to home.

Somewhere close to a popular destination where people are already traveling. Anywhere close to a national park, particularly the ones where travel is year round (as opposed to seasonal) is always a strong market.

Places where there is not a strong hotel presence. Again, it should be a place where people would come to visit, but if vacation rental homes make up a large majority of where people stay, this might be a good place to invest.

Towns were regulations are already in place for vacation rentals. This might be counterintuitive at first but if the state or town has regulated the vacation rental industry, then the government has already stated that vacation rentals are approved and allowed in this area.

We have vacation rental homes in Tiverton & Little Compton. This made sense to us because we live here and we can manage them ourselves. Obviously we are not vacationing here ourselves, but it hits most of the other marks. If you want to see the properties we own & manage, please click on this link here or for a quick listing here.

These are the top things I would think of when looking for a location to purchase a vacation rental home. What are some other considerations that I missed?