Homes

Vacation rental investment vs. annual rental: what to consider

By Andy Moore

Special to the Herald

File photo
File photo SUN HERALD

During the past few years and with the help of websites such as Airbnb and HomeAway, the vacation rental industry has attracted a lot of attention (good and bad).

Being close to some of the best beaches in the world, we are often asked by potential property owners whether they should buy property for an annual rental investment or a vacation rental investment. The response to that question generally depends on the lifestyle choice and cash flow expectations of the investor.

If your aim is a modest steady guaranteed cash flow and an almost immediate revenue stream, then the annual rental approach is the better way to go. It provides stable income allowing you to plan ahead and budget. You know that the tenant is taking care of the utilities and hopefully there is minimal maintenance required.

Some tenants stay in properties for years and the landlord never has to worry about vacancies. The annual rental landlord is responsible for financing (if applicable), insurance, HOA expenses and any major maintenance costs.

Vacation rentals are a completely different proposition.

The owner or landlord will always be responsible for utilities. Due to the frequent turnover of guests there are also more maintenance costs associated with vacation rentals.

While the monthly rental income is often greater, the income can be sporadic. In addition, unless you retain the services of a competent management company you will be forever answering inquiries, meeting and greeting guests, answer

ing maintenance calls at all hours and then cleaning the guests' mess up when they leave. And then it starts all over.

If you want to own your own property in a beautiful part of the world, a vacation rental model can boost your income and subsidize the costs of your property investment.

You'll also be able to use the property whenever you want.

Living in this area, both rental models have a value appreciation element to consider. Therefore, whichever rental type you opt for, you will likely see an appreciation in the home's value in the mid- to long term.

If you are still undecided, I would advise you to contact a rental expert who will be able to advise on your property's suitability for each rental option.

Andy Moore, founder and CEO of Lakewood Ranch-based Gulf Coast Property Management and president of the Sarasota/Bradenton Chapter of the National Association of Residential Property Managers, can be reached at andy@choosegulfcoast.com.

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