Having a second residence or a vacation home is an achievement on many life goal lists, the memories made at the cabin, the lake, or the summer house are fabulous!  Owning a second home can also provide value to you financially, knowing if a rental opportunity is possible using a property manager, Airbnb, or VRBO, while taking into account your personal vacation goals can add a bit more change in your pocket.  

As an experience real estate professional, I've learned that a vacation rental is rarely a get-rich-quick scheme, the income will vary, though the long hold option may be the largest benefit.

I’d also suggest that finding a profitable vacation rental requires more research than any other type of investment property, area, seasonal changes, ability to check on the home during off peak times, and having a sense of security that if something were to happen to the property you would be in the know!

It’s a good idea to talk to a local real estate agent about property values and vacation rental levels of the area. You might also get some help online from Airdna (yes, Airdna!), which measures revenues and occupancy rates. You should also compare this information to how the property would fare if it was permanently rented so you can take this into consideration. 

One survey by HomeAway suggests $30,000 a year might be a good income. Airbnb suggests $11,000 a year is the average for its subscribers, although many of those rent rooms in their primary residences. Here are a few issues to consider if you’re thinking of a new life outside the city or investing in a vacation rental:

1. Revenue can be seasonal – It’s a rare property whose income doesn’t ebb and flow with the seasons. And remember, you can attract higher rents in peak periods. The downside is, this might be when you wish to spend your time at the property. 
2. Location is critical – This will determine your income more than any other factor. Properties near the sea and snow will do very well compared with those in a town several miles from the coast or mountains. Try to find somewhere that’s a popular destination.
3. Calculate costs – Due diligence is critical to ensure the rental does not become a cash-flow headache. Be sure you can handle any mortgage costs, as well as insurance, taxes, maintenance, repairs, cleaning, and the fees taken by the rental company.
4. Don’t underestimate maintenance – You’ll find the property will stand empty for weeks at a time, and this can lead to problems going unattended, having someone that is can check in on your property is key!
5. Check tax benefits – Use a professional financial adviser to maximize any opportunity to gain tax advantages and write-offs from your rental. 
6. Don’t be blindsided – If you spend a certain number of days in a vacation property or more than 10% of the days that it’s rented, you could lose all tax benefits. Talk to your professional financial adviser to get the latest tax rules.