Is Vacation Rental Property a Good Investment in 2012? |
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Is Vacation Rental Property a Good Investment in 2012?

 

Purchasing a vacation home to rent offers a different source of income for investors. It is unlike a traditional rental property that is purchased for a single individual or family. Vacation properties continue to provide the same cash flow that regular rental properties provide only the rent comes from multiple renters. There are several advantages to owning these properties and can ease the doubt in the minds of investors that wonder is vacation rental property a good investment in 2012.

Higher Cash Rental Income
A vacation rental property in Florida is positioned for several types of occupancies. A beach house, lakefront property or home in close proximity to these locations provides tourists, new residents or vacationers with an ideal residence. Since Florida is a high rental growth state, the monthly rent that is collected can be considerably higher compared to average cities with vacation homes not near the ocean. The oceanic views and beach popularity makes it much easier to command a higher rental price. This advantage alone makes Florida vacation rental property an excellent investment. 

Short and Long-Term Rental Agreements
Standard rental properties typically include a tenant lease based on periods of a year or longer. This provides families or single individuals with a guaranteed residence during the rental term. A vacation rental property offers a different arrangement. The property can be rented daily, weekly, monthly or annually if desired to provide flexibility to the renter and property owner. The winter season is just as popular as the summer season. The ability to offer short and long-term agreements to renters helps both the property owner and renters. 

Tourism in Florida Grows Annually
The tropical climate, strong economy and access to the Atlantic provides tourists and vacationers with year round opportunities for leisure and relaxation. Florida is one of the only states in the U.S. that has annual growth in the tourism industry each year. The hotels are easily sold out most of the year and having alternate housing available is a necessity. Vacation rental properties provide a large portion of housing required to fill the demand for occupancy of incoming tourists. The annual growth in tourism continues to drive the rental property market and allows for consistent returns on invested rental property dollars. 

Tax Deductions for Rental Properties
Since a rental or vacation property is treated as a business, certain types of deductions are allowed to reduce the taxable income during each taxable year. The IRS has strict rules between business and personal use of a vacation home. Keeping good records and knowing what you can and cannot deduct is essential for maximizing profits. 

Types of deductions:

• Utility Expenses
• Property Insurance
• Depreciation
• Maintenance
• Theft or Losses
• Real Estate Taxes Paid

A section of the tax code even specifies that you can rent your vacation rental property for 15 days each year tax-free. All days beyond this time period are taxable. Buying vacation rental property continues to be a good investment in 2012.

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