A big secret that is becoming less of a secret these days is vacation homes in Florida. Investors are hitting the Sunshine State hard and buying up properties to rent in all seasons. If you are planning to invest in Florida vacation homes, it is helpful to know the pros and cons of owning these properties to help you avoid problems that can be encountered during your ownership period. There is no free handbook that can teach you how to be a successful investor.
Pros of Buying Vacation Homes for Rent The first and arguably the best advantage of owning a vacation home is the rent money that is received. As a vacation homeowner, one of the best sources of revenue that you can have is making sure that your property is fully booked every month out of the year. Toursists and other visitors that need housing while visiting near to your property location will likely pursue you months in advance to take advantage of occupancies available. You have the option of marketing and advertising to tenants or using an expert property mangement company to constantly book your vacation home.
Tax advantages are plentiful when you own vacation homes. The deprecitation of the property can be deducted each year as an offset to rental income that you have received. This is similar to the mortgage tax deduction on a loan, but it is available for as long as you own a vacation home. Upgrades to the interior and exterior can be deducted as you make improvements to the property. This helps to keep the property fresh and new while taking advantages of tax breaks.
Cons of Buying Vacation Homes for Rent The risks of damage to rental properties are traditionally higher compared with a standard rental property. The constant influx of new tenants over and over again brings the risk of increased damage. Investors that own vacation homes often find out after the fact that a previous tenant has damaged portions of the interior or exterior. For this reason, insurance premiums are often higher for vacation homes. Unexpected loss, theft and destruction from severe weather are additional factors that raise insurance premiums for vacation homes.
Competition in the vacation rental market is fierce. Price wars are one of the things that happen when there are many rental properties within a certain radius. The going rate of vacation rentals could be severely reduced by one property owner in an effort to gain a competitive edge over the other property owners in the community. You could be competing with this directly or through a property management company that rents hunreds of properties to tourists, retirees and vactioners.
Investing in Vacation Homes in Florida Many people find success in the Florida rental market due to increased tourism, sunny weather and since Florida is an official retirement destination. Vacation homes rarely lose value and provide a constant source of income when rented daily, monthly or with short-term contracts. Your research can help you determine if getting into vacation home investing is right for you.