Is a vacation rental property still a good investment?



A vacation rental property is a potentially lucrative investment. According to Statista, the revenue of Airbnb globally was 4.81 billion in 2019. However, revenue dropped to 3.38 billion in 2020. The decline is attributed to the travel disruptions caused by the COVID-19 pandemic. Many countries and cities initiated travel bans and stay-at-home orders to prevent the spread of the virus. Ontario followed suit by issuing restrictions on public events, shopping, indoor and outdoor dining, and short-term rentals.


With the release of the vaccine and the easing of restrictions, the vacation rental industry is beginning to pick up slowly. However, many investors are still wondering whether buying a vacation home is a good investment.


Here are some reasons why owning a vacation rental property is still a good idea:


The emergence of staycations

The coronavirus-induced travel restrictions have resulted in the popularity of staycations. Since the Ontario government lifted the ban on short-term rentals in June 2020, there has been a huge demand for vacation homes. A recent report revealed that the demand for cottages during spring and summer is unprecedented.


Tax deductions

Owners of short-term rentals are allowed to write off most of the expenses they incur in maintaining and repairing their homes. Here are some of the items you can write off as a real estate investor:


  • Hosting fees

  • Supplies (toilet paper, soap etc.)

  • Cleaning costs

  • Occupancy taxes

  • Lawn maintenance

  • Utility costs’

  • Insurance premiums

  • Mortgage interest

  • Advertising costs

  • Property management fees

However, be sure to talk to an accountant or financial advisor to check your eligibility for deductions.


Equity appreciation

Real estate (including vacation homes) tends to appreciate over time. When the value of your home rises significantly, you can borrow a home equity loan to buy more property. The good news is that you can even ‘force’ appreciation in your home by investing in amenities and upgrades.


You have a holiday home.

What is the point of having a vacation home if you can’t use it? Plan a family reunion once a year. Take the kids out for a weekend getaway. Go by yourself once in a while and unwind. Whether you buy a beach condo near your favourite seaside destination or a cabin in your preferred ski resort, you will not just make an income. You will make many memories as well.


Conclusion

Before becoming an Airbnb host, be sure to get familiar with Ontario's Airbnb laws and regulations. If you are looking for an investment property, we can help set up your investment and coach you through the process. Schedule a meeting to see how the process works:




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