Vacation Rentals Vs. Investment Property

The Difference Between Vacation Rental vs. Investment Property

If you’ve been thinking about investing in real estate, it’s important to know the differences between a vacation rental and an investment property as what it means to own one.

WHAT IS A VACATION RENTAL?

The term vacation rental is used to describe a privately owned furnished home, apartment or condominium that is rented out for short periods of time. Typically, a vacation rental is for rent on a weekly or during off-season on a monthly basis.

Families and other vacationers often use vacation rentals as an alternative to hotels to get larger accommodations offering better amenities. Vacation rentals are rising in popularity because of their ability to offer more space and more privacy at a cheaper price than a typical hotel room.

It’s becoming increasingly popular for people with properties in vacation spots to rent them out for periods of peak vacation times such as spring break, the summer months or winter holidays. The appeal of additional income from a place you already consider home, is attractive to many.

If you have a property, you’re considering turning into a vacation rental, it’s important to have your home ready with everything a vacationing family would need. 

WHAT IS INVESTMENT PROPERTY

Investment property is a house, apartment, or condominium that you’ve purchased for profit gain. It could be a property that you purchase, rehab and then re-sell for a profit or it could be a property you purchase with intentions of renting it out.

Regarding tax purposes, if the owner’s time spent in the second property is limited to 14 or fewer days or 10 percent of the time it’s rented out to other people, it’s considered a full-time rental or investment property, where the ultimate goal is to generate income.

VACATION RENTAL VS. INVESTMENT PROPERTY

With an investment property the goal of owning the property is purely to use to make money full time without ever living in it themselves. With a vacation rental, it’s a property that is usually a vacation home or second home that the owner can rent out short term to vacationers when the owner is not using the property.

We hope we’ve clarified the differences between a vacation rental and an investment property. You might just be surprised to discover you already own a vacation rental that you just happen to call “home.”