If you own a second home or vacation property and are considering renting it out on a short-term basis, there are many factors to consider before setting forth.
Geographic Market. The geographic region that your second home is located in will determine your property's rentability as a vacation rental. Do a little bit of research in your area: Are there other vacation rentals in your town or city on the largest vacation rental listing sites (easily found on the search engines)? If not, try to determine why. Perhaps, you're just ahead of the curve in your area. Or perhaps, there's another underlying reason for the lack of vacation rentals (i.e. municipal restrictions).
Location of Home within Market. Location is the number one reason that some vacation rentals thrive and others do not. The most sought after homes are located within a short distance to area attractions (beach, ski mountain, Disney World, etc.). If you are located in a residential area with many permanent residents, your home might not be ideal for travelers looking for a vacation experience; however, it may be perfect for corporate travelers or snowbirds.
Accessibility. Another factor that will impact your home's rentability is its accessibility to an international airport and to public transportation. Homes located in remote destinations can still be successful rentals, but may take more effort to rent. If your home is off the beaten path, you may need to get creative with your marketing, furnishing, and amenities.
The Condition of Your Home. Travelers expect vacation homes to be as nice as or nicer than their primary residence. If your home features appliances and furnishings from 1955 and you're not going for the retro look, you might have some work to do before your property is ready to rent.
Local Laws and Regulations. Before renting your vacation home, research the short-term rental rules and restrictions in your state, county, city, or complex. You don't want to plan to rent weekly only to find out that your HOA prohibits rentals of less than 30 days.
Your Expectations. Before you start renting, you need to set goals for the number of weeks you'd like to rent and the amount of revenue you'd like to accrue. It's important to be realistic when setting your goals and to have done your research to make sure that you're not setting yourself up for failure. For example, if you own a cottage in Minnesota off of Lake Superior, you're not likely to be rented 52 weeks per year. However, if you own a condo in an urban market like Chicago, you're much more likely to be able to rent year-round.
Time and Effort. The amount of time that you dedicate to calling potential renters, tweaking your vacation rental listings, and responding to current guests with directly affect your success as a vacation rental owner. If you don't have the time or desire to put in a little bit of work, you may want to consider hiring a property management company to handle the day-to-day efforts.
Personal Use. The rental weeks that fetch the highest rates in your market are likely the same weeks your family might want to stay in your own vacation home. As a vacation rental owner, you'll have to weigh the reward versus the income lost by using your vacation home yourself during the peak weeks.
While some second homes may not make ideal vacation rentals, with realistic expectations and perhaps a little sprucing up, most second homes have promising vacation rental potential.