Buying a Vacation Home: Is Now The Right Time?
Investing in a vacation rental has been known to bring lucrative returns – but, is now a good time to buy a vacation rental property?
The world changed this last year, and vacation expectations with it. Now more than ever, people are looking for private, safe and clean accommodations where they can reunite with family and friends, enjoy a wellness retreat, or even work remotely in new scenery. Where once vacation rentals were swanky villas and luxury real estate, marketed to the wealthy, there is now a growing market of vacation rentals suited to meet the diverse needs of travelers.
Pent up demand for travel is at an all time high but crowded tourist attractions and perks like all-you-can-eat buffets are a thing of the past. Post pandemic trip planning now starts with a search for space, privacy, contactless amenities and curated properties. Bookings for vacation rentals are through the roof and so is the desire to own a second home.
More People Are Buying Vacation Rental Property
Real estate has often been thought to be a solid investment, even when financial markets are volatile. Vacation rental property creates a lucrative opportunity to earn back money on this investment quickly, and through 2020 we saw many following this mindset and investing in a second property.
The National Association of Realtors found that despite the pandemic, from July-September of 2020, there was a 44% increase in sales of vacation homes compared to just three months prior.
The pandemic brought with it historically low mortgage rates in the US, which increased the affordability and desirability of investing in a vacation rental property. For many Americans, a second home becomes a great source of income to cover mortgages, taxes and other expenses, to fund education or retirement plans, or to be used as a secondary source of income for luxury purchases or further investment.
Now is The Right Time To Invest In Vacation Property
If you have the interest and opportunity, buying a vacation home now is a great option. Vacation towns are growing across the country and the pandemic has led to a vacation rental boom.
Vacation Rentals Provide The Privacy and Safety Travelers Are Looking For
Many Americans are looking to escape from months of uncertainty, stress and disruptive changes. However, COVID restrictions, social distancing and fears around health have led vacationers to look for alternatives to crowded hotels and busy destinations. Vacation rentals offer the privacy, social distancing, and security that many are now looking for in their holiday escapes.
According to StayFi, since COVID, occupancy in vacation rentals has increased 60% and the nightly rate has increased 23.2%. In comparison, hotels are not faring so well. Publicly traded hotel companies have bottomed out at a 60% share price decrease, 25% points below the S&P 500 (an index that measures the stock performance of 500 large companies listed on stock exchanges).
Any place offering overnight accommodation is now working hard to win back the trust of travelers. For vacation rentals, winning the trust of travelers can be easy if the right steps are taken.
According to Booking.com, 70% of travelers will only book their selected accommodation if there are clear policies for health and hygiene in place.
In comparison to hotels, house share room rentals on Airbnb, RV parks and many other accommodation options, vacation rentals offer minimal contact with others and the ability to safely social distance. They can quickly put additional policies into place to reassure travelers of the level of cleanliness of the property and partnering with local cleaners and housekeepers who have COVID policies in place.
Vacation Rental Management Technologies In The Age of COVID
Contactless self-check in technology, concierge door deliveries and guest services apps make vacation properties more appealing to travelers by limiting contact with others. Smart home technology like noise detection services, smart thermostats, remote entry and other security measures have also made owning a vacation home more convenient, safe and secure.
Short Terms Rentals Are Perfect For a New Generation of Remote Workers
COVID has had huge impacts on the way we work, with many now working remotely. Companies such as Microsoft have seen the benefits that remote work brings in terms of productivity and happiness in its workers and is offering its employees the option to work remote permanently.
We can expect to see this trend stick in 2021 and beyond. The following years will likely bring with it a new age of remote jobs. As employees can work from anywhere that has a stable internet connection, many are looking beyond their current homes.
A nomadic lifestyle is appealing to many. A major reason people live in cities is the proximity to work. The ability to work remotely now allows people to look further afield and urban areas are losing some of their appeals.
According to Booking.com, 37% of travelers surveyed have considered booking accommodation to stay to work from a new location, while 40% would be willing to quarantine if they could work remotely.
Travel restrictions are still in place in many countries. Also, concerns over healthcare, and the way various international governments are handling the COVID situation, has led to many looking for domestic vacation rentals.
Work-friendly and laptop-friendly spaces are key features remote workers are looking for. High-speed internet is also a priority, with savvy vacation rental owners adding their wifi speed to their listings to entice travelers who are working.
Property design for vacation rental is changing with the new audience that owners are trying to attract. Beyond workspaces, comfort and practicality now take a priority over aesthetic. When a guest is staying for a weekend, luxury and beautiful interiors are of more importance. However, for longer stays, where travelers will be spending more time in the property and using it for work, having a comfortable sofa that can be sat in day-in-day-out is the better option over a vintage couch that looks great in photos.
The past year has brought with it changes to how we do just about everything. Investing in a vacation rental property is no exception. The industry is booming and now is a great time to buy with the surge of remote workers, vacationers looking for private rentals, and low mortgage rates making now an affordable time to invest.
What has changed is the priorities you should look for in an investment property. Safety and hygiene are of huge concern so finding a partner to keep your vacation rental clean and safe is paramount. In addition, you will now be searching for a property that will be able to accommodate longer stays. One that is in an area with fast wifi, and can easily be updated to include space for working.
As the vacation rental industry booms, managers will be looking to expand their inventory and attract these new owners. Vintory has just launched the first and only CRM and Sales & Marketing Automation Platform designed exclusively for Vacation Rental Managers to grow their inventory. Book a demo today!