What are the financial aspects unique to managing a VRBO property?
Virtual vacation rental (VRBO) properties are a popular option for people who want to make money from their homes while they’re not using them. However, there are some financial aspects unique to managing a VRBO property that you should be aware of before you get started.
1. The cost of owning a VRBO property
The first thing you need to consider is the cost of owning a VRBO property. This includes the purchase price of the property, as well as the costs of maintenance, repairs, and taxes. You’ll also need to factor in the cost of furnishing and decorating the property, as well as the cost of marketing and advertising it.
The total cost of owning a VRBO property will vary depending on the location of the property, the size of the property, and the amenities that are included. However, you can expect to spend anywhere from \$50,000 to \$500,000 on a VRBO property.
2. The income potential of a VRBO property
The income potential of a VRBO property is another important factor to consider. The amount of money you can make from your VRBO property will depend on a number of factors, including the location of the property, the season, and the demand for vacation rentals in your area.
According to HomeAway, the average nightly rate for a VRBO property in the United States is \$169. However, some properties can command much higher rates, especially during peak season. For example, a beachfront property in Miami Beach could easily rent for \$500 or more per night during the summer months.
It’s important to note that you won’t be able to rent out your VRBO property 100% of the time. There will be times when the property is vacant, and you won’t be earning any income. You’ll need to factor this into your calculations when you’re determining the financial viability of your VRBO property.
3. The tax implications of owning a VRBO property
When you own a VRBO property, you’ll need to be aware of the tax implications. You’ll likely have to pay property taxes, income taxes, and sales taxes on your VRBO property. You may also have to pay other taxes, such as tourist taxes or bed taxes.
It’s important to consult with a tax advisor to understand all of the tax implications of owning a VRBO property. You don’t want to be surprised by any unexpected tax bills.
4. The management of a VRBO property
Managing a VRBO property can be a lot of work. You’ll need to find tenants, screen them, and collect rent. You’ll also need to maintain the property, clean it, and handle any repairs or emergencies.
If you don’t have the time or the expertise to manage your VRBO property yourself, you can hire a property management company to do it for you. However, this will cost you money, so you’ll need to factor this into your calculations when you’re determining the financial viability of your VRBO property.
5. The risks of owning a VRBO property
There are a number of risks associated with owning a VRBO property. These include the risk of damage to the property, the risk of theft, and the risk of lawsuits.
It’s important to have insurance to protect yourself from these risks. You should also have a good understanding of the laws and regulations that apply to VRBO properties in your area.
Conclusion
Owning a VRBO property can be a great way to make money, but it’s important to be aware of the financial aspects involved before you get started. By doing your research and planning ahead, you can minimize the risks and maximize the rewards of owning a VRBO property.