Is It Profitable to Own a Vacation Rental? How to Calculate Income and Expenses

Is It Profitable to Own a Vacation Rental? How to Calculate Income and Expenses

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Trey Duling

Trey Duling is the President/CEO of, a large travel company specializing in Florida getaways. He has over 27 years of experience in the area, owning multiple companies that market to guests looking for an Orlando vacation. His main focus is marketing hotels and short-term vacation rentals near Disney World, with ample expertise as the largest authorized ticket seller for the large attractions in Orlando.

Raised by his father who previously owned multiple hotel properties, Trey gained a lot of knowledge growing up around the hospitality industry. He learned early on what general managers for hotels were looking for in a marketing company to help them sell more rooms per night and has been actively growing his hotel portfolio since 1993.

In 2006, Trey expanded into the vacation rental home market by offering his guests condos and townhomes to rent within a 15-minute drive to Disney World. With the increasing demand of this type of accommodations, he now markets over 380 condos, townhomes, and vacation homes in the area.

Packages are the most popular among guests, as they offer more savings when bundled with lodging, and is the largest ticket seller for the area’s attractions today.

Trey graduated with a bachelor’s degree from the University of Mississippi and then received his master’s degree in Entrepreneurialism from Belmont University in Nashville, Tennessee.


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Are you looking to buy a vacation home rental property but want to make sure it is a good deal? Below, let’s walk through a vacation home deal analysis.

How to Calculate the Vacation Rental Expenses

The best thing to do first is to calculate your expenses—figure out how much the vacation home is going to cost on a monthly basis.

Here is a list of the typical expenses that most vacation homes have each month and/or year:

vacation rental

Most of these expenses are pretty easy to figure out on your own without much help from anyone else. Your monthly mortgage fee can easily be calculated and most insurance agents can give you a pretty good ballpark figure on the renter’s insurance.

Your Realtor should be able to ask the current owners for their last 12 months of statements so you have a better understanding of how much utility bills will run. If not, call the utility company, and they will be able to give you an average monthly cost.

Please note that vacation rental properties tend to have higher utility usage than other rental properties. Think about it: The guest is not the one paying, so if a light is left on, they are not too concerned. Utilities will also be higher during popular travel seasons and lower during the off-season.

Related: How to Make a Fortune on Airbnb Without Owning Any Property

How to Calculate Vacation Rental Income

Once you’ve tallied up all the expenses, you’ll have an idea of how much the vacation rental will cost monthly.

The rental income of a property, however, can be a little more difficult to figure out. To get the most accurate gauge, email or call other homeowners or get in contact with the current management company.


When you speak to the current property manager of the unit you are interested in, ask them a few simple questions:

  • What can you tell me about the rental history of the property?
  • How much is the nightly rental rate on average?
  • How much annual income does the property produce?

A lot of management companies handle all the bookings for the homes they manage. If the current management company does this, they should be able to provide the last 12 months of invoices, complete with all the costs associated with the house and the rental income.

Management companies are always the easiest to start with because they know the more helpful they are to the new homeowners, the better chance they have of retaining the unit under their management after the sale goes through. They are also in the property more often than the current owner, so they can provide better information about necessary repairs, ongoing maintenance, and guest feedback.

Next, go online to VRBO, HomeAway, and Airbnb. Look for a vacation home that is similar in size and location to the property you are looking to purchase. Pay attention to the comparable properties’ nightly rates. Check their calendars to get a feel for the occupancy/vacancy each month, too.

Related: Calculating Your Airbnb Return: How to Estimate Your Rent

Don’t forget that vacation hot spots have high, mid, and low seasons, and pricing will vary accordingly. Because of this, you can’t expect your rental income to be the same each month.

Lastly, reach out to individual homeowners who list their properties on VRBO and HomeAway. (You can’t do this for Airbnb, because homeowner contact information is not available.) For me, email has worked best. Send the homeowner a note, telling them that you are interested in purchasing a home in the same neighborhood where their house is located, and you have a few questions you would like to ask them. Typically, people are pretty open to helping each other out.

Wrapping Up

After you have talked with a few homeowners in the neighborhood and done your research online, you should have a pretty good idea as to how much rental income to expect on a monthly basis. Now all you have to do is simply compare your income to your monthly expenses to see if it is a good deal.

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What other questions regarding investing in vacation rentals do you have? 

Let’s talk in the comment section below.

Looking to invest in a vacation home? Here is a step-by-step guide to calculating income and expenses on a short-term rental to determine whether or not it's going to be a profitable investment property.