The Top 8 Hidden Costs of Owning a Vacation Home


Owning a vacation home is a good investment, but there are sometimes hidden costs. In this article, we are going to look at the most common hidden costs you as a homeowner might incur.

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The Top 8 Hidden Costs of Owning a Vacation Home

Higher Utility Payments

If you own a vacation home in a hotter climate such as Orlando, during the summer and fall months you could end up paying as much as 25% more on utility payments. Unfortunately, since the guests are not paying for utility bills, they tend to leave lights on when they are not in the room and lower the AC more than they would in their own homes. In addition, most utility companies will require you to put down a $500 to $750 deposit if your house is being rented as a vacation home and you do not have prior credit set up with them.

Higher Mortgage

If you are trying to obtain a mortgage for your vacation home, you should expect to have stricter qualifications. Most lenders are now requiring vacation home owners put at least 20% down on the property, as compared to 5% down on conventional mortgages.

If you have the down payment available, you might want to put down 20% to avoid paying PMI, which could run as much as 1% of the mortgage amount. In addition, since this is not going to be the lender’s primary residence, you could expect to pay as much as 1% more on the interest rate.

Related: 5 Things No One Tells You About Owning Vacation Home Rentals

Higher Homeowners Insurance

If you are just using the vacation home for you and your family, then your homeowners insurance should not go up, but if you are renting it out, you could see a 25% increase in your monthly premiums, as you will need to add a rental dwelling policy.

Higher Property Taxes

In most states you are able to homestead your primary resident, and this will save you as much as 25% to 35% on your property taxes. Here in the state of Florida, if you are not claiming your vacation home as your primary residence, then your property taxes will increase 28%.

Property Management Fees

You will need someone to look after your property when you are not there and also take care of the guests who are staying in your house. It depends on the type of vacation home you buy, but you should expect to pay around $110 to $250 a month for a property manager to look after your property.

Marketing Costs

If you are going to be renting out your vacation home, you need to market your property and let potential guests know about your property. The good news is that most property managers will do the marketing for you, but sometimes you might want to do a little more.

If you advertise on or (the two most popular vacation home-renting websites) you will probably pay between $400 and $1000 a year, depending upon the marketing package you choose. In addition to marketing costs, you should also figure in your time, as these guests will be contacting and paying you directly. A homeowner recently told me that they spend as much as 2 to 4 hours on each booking talking to the guests and making sure the payments went through.

Higher HOA Dues

Most vacation home communities charge higher HOA dues than, say, residential communities. Why? Simple, the vacation home communities usually have more security gates and security guards patrolling the community for the safety of the guests. Plus, most vacation home communities include many amenities for guests staying on the property that cost money, such as free coffee, an internet café, free newspapers, shuttle service to local attractions, etc.

Related: 8 Clever Ways to Save BIG on the Monthly Bills for Your Vacation Rental

Repair and Upkeep Costs

It is said that a homeowner should budget to spend least 1% of the value of their house on annual upkeep and maintenance just to keep the house at its current value. A vacation homeowner, since they are renting it out to guests who are typically harder on the house than a homeowner would be, should budget to spend around 1.5% to 2.% of the value of the house. For example, if the house is valued at $200,000, the vacation homeowner should budget to spend around $3,000 to $4,000 on annual maintenance.

I hope this article was helpful to you when trying to figure out all the hidden costs of owning a vacation home.

What hidden costs have you found to be associated with vacation rentals?

Please respond below!

About Author

Trey Duling

Trey Duling has been managing and marketing vacation homes in the Orlando and Disney World area since 2001. His passion is helping investors make their vacation homes more profitable. Please visit his website at


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