4 Compelling Reasons to Invest in a Vacation Property


Owning a vacation home can be a good investment, but you need to be careful when buying, as many investors buy a vacation home for all the wrong reasons. Since I like to have a more positive approach to life, I thought we would discuss the four best reasons to buy a vacation home.

Download Your FREE guide to evicting a tenant!

We hope you never have to evict a tenant, but know it’s always wise to prepare for the worst. Navigating the legal and financial considerations of an eviction can be tricky, even for the most experienced landlords. Lucky for you, the experts at BiggerPockets have put together a FREE Guide to Evicting Tenants so you can protect your property and investments.

Click Here For Your Free Tenant Eviction Guide

4 Compelling Reasons to Invest in a Vacation Property

1. They give you the ability to take family vacations.

If you and your family have a favorite vacation spot you love to go to and you desire to visit a few more times a year, then buying a vacation home in that area would be a good investment. Remember, you can’t put a price tag on spending quality family time and developing memories that will be with you for a lifetime.

Related: In the Market For a Vacation Rental? First, Take a Look at the Pros & Cons!

2. They can serve as retirement homes.

In most popular retirement hot spots throughout America, the prices of homes continues to rise. One of the best ways to save money is to purchase a house where you and your spouse would like to retire someday. Purchasing the house before you are actually ready to retire has quite a few benefits. For one, it allows you to buy a fixer-upper and have plenty of time to get the work done. Secondly, you can actually spend a few weeks a year in the area before you are ready to move there. This will allow you to get used to the area and meet quite a few new friends.


3. They’ll provide some extra income.

Most vacation homes, especially if you have a good management company, produce extra income, and they will also provide great tax benefits for you. You need to do your research and make sure that the area where you are buying the vacation home is a popular vacation spot (enough visitors to support the lodging choices) and the income of the property can hold up to the monthly bills.

Remember, owning a vacation home is just like owning a business; the income needs to be greater than the expenses. The key is to buy right, have a tight range on management of the property and to spend money conservatively to maximize your profits.

4. They’re a good way to diversify your portfolio.

Most of the money investors make on their vacation home is when they go and sell their property. This is why it is said that you make money in real estate when you buy a piece of property — it is key that you buy right and not over pay. If you buy right, then you should be able to make money on the property, as most vacation homes do increase in value, especially if you own it for at least 7 years. Owning a vacation home is a great way to diversify your portfolio.

I will caution you that owning a vacation home is not without risk, and you need to take your time and do your research before you actually purchase a property. A vacation home is a luxury item, and as with any luxury item, it is best to purchase the property outright without having any debt on it. If you cannot afford to purchase the property outright, then you should look for a cheaper house or put at least 40% down.

Related: 8 Factors to Investigate Before Purchasing a Vacation Property


It is also important to note that if you purchase a vacation home, you are pretty much locking yourself into one main vacation spot for your family. Trust me; it is really hard to convince yourself to visit another area for vacation, especially if you are paying for upkeep on a vacation home. Also, as your children grow and get older, their extra-curricula activities will get in the way of many of your vacations. When they are young, it is easy to plan 3 or 4 family getaways a year, but once they start playing sports, performing in drama, or just attending high school, you will be lucky to go away once or twice a year.

Owning a vacation home is a good investment, but you need to make sure it is the right investment for you and your family. Too often I have seen families purchase a vacation home for all the wrong reasons and not fully think the purchase through. Oftentimes this results in them losing a lot of money to get out of the property, or they end up getting stuck with a property they cannot sell.

In your experience, has owning a vacation home been a good or bad investment?

Let me know with a comment!

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 http://www.orlandovacation.com/home-rentals/.


  1. Brendan Morin

    Thanks for the article, Trey! All great points here, but I’m a hardcore numbers guy. I would love to see some side-by-side investment scenarios of expected returns/hassle factor on vacation property vs buy and hold. What are some of the challenges unique to vacation homes, and how are they overcome? I imagine they can be a headache in downturns, as vacations are probably the first thing many people cut out of the budget in rough times.

  2. Laura Tokgozoglu

    Thanks very much for the article. My husband and I are entering into a new season of life, moving from Maryland to South Carolina.We realized that for the price of one home in Maryland we can buy a residence and a vacation home in South Carolina! You made some very good points.

  3. Nick W.

    I would also add that if you log enough hours (i seem to remember 750 being the magic number although this might be outdated) managing your rental property and dealing with construction/repairs/improvements you can recoup a lot of the money spent (ie your vacations may end up being free).

    Read up on it (IRS Publication 463 is probably a good place to start), or consult a professional on the ever changing legalese surrounding this.

    Maybe we can get one to weigh in here???

  4. Tim McCarthy

    Remember you can only stay in your vacation home 14 days to take full advantage of the tax benefits, but days that you are maintaining the house do not count against the 14. We have a vacation home in Emerald Isle that we rent during the peak summer months, from Memorial Day to early August, the rest of the year it is used by family and friends. My favorite months at the beach are September and October, water still warm, cooler weather, and far fewer crowds. The saltwater environment is very hard on a house so the maintenance is never ending.

  5. Darren Sager

    This is a topic we’re strongly considering going forward. Thanks for this article Trey. I know my brother has wanted to invest in rentals around Disney for quite some time. I should have him reach out to you .

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here