How to Make Your Dream Vacation Home a (Profitable) Reality Now


After living in Florida for seven years, a second home in South Florida has landed on the short list of big goals for my wife and me. We love being near the beach, the calmness of the water, the amazing restaurants and bars, and the nightlife. There is a calmness of the pace of life in coastal cities — something that has been a calming and centering place for me since we lived there. Our kids love playing at the beach, hanging out, and enjoying sunshine almost every day.

We will achieve the goal of buying this house. Now it’s all about timing, executing, and finding the right one.

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Overall Thought Process

The idea of having a second home is exciting, but also daunting. First, you have the cost of buying the second property. But also, questions arise on how to maintain it, how to know what property to buy, what area to buy in, and what it costs you to buy, maintain, and operate the house long-term.

Selecting a Location

If you are already familiar with a city, area, or neighborhood where you would want to buy, then you are already ahead of the game and have a clear locale you want to buy in. If you aren’t clear, you need to think on a city or area, such as Southern California, the beaches in South Carolina, the South of France, or the West coast beaches in South Florida. You have some homework to do. Maybe you need to think about the lifestyle goal — what you want to do, be around, or experience with this property.

Whatever you are looking for, you need to go to the area you think would be ideal long-term — and actually stay there. Start with a similar amount of time you would want to be away — one week, two weeks — and stay at a hotel or Airbnb-type of property in an area that looks interesting.

The most cost effective way is to stay in a nice but reserved AirBNB property where you can enjoy the comforts of home, cook, do your laundry, and have a nice place to stay that’s not a one-room tiny hotel room. You also have (hopefully) ease of use with a car to travel around, or pick a location that is close to the local mass transit if that is available.

If you were, for example, three years out from selecting a location, but you knew you wanted to be in South Florida, take one winter trip to Tampa, and then the next winter trip to Jupiter, and then the next one to West Palm Beach. Whatever the cities are, take your time, stay there, wander there, have fun, and learn the vibe of the city by BEING there. Taking the time in each area will help influence and then solidify where you want to buy and give you a lot of confidence going into the purchase.


The Purchase

As a second home, you can get regular conventional financing for this property and use a 20% or 25% down payment, depending on your lender. Assuming you are required to put 25% down, and let’s say a purchase price of $300k for your property, you would need $75k plus closing costs for your down payment.

Using the same example, you have a three-year timeline before you purchase, so you need a plan to save for that down payment. Call it $75k plus $5k for closing costs, and you’ll need to save up $80k in three years. That equates to $26k a year — roughly $2,200 each month.

A few other examples for reference: For a $150k condo, you’d need to save $1,100 each month, and for a $500k house closer to the beach, you would need to save about $3,500 each month (for the down payment).

Type of Property

I am most familiar with Florida, so I will use that as our example. In Florida, there is a wide variety of options when deciding on locations, HOA, landscaping and amenities, neighborhoods in a community versus not, and price range. For instance, you could be within a few blocks of the beach in a condo for $300k, but it might be tiny, not renovated, and have costly HOA fees. A beautiful neighborhood with a 3/2 condo with 1,500 sq ft would run you around the $250-300k price point, could be within 10-15 minutes of the beach, and have around $400 a month in HOA fees between the master HOA and the smaller community where you condo is located.

Related: I Just Stayed in a Vacation Rental: These 7 Things Would’ve Made Me Return

If you went for a single-family home within a community, the housing prices could start more in the $300k-$400k range and will likely go up dramatically depending on location and the amenities. Here, you could have your own pool instead of the common one for the condo (but you’d also have to allow for maintenance of it), and you’d have a little more freedom with not having people directly across from, above or below you, like in a condo or townhouse.


Make sure you understand the rules within the HOA on everything — paint colors, lawn maintenance, the common areas, the pool, and use of your home in regard to rentals. There are a lot of different rules and specifics that govern the property you are about to buy.

Make sure you have a real estate agent who is helping you navigate these questions when you go to buy the property, and understand what you are getting into! If you have budgeted for $300 a month for your HOA fees because you love the landscaped areas and the large pool in the neighborhood, that’s wonderful. Just remember, if the community votes to tear out the pool and add $300 a month to your HOA fees, guess who is on the line for it. YOU!


You’ve saved your money, found your perfect location, and purchased your property. Amazing! For my family, we’re making sure we can use the property as a vacation rental during the times we’re not personally there, at least for a number of years. By doing this, we are:

  • Allowing cash flow for the property
  • Able to pay off the property faster
  • Having people in it a lot, ensuring we know of any maintenance issues and have them addressed

Back to the $300k example:

$300k purchase

$225k 30-year mortgage with 25% down = $1,100 or so PI, and then insurance and taxes

For example’s sake, the final mortgage payment ends up at $1,800 a month PITI (principal, interest, taxes, and insurance).

You plan to visit 3-4 times a year and then rent it out all other times. You average $300 a night and have 30% occupancy as a vacation rental. That would mean 10 nights per month and $3k a month in rental income. It also means you can stay for 1-2 weeks at a time and still keep that rental income cash flow up for all 12 months within your projection.

At the $3k number for rents, you can pay your mortgage at $1,800 monthly, save $300 a month (10%) for maintenance, keep $400 in income or cost of a manager to manage the rental or HOA fees, and pay $500 additional towards principal. I have left this open for good reason. There are a lot of variables. All of this is meant for proof of concept, not that something important is left out.


Related: 10 Photo and Video Tips to Showcase Your Vacation Rental Property

The Grand Plan

If you were to buy this property today, you would expect to be cash flow positive within a month or two once you had established the property (yourself or a manager if necessary), getting renters lined up and cash flow in. If you used this example and executed this process, your rental would be MAKING you money.

To take it a step further, you could have the property paid off in roughly 16 years, using it 3-4 times per year personally, averaging 1-2 weeks per trip. You’d positively cash flow every month, on average with 30% occupancy, creating roughly $1,200 a month additional revenue to cover expenses, HOA, management, and debt payments, however you want to do that. If you are able and committed to paying $500 additional principal monthly, you’d have it paid of in 16 years and own it free and clear.

At that point, you could either continue as you were (except now pay yourself the additional $1,800 monthly), or you could take that, buy another one in another place, and do it all over again.

Final Thoughts

The vacation rental is an awesome idea, and many people dream of owning one. Think of how you can operate within this idea, what specifically you want in the property, and how often you can visit. Make it so you can comfortably operate it and use it to the joy and benefit of your family and friends and that it does not become a larger stress and problem. Dream about what you want to do and where you want to live, and then see it to fruition.

Do you dream of owning a vacation home one day? How are you going about making that a reality?

Let me know your thoughts with a comment!

About Author

Nathan Brooks

Nathan Brooks is a dad, husband, worship leader, and real estate investor in the Kansas City market. Foodie. Coffee addict. Crossfit junkie.


  1. Jon S.

    @Nathan Brooks I think you’re underestimating the single most important fact: that in most desirable vacation destinations, Price to Rent ratios are not attractive and home prices are so high and rents not high enough so you cannot cash flow. Cash flowing in Hawaii, Costa Rica or any other highly sought after vacation location is more easily said than done.

    • Nathan Brooks

      Jon … Thanks so much for reading and responding. There are two questions here. Costa Rica, Hawaii, … you can buy for under $300k in both places. Doesn’t mean you have a mansion, but it does mean you could have a home there. I’ve looked at the big island in Hawaii, and there you can buy a sweet house with 1000-1500 sq ft easily for under $300k, and some were well under that. Not Tiger Wood’s house, but you have a house in Hawaii.

      Having a vacation home doesn’t have to equate to having a mansion. Sure, some California areas you can’t buy in that price range, but if you had X to spend, and having a vacation home was the goal, the process and the pricing does equate here .. you might just have to change the location a little bit. You maybe can’t afford Naples, FL or Bonita Springs, FL … but you go an hour up the coast and you can find twice the house for the same money.

      ***The other mention, the vacation rental model is a much higher return than the regular cash flow monthly rental, which is why I suggested it as that, and not a monthly rental.***

  2. Casey S.

    Great article and nice to see the subject being discussed. I’ve been doing a little shopping with my sites set on Southeast Alaska or the Texas gulf coast. In the areas I’ve been looking, 30% occupancy doesn’t seem realistic. I’ve been going to VRBO and looking at the availability calendars of individual properties in the targeted areas and it appears occupancy is just too low for it to work as an “investment”. So for now, I’ll just keep chugging along on the real investments and buy the vacation home for ME when I can actually afford it in a few years. Not trying to sound negative but buyers should do plenty of due diligence if going at this as an actual money maker.

    • Nathan Brooks

      Casey, I think this is a totally fair observation, and absolutely people should do their due diligence for wherever they are looking for.

      With that said, I think you can also comp out areas and see where demand is, where the pricing is. So it may be a matter of how they have their settings (how many nights per month), or maybe you could have 30% occupancy, but $50 less a night. Whatever that might be … just DO YOUR HOMEWORK! 🙂 Thanks Casey!

  3. Jed Spencer

    Nathan ,

    Thanks for the article, and some interesting points to think about. I’ve run the #s on this for a couple different scenarios, but unfortunately our ideal vacation destinations (either mid atlantic beaches due to proximity, or rockies on-slope ) would have a much higher vacancy rate –i’m estimating 30% occupancy for beach and 50% ski place, therefore making the numbers unworkable from a cash flow perspective. Your thoughts above bring up a good point in that other locations such as FL, CA, etc. probably have more year-round appeal and therefore higher occupancy

    • Nathan Brooks

      Jed, this is an interesting question. So WHAT would be something that would bring someone to those kind of places during all year. For instance, I know that Denver is a beautiful place people like to go, and you could have snow people during winter, and biking and hiking and outdoor kinds of activities during the spring and summer months. It might be a matter of making something really useful like having a few bikes for people to use, or connect w/ a local ski place and help the guests have an easier time to get where they want to go. I think there are creative ways to help make that a better/bigger value for potential guests.

  4. How do you are using as a vacation rental when you are not there, how do you take care of the management aspect of it? (cleaning, key-delivery and drop off, turning over, repairs, etc.)

    • Nathan Brooks


      This is an awesome question. For the ones we have local, we have our team who manages (assistant preps for next guest, and cleaning person turns the units).

      For out of town, I think a local handyman would be perfect for maintenance calls, and hire someone local (a cleaner is perfect) who would turn the unit, and do whatever you wanted to have for a guest who is arriving.

      If you have long periods of vacancy, consider allowing/asking your cleaning person to hang out and stay the weekend at the place, or invite family or friends to use it.

  5. Ken Boone

    I would love to do a vacation rental home as well. What I am running into though is that with those kind of numbers, management kills it. With SFH, property managers get on average 10%, with vacation rentals I have seen anywhere from 30-40%. It makes sense since there is a lot more activity that a manager has to deal with when vacationers are coming and going constantly. I am thinking for it to have any chance of cash flowing you would have to manage it yourself and use something like VRBO or AirBnB.

    • Nathan Brooks

      Management companies in this realm do sometimes make more … we do use AirBNB and VRBO and it works great. You would likely manage yourself, but could hire someone locally to do that. The booking and communication doesn’t take too much effort, and the interface is very easy. A management company could be useful, but at that point my suggestion would be do more like 2-4 weeks stays at least, and then do 4-5 months of occupancy, and then use it during the other periods. Make use of having a management company and their services, and viewing your occupancy over the 12 months.

    • Nathan Brooks

      Hi Monica! Yes, I do think it would be little more than the 10% range depending on arrangement … I just had the similar kind of question above, see the notes from the previous message. I do think self managing or w/ management company you can make it work, a slightly different thought process on how to operate it.

  6. Bill Ramirez

    Good article. One thing you need to be careful about is telling a lender it’s a second home when you plan on renting it out a majority of the year. I don’t think Fannie allows a third party management company to be in control of a second home. You can still buy as an investment property but you’ll likely have to put more down and have a higher interest rate. It’s just an issue to be aware of in regards to underwriting guidelines. Of course, you can buy the house as a second home and then decide after the fact that you want to rent it out.

    • Nathan Brooks

      Bill, great point here. I definitely am not suggesting not to tell the truth, but work with the lender on whatever they suggest is best based on how much you would be there and its use. Thanks for your good thinking and taking time to respond here!

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