Chapter 2

Buying a Vacation Rental Property

Vacation rental properties are short term rental properties that many people use for vacationing in when they are at a spot away from home. It is basically renting out an apartment or other space, such as a house, condo or resort area to those that are visiting the area for a short period of time that need the space. They generally come fully-furnished with everything that a visitor would need during their stay. It is a great alternative to a hotel and it is also usually more upscale and private. Starting a vacation rental business is an investment that many consider undertaking, as the vacation rental can provide income year after year.

In the U.S., it is known as a vacation rental but it is also called a villa rental or even a villa holiday by those in Europe. Holiday homes, cottage holidays and gites are also other terms used for these short term rental spaces.

Types of Vacation Rental Properties

There are many different kinds of vacation rental properties out there. With many of them expanding across a wide range of types, there is no set guideline on what ‘type’ of vacation property you can invest in and then rent out.

Here are some of the options available, though they can be just about anything, the sky’s your limit when investing in vacation rental properties:



These are detached from the rest of the villas in the area to provide more privacy, are upscale and provide those staying within them with the beauty that you would only get from a home in the Roman time period. They’re usually found on ocean-sides or other beach-like areas.


Houses are regular homes that are built with one or two floors. They can be in towns, off in the fields, in a suburb, middle of a city or even right on the coast. They are usually larger when rented out and might even just have a room for rent inside a home, which is what is common with Bed and Breakfasts.


Apartments are generally around, on top of, next to, below other people in a building that is shared space. They can range in size and can be comfortable for a number of people. They have lower upfront costs and come maintenance-free.


vacation rental-cabin

Cabins are small homes that are built from logs and typically are found in the woods. They’re great for having a wood-burning fireplace and for privacy. They are usually one story and great for the mountains.


These are charming smaller homes that usually only consist of one floor. Although, if they have a second floor, it is generally made in the attic of the home. They are ideal for older visitors, young families or those that just want a quaint, quiet experience.


Chalets are a lot like cabins, but they’re built to be stronger and more rugged, they’re cuter and provide more upscale amenities that a rugged cabin generally does not provide. They’re known to be around hillsides.


vacation rental properties - Vacation rental cottages

Found mostly in rural locations, these little homes are often just one story and do not have a second floor. They do not hold many people and can be made from a number of items. They are perfect for a getaway at a beach or even just to be out in the woods.


Also known as a condo, this is a style of home that is attached to other homes within a community. There are usually amenities that can be shared, are maintenance-free and are upscale. They range in size but are often found in warmer climates and by oceans.


This is a large, impressive and upscale house that can hold many people all at once. This is a place where everyone would go to enjoy their time away.


Vacation rental properties - studios

Studios are small room-like structures but built without rooms inside them. They have everything a person would need for their stay such as a small kitchenette, bathroom and living quarters, complete with bed.

They are generally small and built only for one or two people. They are also more like apartments and are on top of, next too or below others.


Townhomes are homes that are full size but attached to another one the other side. They are slimmer but provide everything that a person would find in a full-size, detached home. They are also usually in neighborhoods with others that have many amenities for those that come and go to use.

Unusual homes

Vacation homes are not restricted to the normal hotels or motels that you would stay in or the ‘homes’ that others would have to go through a time-share to get. Now, you can also invest in an alternative home. Some of the options out there are completely off-the-wall and provide guests with the most unusual stay but also a delightful one.

Barns, houseboats, RVs and campers, yurts, treehouses, shipping containers, nature lodges and more are all considered places to rent out to those that want something unique, yet comfortable. When you have an investment in a vacation rental property, you can give it as much appeal as you’d like.

What To Consider Before Buying A Vacation Home

When you’re playing with starting a vacation rental business and the idea of buying a vacation home, it may feel like there a million different decisions to make. Because there are. But there’s no decision more important than the location of your rental. You could have the coolest themed rooms, the most beautiful pool, and a kitchen that would make any chef jealous, but if your home is located in a place that very few people want to be, it’ll be all for nothing.

Best places to buy rental property

The first thing you need to consider before buying a vacation home is the location. There are great places for vacation rentals, and there are not so great places. And while there will be a few areas where you may want to settle or compromise when it comes to your rental, the location should not be one of them.

Think About The Experience

Different families have different ideas about a dream vacation. Some want to escape to the sun and sun of Florida’s beaches, while others want to connect with nature in a cabin in the woods. Some families want to feel like a tourist while others find joy in experiencing new places like the locals do. When picking a location for your rental, think about places that families like to visit, and ensure you look for property that makes getting to and from the major attractions easy and convenient.

And while the guest experience is critical in deciding where to buy a vacation home, your personal experience should be taken into consideration too. Chances are, you’ll use your rental from time to time, so you want it to be in a place that you enjoy visiting, and you look forward to visiting. Before you decide on a geographical location, sit down and plan out the experience you want to offer your guest. What feelings do you want your guests to feel when they stay at your home? Luxury? Tropical? Cozy? Knowing the kind of experience you want to offer to your guests will help you narrow down the perfect location.

Best place to buy a vacation home are often in the south

Hot summers, gorgeous beaches, sparkling pools, and popular tourist attractions bring millions of tourists to the south every year. From theme parks and beaches in Florida to the music scene in Nashville and Memphis, the south offers some of the best places to buy vacation rental property. The area offers gorgeous weather and plenty of things to do for people of all ages. The southern region has proven year after year as being one of the best places to invest in property.

Florida is one of the top vacation home destinations, mainly because it’s such a popular winter destination and it has an abundance of affordable real estate. Local regulations also are more laid back when it comes to vacation rentals in the Sunshine State, making it easier to run a successful vacation rental. Florida is also very versatile when it comes to vacation home locations. There are single-family homes in suburbs just minutes from the theme parks, high rise condos on the beach, bungalows in the Keys and even cabins in some of the state’s local parks.

Texas and Tennessee also made a name for themselves on the list of best places to buy a rental property, as it’s beautiful landscapes, popular for shopping, and dining destinations, and famous attractions like the Texas Rodeo and Graceland in Nashville are a magnet for tourists from all over.

If you find yourself looking at a map and feel overwhelmed about where to buy a rental property, narrowing your search to the south may help you find a location that works for you and your future guests.

Places to avoid if you’re thinking of buying a vacation rental property

Unfortunately for many vacation home buyers, not every vacation destination is an ideal vacation destination, and they learn this the hard way.  While the slopes and mountains of Aspen are beautiful to look at and fun to explore, the area itself is an extremely low performing area for vacation rentals. And it may surprise you that New York City, Martha’s Vineyard and Honolulu, although bucket list places to visit for sure, are just not measuring up when it comes to successful vacation rentals. These cities may offer incredible vacation opportunities, but strict restrictions for short-term rentals make it difficult for owners to make money in these areas.

If you want to cater to wine lovers, instead of buying property in underachieving areas like Martha’s Vineyard, think about properties in Georgia or California where people can enjoy the area’s wineries but also experience everything else these popular tourist destinations have to offer. These areas are also much more short-term real estate friendly and allow vacation rental owners more flexibility and freedom when it comes to running their vacation rental.  Instead of a beach rental in Naples, think a little more north like Panama City Beach (Rented’s #1 best place to buy vacation property!) You can offer guests an unforgettable vacation experience and run a successful and profitable business at the same time. Doing a little research can help you find the right location for the type of vacation rental you’re looking for.

Buying a vacation home is an exciting adventure, and comes with a lot of factors to consider. But before you get carried away with trying to sort out of details of your vacation rental, take time to find the ideal location that will draw people in and give them the experience that they’ll never forget. Being intentional about the location of your vacation rental will set you up for success and create a vacation destination that will be profitable for you and memorable for your guests.