If you’re looking to build wealth, you already know the importance of a good investment. But with so many options available, how do you know which investment is right for your situation and financial goals? While stocks, bonds, and annuities can also play an important role in your investment portfolio, you should also consider the myriad benefits of investing in a luxury Sedona vacation rental property.
In this blog, we’re taking a closer look into why a Sedona vacation rental should be your next big investment. Tapping into an investment that offers steady income, solid appreciation over time, flexible use, and tax advantages, a vacation rental can serve as a pillar in your overall investment strategy. Not to mention, unlike other types of investments, you can enjoy the luxury vacation rental yourself whenever you choose.
VacayAZ is Arizona’s premier luxury vacation rental management company for renting out your short-term rental properties. Let us do the heavy lifting while you enjoy the return on your investment. With years of experience managing the most luxurious vacation properties throughout Phoenix, Scottsdale, and Sedona, we have the tools and resources to maximize your vacation rental investment.
Why Are Luxury Vacation Rentals a Good Investment?
When looking for future investments, you have a lot of options. But there are clear reasons why many individuals are choosing to invest in vacation rental properties across the country. Seen as one of the most secure investments you can make, vacation rentals can enable you to earn a steady stream of revenue for years to come.
Here are 5 of the top reasons why investing in vacation rentals like stocks could be the smartest investment you make:
1. Steady income: After all, isn’t this the purpose of any investment? According to recent data, rental properties post some pretty impressive average annual revenue for property owners. By the end of 2021, the average annual revenue for a short-term vacation rental hit $56,000. In some of the top-performing markets, cash-on-cash returns averaged just about 10 percent on the year. If you’re looking for a high-performing and relatively “safe” investment, this could be for you. And with VacayAZ, some of our properties average over $450,000 a year.
2. Appreciation: As historical data shows, real estate tends to appreciate at a higher rate than inflation. Renting out your vacation property investment can help you hedge against inflation and profit from an increase in equity. In fact, the housing market has performed well despite events such as the pandemic, which speaks to the relative safety of an investment like this. In Sedona, there are so few large luxury homes that are able to be rented on a short term basis. In fact, VRBO did a study that found only 17% of the vacation rentals in Sedona are 4 bedrooms or more, making it the perfect opportunity.
3. Tax advantages: As long as your vacation investment property is rented out for at least 14 days out of the year, you can take advantage of certain tax deductions and write-offs enjoyed by real estate investors. If you’re interested in what type of tax advantages are available to vacation rental owners, our team can help you run through the details.
4. Flexibility: A short-term vacation rental offers a lot of flexibility when it comes to finding potential renters. For vacationers looking for a weekend getaway, week-long family reunions, or even just a business traveler looking for a quick place to stay, you can draw in a lot of unique clientele with a vacation rental. And as you might expect, the longer your property is booked, the more profit you’ll make.
5. Resistant to recessions: Historically, vacation rentals perform well even during recessions. Depending on your market, you can stay booked even in economic downturns, as many vacationers and travelers opt for less crowded cities for a budget-friendly trip. That’s why, compared to major cities like New York or Dallas, an emerging market like Sedona could be worth exploring.
How to Choose Your Luxury Vacation Rental Property
As you can see, a vacation rental can be a very beneficial investment. But deciding to pursue this type of investment is just the first step. Now you’re left with the important decision of determining which property to purchase. Before jumping in, there are a few things to consider when determining which vacation property will help you make a return on your investment.
When researching potential vacation properties, consider the following:
· Location: What’s the first rule of real estate? Location, location, location. This rings true for vacation rentals as well. Location will dictate the guests who will be interested in booking. But it’s not all just about the number of guests. Consider the trade-off of purchasing in a smaller market with less competition versus buying in a market like New York City where your potential guests have tons of options.
· Rise in demand: In recent years, demand for vacation rentals has steadily increased—even during the pandemic. More and more travelers are looking for alternatives to traditional hotels, but you also need to be aware of your market. Studies show that vacation rentals in mid-sized cities, rural areas, and resort towns saw the highest increase in demand between 2019 and 2021.
· Seasonality: Whether purchasing a beachfront condo or a cabin in the mountains, consider how seasonality will impact the popularity of your vacation property. Choosing a property in a major metro area can help shield you from the seasonal swing that’s common in bookings.
· Occupancy: One of the top reasons why more travelers opt for vacation rentals instead of hotels is the higher occupancy rate. When renting an entire home, you’ll have far more spaces and more beds to accommodate large groups.
Why a Luxury Sedona Vacation Rental?
When looking for the perfect location for your vacation property, look no further than Sedona, Arizona. This unique city nestled high up in the mountains offers stunning scenery and a reprieve from the notorious Arizona heat.
Why should you invest in a Sedona vacation rental property?
· Popular tourist destination.
· Improving property market value.
· Breathtaking scenery.
· A range of outdoor activities, including hiking, fishing, kayaking, rock climbing, and more.
· Over 50 diverse local restaurants.
· More than 80 art galleries and shops.
· Unique blend of Native American, Mexican, and American Southwest culture.
Conclusion – 5 Reasons Why a Sedona Vacation Rental Should Be Your Next Investment
If you’re looking for a unique investment that offers clear benefits and returns, you need to look into vacation rental properties. Investing in a luxury vacation rental, especially a luxury Sedona vacation rental, offers many benefits, including steady income, distinct tax advantages, and flexibility to ensure your property is booked throughout the year.
Once you’ve purchased your vacation rental property, are you prepared to manage it effectively? The vacation rental management pros at VacayAZ can help. Our full-service vacation rental properties management helps you manage, book, and maintain your rental property so you don’t have to worry about the details of running a successful vacation rental. With our years of experience in the industry and unmatched resources, we can help you maximize your rental income.
Contact us today to learn more about our full range of services. If you’re looking to make a splash in the Sedona property market or are interested in optimizing the Sedona luxury vacation home you already own, we can help.
