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 of benefits from investing in a 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 vacation rental yourself whenever you choose.
VacayAZ is Arizona’s premier vacation rental management company. 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 Vacation Rental Properties a Smart 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 a vacation rental 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 the historical data shows, real estate tends to appreciate at a higher rate than inflation. This means that a vacation property investment can help you hedge against inflation and profit from an increase in this type of equity. In fact, even in recent years with unexpected events like the global pandemic, the housing market performed quite well, which again makes this a safer type of investment.
3. Tax advantages: as long as your vacation 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 prove that they still 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 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 quite a few metrics to consider when determining which vacation property will be perfect for your goals and 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 the location will dictate the guests who will be interested in booking. But it’s not all just about quantity of guests. Consider the trade off of purchasing in a smaller market where there’s 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 your traditional hotel, 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 for 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 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
Stocks, bonds, and mutual funds can all play a vital role in your investment portfolio. But if you’re looking for a unique type of investment that offers clear benefits (not to mention impressive returns on your investment), then you need to look into vacation rental properties. Investing in a vacation rental, especially a Sedona vacation rental, offers many benefits, including steady income, distinct tax advantages, and flexibility to ensure that your property is booked throughout the entire year.
But once you’ve purchased your vacation rental property, are you prepared to effectively manage it? The vacation rental management pros at VacayAZ can help. Allow us to help 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 property investment. As a full-service vacation rental management firm, we’ll handle all your guest services, bookings, cleanings and maintenance, and even promote your property with our advanced marketing tools.
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 interested in optimizing the Sedona vacation home you already own, we can help.
