For many, owning a second home near the beach is a lifelong dream. Yet, most people find themselves occupying their second home for a short time throughout the year. If you’d like to increase your income during the months that you’re away, you’ve probably considered turning your home into a vacation property. But how do you make money on vacation rental property? It depends on several factors, and we’ve outlined them below with three tips on how to calculate your vacation rental income.
Here’s How to Calculate Your Vacation Rental Income
1. Know the Cost of Upkeep
Before you calculate your income, the most critical step is to create an expense spreadsheet. Begin with the basic costs of caring for your home, like landscaping, cleaning, repairs, and maintenance. Next, move on to owner-specific costs, including your homeowners’ association fees, property taxes, homeowners’ insurance, and flood insurance.
You’ll also want to keep in mind the time investment that you make in marketing and making reservations. Because owning a vacation property often comes with hidden costs, it’s essential that you dedicate time to this task. Every dollar impacts your ROI.
2. Educate Yourself on the Competition
Once you’ve taken your expenses into account, you know what it will take to at least break even. Now, it’s time to evaluate the competition in the area. Find out what properties like yours charge. Also, take your time to see how much properties with special amenities are charging.
For example, many guests are willing to pay more for a home that offers a Seabrook Island Beach Club amenity card. By doing this research, you can walk away with a realistic income estimate, and also discover low-cost ideas that can help increase your ROI.
3. Keep Your Peak, Shoulder, and Off Seasons in Mind
In a place like the South Carolina Lowcountry, property owners acquaint themselves with the nuances of the area. Familiarize yourself with how and when visitors come. Your rates will increase during peak season, level off in the shoulder season, and be at their lowest during the off-season.
Remember, these seasons vary dramatically from city to city. For example, in downtown Charleston, the peak season is much different than on Kiawah Island. While fewer people visit downtown during the summer, this is the most popular time to visit Kiawah and Seabrook. And these towns are only 25 miles from downtown Charleston!
Your Vacation Rental Income Calculator
Rented offers a monthly vacation rental income calculator to help give you an idea of how much money you could make. Understanding your expenses, your competition, and peak seasons will provide you with a more accurate answer.
While tools like the Rented calculator have value, keep in mind that effective revenue management is more complicated than a simple calculation.
Ready to Buy a Vacation Home?
Now that you know the basics on how to calculate your vacation rental income, you can see that it is no small task. Now it is time to find that perfect vacation home.
Pam Harrington Exclusives can help. With over 44 years of selling and managing vacation beach homes they know the market better than anyone on Kiawah Island and Seabrook Island.
Start your search by viewing current real estate listings on Kiawah Island and Seabrook Island. Looking for something in Charleston? Our real estate sales associates build lasting relationships with their clients. We may learn of buying opportunities before they hit the MLS. Contact an agent and let's find your investment with a beach!