Complete Guide On How To Make Money On Vacation Rental Property

house with two chimneys

Are you looking for the best source of passive income? Have you ever thought about real estate investments?

Investing in real estate can be intimidating for most people. Buying a vacation rental home, on the other hand, is a a great way to create income from real estate. In fact, the popularity of vacation rental home has increased over the past few years. Just look at how big companies like VRBO and AirBNB have become. There is lots of money to be made in renting your own vacation property.

This article will show you a step by step guide on how to make money on vacation rental property.

What Is Vacation Rental Property

A vacation rental property is a privately-owned property rented out to tourists as an alternative to a hotel. Vacation rentals are not limited to traditional-style homes. They may also include villas, cottages, tiny homes, beach houses, log cabins, condos, apartments and more. They can also range from affordable studio apartments to luxurious private villas located in the world’s best tourist destination.

How does vacation rental work?

Tourists rent vacation rental properties for a specific period of time. Some property owners rent out their units like hotel rooms, on a nightly basis while others do prefer weekly or monthly rentals. This will often depend on the type accommodation you own and location of the property.

Some vacation rentals also offer the same services found in hotels. For instance, most apartments and condominiums offer concierge service, in-house housekeeping, and 24-hour maintenance.

Renting vacation rental properties is widely popular among travelers in Europe and Canada. However, it’s popularity is now increasing across the world. Sites like airbnb, and VRBO have helped make vacation home rental a simple and stress-free process.

Advantages of Buying a Vacation Rental

Here are some of the reasons why you should consider vacation rental as your first option in real estate investment.

  • Serves as dual-purpose – A vacation rental is your second home where you spend your vacation days there. At the same time, you can rent it out to tourists when you’re not using it for the rest of the year.
  • Source of steady income – Since you’re renting your home to your guests, you’re basically making money when you’re not using it. You can use the money that you earn from bookings in paying your mortgage and other expenses.
  • Builds a long-term value – The value of the real estate increases over time. When the time comes that you would want to sell your vacation rental property, you can cash it at a higher price.
  • Less risky – Vacation rentals offer a lower risk compared to other types of real estate investment. Since most of the vacation homes are situated at top tourist destinations, you get to have higher occupancy rates. This results in a higher rental income.

How to Make Money on Vacation Rental Property

black and brown painted 2-story house near body of water and gray mountains

A vacation rental is a good investment for those who want to start investing in real estate. If you want to maximize your ways of earning a passive income, follow the steps below on how to make money on your vacation rental property.

1. Get Started With The Right Vacation Home

If you want your vacation rental home to be a story of success, you must consider the following factors before you purchase your second home.

Location – Choose a vacation rental home that has immediate access to tourist attractions like a theme park, beach, ski slopes, etc. The last thing that you want for your vacation home is low to zero occupancy rate so choose the right location strategically. You can never go wrong in investing a property in a city with a high tourism rate.

Seasonal appeal – If you want a steady source of income, choose a location that is desirable and seasonal all year round.

Property type – The size of your vacation rental home affects the rental rate. You can charge more per night if you have bigger bedrooms and bathrooms. Decide if you want a single-family home or a multi-family property.

Regulations – Before you decide the location of your rental home, it’s important that you research the city’s regulations on short-term rentals first. Check the ordinances and bylaws around vacation rentals in the city, county, and HOA (homeowner association). There are some areas that don’t allow people owning a rental home unless they have a license. Some areas also limit the number of guests that you can host in a year.

2. Create a Beautiful Space for your Guests

If you want to attract more guests to your vacation rental home, then it’s important to create a beautiful space for them. We live in a world where almost everything is posted on Instagram. If you impress your guests with the appearance of your home and they post it on Instagram, that’s immediate free marketing for you.

You don’t need to spend tons of money just to create a perfectly welcoming atmosphere. What you need though is lots of creativity and resourcefulness.

Here are some of the simple ways to elevate the appeal of your rental home:

  • Curtains can do wonders in a room. For rooms that get a lot of sun, choose curtains that are airy and light. Heavier drapes, on the other hand, can instantly add class and sophistication to bedrooms.


  • One of your selling points should be the bed. Choose linens that are hotel-quality. You should also have four pillows per bed. Guests always cherish a comfortable and cozy bed.


  • One of the advantages of rental homes against hotel rooms is that guests have access to the kitchen. Attract tourists by spicing up your kitchen. Stock your private kitchen with necessities like table linens, pans, mixing bowls, etc. You don’t need to have a whole kitchen makeover. Painting your cabinets fresh colors can instantly make your kitchen pop.


  • Give your vacation rental home a hotel experience by adding a hot tub. Adding a hot tub, especially during colder climates, can increase your revenue by 15-25%.


  • Welcome pets to your second home. A lot of tourists want to bring their pets along during vacation. Welcoming pets to your vacation rental increases your occupancy rate.


  • Provide free WiFi. Access to the internet has now become a basic expectation for all accommodation. You will surely get left behind if your vacation rental home does not provide free WiFi. Besides, you would want your guests to post as many photos of your property online. What better way can they do it than having access to the internet in real-time?

3. Optimize Your Listing

gray steel 3-door refrigerator near modular kitchen

Renting vacation homes have become a popular choice for travelers. Since vacation rental home offers a promising business opportunity, a lot of investors are looking into this kind of venture. As a result, the competition between vacation rental owners is becoming too tight.

Optimizing your listing is one of the most effective ways of promoting your vacation rental home. The flock of tourists inquiring and booking your rental property can bring a steady source of income.

Follow these tips on how to optimize your listing.

Go for online bookings and payments.

A vacation rental property increases its reservation by 50% when it’s offering an online booking and payment feature. The majority of the guests find it convenient to book and make a payment online. Online bookings and payments also benefit both parties. Guests are satisfied when their accommodation is processed conveniently and quickly. Owners, on the other hand, are happy that their rental property is booked for several nights.

Go for an attention-grabbing title.

The first thing that guests see when they search for rental properties online is the property headline. Grab the attention of the guests by using a catchy title. Make your vacation rental home stand out and draw potential guests in by promoting the strength and uniqueness of your second home.

Respond to inquiring guests immediately.

Your response time to every query affects your listing scores. Though it’s acceptable to respond in a maximum of 24  hours, responding to guest queries as quickly as you can go a long way. It will not only boost your listing score but more importantly, it promotes a positive customer experience.

Use professional photos

Photos can make or break an online booking. Invest in professional and high-quality photos to attract guests to click on your listing. Additionally, include photos of the important features and areas of your vacation rental – living room, bathroom, bedroom, kitchen, etc. Also, add a photo of any outside amenities as well as the front of your rental home.

4. Determine Your Rental Rates

If you want to know how to make money on vacation rental property, then it’s important that you master the skill of vacation rental pricing.

Determining your rental rates could be tricky. You risk losing your bookings when you set the price too high. On the other hand, you set the price too low and you are putting yourself at risk of losing money.

So how do you determine the right rate for your rental property?

The calculation of your rental rate should be built on the foundation that it should cover your expenses. List down the expenses of your vacation rental property, including the fixed and variable costs. These expenses should determine the minimum rate that you can set. This ensures that you will have a steady source of income.

The next thing that you need to check is your competition. Research nearby competitors and check the rates that they are offering. Compare the features of your property to other facilities and rental homes in the area. You can set a higher price than your competition if you offer better accommodations. On the other hand, offer a lower price if your rental home is smaller and has fewer amenities and services.

Lastly, make use of an automated pricing engine that can research the pricing for you., Beyond Pricing, and Smart Host are the most popular choices of many rental homeowners. These services keep you updated with the current pricing trend in the market.

5. Value The Importance of Reviews

woman holding phone

Most of the consumers check reviews and feedbacks before they purchase a product. This goes the same in choosing a vacation rental home too. Most travelers check out reviews from other guests before they book the accommodation. Positive reviews tend to attract more guests while negative reviews obviously scare them away.

Capitalize on traveler reviews to promote your vacation rental home. Ask each of your guests to leave a review of their experience at your rental home. Aim for the five-star status so gather as many reviews as you can.

While the primary purpose of reviews is to attract many bookings, it should also serve as a catalyst for improvement. It’s quite understandable why a lot of businessmen are scared of negative reviews. Though it can impact negatively on the decision of your guests, you should take every negative review seriously. Listen to the feedback and suggestions and work hard to make it better. You should use criticism to your advantage and come out with improved facilities and better services.

6. Hire a Vacation Rental Management Company

Hiring a vacation rental management company can help you make money on your vacation rental property.

Here are some of the advantages of hiring professionals to manage your vacation rental home:

More Time for Yourself

Taking care of your vacation rental property can take a lot of your time and energy. You need to handle a lot of things, from reservation to housekeeping, maintenance, and even marketing. It also gets super busy during peak season. The vacation rental management company will handle all these tasks for you so you get to have more time for yourself. You will have confidence that your property is well-taken cared of by professionals.

You Don’t Have to Screen Renters

Screening of renters can be a time-consuming activity. When you hire a vacation rental management company, you don’t need to do this tedious task anymore. These companies have access to technologies and tools to screen renters as well as attract potential renters.

Better Marketing For Your Rental Home

Rental companies don’t just screen renters and collect the rent for you. More importantly, they are armed with better marketing strategies to boost the occupancy of your property. A good vacation rental management company knows how to add a “wow” factor that will attract many tourists and renters. They have better photos and catchy lines that will make your rental home stand out.


If you want to jump into the passive income community, then investing in vacation rental property is a smart move. Just like with any type of investment, you need to research first and make a deliberate plan. Follow the tips on this guide if you want to know how to make money on vacation rental property.

If you’re considering making money with vacation rentals yet don’t know how to start, Vacation Rental Confidential by Michael Hamilton can be a big help. This book is perfect not just for beginners but for experienced vacation rental homeowners as well.

C. James

C. James is the managing editor at Wealth Gang. He has a degree in finance and a passion for creating passive income streams and wealth management.