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Why is investing on a vacation home a smart move?

Date: 28/07/2015

Are vacation homes a good buy?


Before, vacation homes where seen as an expense, where the only profit made was after the property was sold and gained value over time. Times have changed, and travelling trends are much different. New technologies that enable new connections where people can offer services that put their assets to work are a worldwide trend, and the vacation real estate market is evolving with it.

Today, many get a high ROI (Return on Investment) just by renting their vacation home through trusted service providers that manage their homes. So not only is your property appreciating, but it´s also working for you while you´re away.

If you’re interested in buying a home for the purposes of becoming a vacation rental, now is the perfect time to partake in this 85 billion dollar industry! Research has shown that in the US, by investing in a vacation home, 54% of homeowners are able to pay for 3/4 of their vacation home mortgage by renting it out.

According to a 2014 survey conducted by the National Association of Realtors Investment and Vacation Home Buyers, real estate sales for the purpose of becoming vacation homes has steadily increased over the past three years. Of the 5 million homes sold in the United States in 2012, 11% were bought with the intention of becoming vacation homes. In 2013, this percentage jumped to 13% and by 2014, over 20% of home sales were for the purpose of becoming vacation homes.

The growth of the vacation home rental industry currently outweighs the supply growth 2:1. In other words, the number of travelers looking for a vacation rental is increasing at double the rate of the new vacation homes entering the short term rental market.

In Mexico, this trend is following fast and the vacation home rental industry is also poised to grow dramatically because of the “awareness” opportunity - only 33% of US adults are aware that vacation rentals are a lodging option while traveling. Imagine the potential impact and growth of the industry as awareness continues to increase.

What important factors make properties and vacation homes ideal for renting in Baja Sur?

-Location. As in any real estate investment location is a very important factor. Access to activities nearby, far enough to be private yet close enough to be close to supplies and venues.

-Views. Research has shown that properties that offer great views of the sea are much more likely to be rented over properties without a view (60% more likely).

-Social areas. Properties that have access to social areas (pools, club house, grill area, gyms, etc.) are more likely to be rented as travelers often search for a social interaction where they can meet locals and travelers that will enrich their experience.

-Authenticity. New travel trends show that people seek authentic experiences, moving away from resorts that showcase a “very turisty” lifestyle where almost nothing is regional or real, and moving towards boutique hotels and home rentals that allow them to experience the real Mexico.

-Sustainability. The CMIGreen Traveler Study Report 2010 asked responsible travelers how the global how the global economic crisis had affected their travel plans: 54% reported taking a “greener” vacation within the last 12 months, “43% of survey respondents say they would be willing to pay up to 5% more to decrease their ‘ecological footprint’ on their next trip; almost as many say they would pay more than that.

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