Is Buying a Vacation Rental Still Worth It?

For years, owning a vacation rental was seen as one of the smartest ways to invest in real estate. The promise of generating rental income, enjoying a personal getaway spot, and benefiting from long-term appreciation drew in buyers from all walks of life. But with changing travel trends, new regulations, and shifting economic conditions, many buyers are now asking: Is buying a vacation rental still worth it in 2025?

At Rudy Properties, we’ve helped countless investors weigh the pros and cons of vacation rentals. The truth is, while this type of investment still offers great potential, success today looks a little different than it did just a few years ago. If you’re considering buying a vacation rental property, here’s what you need to know before diving in.

The Appeal of Vacation Rentals

Vacation rentals remain popular because they offer a unique balance between personal enjoyment and investment opportunity. Unlike traditional rental properties, vacation homes allow owners to use the space themselves when it’s not rented out. This flexibility makes the idea of ownership more attractive, especially for those who love certain destinations.

Platforms like Airbnb, Vrbo, and Booking.com have also made it easier than ever for owners to market and manage short-term rentals. With proper listing optimization and competitive pricing, many properties can stay booked for most of the year, creating a steady stream of income.

Additionally, in vacation hotspots, demand is often high regardless of broader housing market conditions. Tourists are still traveling, families still want getaways, and professionals are taking advantage of remote work flexibility. This steady demand makes vacation rentals a resilient investment option.

What’s Changed in 2025

While the fundamentals remain strong, the vacation rental market isn’t the same as it was in 2019 or even 2022. Several key changes are shaping the current landscape:

Increased Regulations – Many cities have cracked down on short-term rentals, requiring special permits, limiting the number of rental days per year, or imposing hefty taxes. Popular areas like New York, Los Angeles, and Honolulu now have strict rules that can cut into profitability.
Rising Operating Costs – From cleaning and management fees to utilities and insurance, running a vacation rental is more expensive today. Inflation has pushed up nearly every cost associated with property ownership, and owners need to budget accordingly.
Traveler Expectations – Guests now expect more from vacation rentals. High-speed internet, stylish interiors, fully stocked kitchens, and even extras like hot tubs or game rooms are becoming the norm. Properties that fail to meet these expectations may struggle to stay competitive.
Seasonal and Economic Shifts – With economic uncertainty, some households are cutting back on travel spending. This can lead to fluctuations in occupancy rates, particularly in markets that rely heavily on international tourism.

Pros of Buying a Vacation Rental

Even with challenges, vacation rentals can still be a worthwhile investment. Here’s why many investors, including those we work with at Rudy Properties, continue to explore this option:

Dual Purpose Use – Owners get both a personal vacation spot and a rental income stream.
High Income Potential – In popular destinations, vacation rentals often outperform long-term rental properties.
Property Appreciation – Over time, real estate typically increases in value, and vacation markets are no exception.
Tax Benefits – Owners may qualify for tax deductions on mortgage interest, property taxes, operating expenses, and even depreciation.
Flexibility – Owners can adjust rental availability based on personal use or changing market conditions.

Cons of Buying a Vacation Rental

On the other hand, owning a vacation rental isn’t all sunshine and profits. Investors must be realistic about potential downsides:

High Upfront Costs – Popular vacation areas often have higher property prices.
Maintenance Demands – Short-term rentals see more wear and tear than long-term ones.
Management Challenges – Unless you hire a property manager, running a vacation rental can be a full-time job.
Market Saturation – In some destinations, the number of available rentals has grown faster than demand, lowering occupancy and rates.
Regulatory Risks – Local laws can change quickly, and an investment that made sense one year could face new restrictions the next.

Tips for Buying a Vacation Rental in 2025

If you’re considering buying a vacation rental, here are a few expert tips from Rudy Properties to help maximize your chances of success:

1. Research Local Regulations

Before falling in love with a beach house or mountain cabin, check the short-term rental laws in that area. Some cities outright ban them, while others impose strict requirements. Factor in taxes, permits, and any limits on rental days when running your numbers.

2. Location Matters More Than Ever

Not all vacation destinations perform equally. Look for areas with year-round tourism rather than seasonal-only demand. Properties near beaches, ski resorts, national parks, or city centers tend to perform better over time.

3. Calculate Realistic Costs

Be conservative when estimating profits. Account for cleaning, utilities, property management, repairs, insurance, taxes, and vacancy periods. A realistic budget helps prevent unpleasant surprises.

4. Invest in Guest Experience

Small upgrades can make a big difference. Comfortable furnishings, quality linens, reliable Wi-Fi, and local touches can boost reviews and lead to repeat bookings.

5. Consider Hiring a Property Manager

Managing bookings, guest communication, cleaning, and maintenance can quickly become overwhelming. A property management company can handle the day-to-day, though it will reduce your net income.

6. Think Long-Term

Even if rental income slows temporarily, your property may still gain value over time. Consider whether the property also makes sense as a long-term hold or even a retirement home in the future.

So, Is It Still Worth It?

The answer depends on your financial goals, risk tolerance, and willingness to manage the property. For many investors, vacation rentals remain an exciting and profitable venture—especially when purchased in the right location and managed strategically.

At Rudy Properties, we believe that while the days of “easy money” in vacation rentals may be over, there are still plenty of opportunities for smart investors. By doing your homework, carefully analyzing markets, and planning for both the highs and lows, a vacation rental can still be one of the most rewarding investments in real estate today.