1.2 Where is VRP?

WEALTH AS A VACATION

the area from the start, so homeowners are secure in the knowledge that their investment will always be legal to operate.

1.2 Where is VRP?

Vacation Rental Property can be found wherever people vacation, period. However, some areas will have far more variations and density than others. Chances are good you have some form of vacation destination near your full-time place of residence. It might be a state park, a beautiful lake, or an odd road-side attraction. For fi rst-time investors, my recommendation would be to start there. Remember, a Vacation Rental Property is a short-term rental (four days to two weeks, generally). So, you will need to research the history of the renter demographic in your particular area.

Lakes, rivers, ski areas, beaches, and city attractions that are close to you are all great places for a new VRP investor to get started. These stand-alone locations can be low price, high Average Daily Rate producers. You may even be fortunate enough to be close to a big attraction like a theme park, with a resort and residential community that is zoned for short-term rental nearby. In this case, you will have a stunning array of potential investments from which to choose. These communities will also, as I previously mentioned, have rental management companies that will do the “heavy lifting” part of the management for a contract price and/or percentage of profi ts, generally 30%.

The growth of this resort-driven VRP business has outpaced all other market segments, and this trend is expected to continue. It makes sense. A community that is designed specifi cally to accommodate and service short-term vacation renters has many advantages over other locations. Primary is the customer experience. These communities are designed with resort-type services and amenities built in from the beginning, including a concierge desk, shuttle services to local attractions, room (home) service, and chefs on demand. Inside

CHAPTER 1

these resorts are golf courses, tennis courts, water parks, entertainment complexes, and many other attractions. Furthermore, these VRP community resorts are usually located near world class attractions such as theme parks, beaches, ski lodges, etc.

In addition to the now “traditional” Vacation Rental Property growth are other Short-Term Rental (STR) products. As the industry matures, it is segmenting itself into categories. The growth currently is in the Urban Working Trip Rentals. These can range from high rise condominiums in fi nancial centers, to townhomes in smaller business hubs, to golf homes near or in metros that allow the business traveler to bring family and stay in a “home.” Urban Working Trip Rentals provide a great option for bringing the family on business trips. In addition, there is emerging growth in the need for short-term student housing, as well as explosive increase in the need for Digital Nomad homes, which may be rented for three to six months at a time. We will discuss this sector in a later section.

Consider whom your VRP will attract. Your VRP business planning should focus fi rst on your customer profi le. Wherever you fi nd VRP in which to invest, it should also be a place that attracts the type of renter you desire. Give some thought to the customer profi le you would like to serve. Are they families, groups, couples, singles? This will give you an indication of ideal bedroom counts. Is the vacation destination near you a high-end country club, a beach party, or a family location driven by a theme park? This will give you insights into the type of renters you will attract. Is the attraction an internationally recognized brand and is it considered a luxury destination? This will give you an indication of the rental price, and comparable information for forming your purchase strategy.

All of this information (and much more) is necessary to determine your tactical purchasing strategy regarding location. Though customized for the Vacation Rental Property investment type, as in other forms of real estate investment, “location” is still the number one consideration in your investment strategy.