Close-to-home travel boom opens profit avenues for homeowners and real estate investors
Since the pandemic began, demand for accommodations that travelers can drive to, rather than fly, has risen, and vacationers are more likely to visit places with outdoor activities.
COVID-19 has changed how people travel in addition to the way people work and where they want to live. Companies like Airbnb and Vrbo that allow homeowners to rent out rooms or properties for short-term vacationers have seen shifts in traveler preferences since the start of the pandemic.
Both companies report that travelers today are more likely to stay closer to home. Demand for accommodations that travelers can drive to, rather than fly, has risen, and vacationers are more likely to visit places with outdoor activities instead of urban centers with indoor landmarks and attractions.
For homeowners, these changing tastes could be an opportunity for a little extra cash. If you have a home in a newly popular vacation area, you could rent it out and use that money to help cover your mortgage, boost your savings, or fund other big purchases. These shifting travel demands could present a good opportunity for those looking to get into real estate investing, too.
Top destinations and trends
“Once people feel safe to travel, they will. But it will look different than before the pandemic. Travel will be viewed as an antidote to isolation and disconnection,” Airbnb cofounder and CEO Brian Chesky wrote in a report the company released in January about 2021 travel trends. “People don’t generally miss landmarks, crowded shuttles, and lines and lobbies packed with tourists,” he added. “What people want from travel now is what they’ve been deprived of — spending meaningful time with their family and friends.”
The report found that more than a third of vacationers want to travel this year specifically to reconnect with friends and family and that more than half preferred a domestic or local destination.
Vrbo had similar results in its own 2021 travel report.
“Vrbo’s newest top emerging destinations align with shifts in family travel behavior due to the pandemic, such as vacationing closer to home and embracing the great outdoors,” Melanie Fish, a travel expert at Vrbo, said in a statement. “Booking a Vrbo in these off-the-beaten-path locales means families can enjoy the privacy and comforts of home while reaping the mental health benefits of being in a new environment, and spend quality time together exploring places they may have otherwise overlooked.”
Both Airbnb and Vrbo saw demand spike in vacation spots close to natural amenities. Airbnb said places like Rodanthe, N.C., and Forks, Wash., saw surges in reservations for 2021. Vrbo reported that Emory, Texas, Smithville, Mo., and Slade, Ky., were the site’s top emerging destinations for this year.
How this has changed real estate
The real estate market has been unusually busy throughout the pandemic, a trend that has extended to vacation communities.
“The buying and selling of the homes did not stop because of the pandemic,” said Rob Johnson, a Coppel, Texas-based Realtor with RE/MAX who serves a number of communities, including Emory. He said people these days are more likely to look for vacation spots closer to their primary homes.
“I believe there’s definitely pandemic-related motivations. Just the need to do something with the family or to get away, you can just drive and not have to worry about flying.”
Anecdotally, he said, sales for vacation homes in the communities where he works are definitely spiking. Recently one office he works with on closings in a small town processed 28 transactions in one week — five or six times the normal rate.
Johnson expects that vacation homes in towns like Emory will remain especially popular even after the pandemic subsides.
“The demand is there and as more and more people get vaccinated, I think we’re going to find that more and more people are interested in doing this sort of thing,” he said. “They’ve seen the future and this is a piece of it for sure.”
What makes a good vacation rental
If you already own a home in an area where people might want to come to escape the city, you could be sitting on your own personal piggy bank.
“I have an associate who owns a vacation home in Colorado where he does use Vrbo, but he also owns a lake house in East Texas,” Johnson said. “He’s considering making it a Vrbo-available short-term rental because he’s had so many inquiries.”
As demand for this kind of accommodation rises, you could make a little extra income by renting out your own property. Johnson said he understands from his clients that having a clean home and enough space are the keys to success in the vacation rental market.
“Everybody likes clean, everybody likes space. They don’t necessarily want to be away from their technology all the way, they want to be able to connect,” so you’ll want to make sure you have a stable internet hookup.
The most popular vacation rentals are close to fishing and water sports. Other draws include be the ocean, a ski mountain or hiking trails. Vacationers usually want to stay in a property that is close to whatever attraction they’re visiting.
Tips for investing
If you don’t have a vacation home now, it could be a great time to think about buying one. Especially as demand for rentals in vacation communities spike, you may be able to cover your costs more easily than you think.
Here are some key things to consider before buying a second property:
Know what you can afford. Factor in potential rental income as you think about your mortgage payments, but remember lenders usually won’t take that into account unless you have a signed, long-term lease.
Do your homework. It’s good to know what the local real estate market is like and what the top attractions are. The closer your property is to those, the better.
Have enough space for visitors and a versatile layout. And make sure local regulations support your plans. Buying a vacation home you plan to rent isn’t the same as buying it for yourself. The property needs to feel comfortable for lots of different people.