I’ve been thinking lately — is vacation rental investing worth the hype?
There is an intriguing real estate trend going on not too far from me in Orlando, Florida. You know if there is something hot in real estate, I’m going to check it out.
Contractors are building bigger and more elaborate vacation homes in Mickey Mouse’s backyard.
We’re not talking about home theaters and grotto pools — those are considered par for the course these days.
The vacation rental investing trend
This new breed of mega vacation rentals include themed and secret rooms, movie set replicas, and play areas for kids that put the neighboring theme parks to shame.
But the thing we need to examine is what’s going on with this boom and if it can be profitable.
This is what I think is going on.
Fun for kids of all ages
I think, no matter our age, we are all kids at heart. That definitely adds to the appeal of these extravagant rental properties. Recent booking and rebooking numbers are supporting that too.
A unique property that features a recreation of the train to Hogwarts of Harry Potter fame shows that this strategy is working. The house has a 40% rebooking rate for past guests.
People just can’t wait to come back and take pictures with it, the Realtor article featuring the house claims.
I think it may be that you can sleep on bunk beds on the train, but that may be the kid in me.
More amenities: more money or more problems?
Next, we’re going to talk about the important part.
The profitability of these niche and large properties are uncertain to me. I don’t know many people looking for a house with sleeping areas that can fit 30 people to live in.
The Hogwarts train property I previously mentioned was listed at $5.6 million and sold for $5.2 million.
In the end, this type of real estate investment is still too new to know where it is going. So, unless you intend to rent that property to tourists forever and pay for these amenities’ upkeep, it’s not for you.
Regardless, I’m going to keep my eye on it.