Your vacation rental’s location can make or break your business.

Find out what factors you should be thinking about to make the right choice.

When it comes to running a successful vacation rental, few decisions are as important as choosing the right location. You might have the most stunning property with all the amenities in the world, but if it’s in a spot no one wants to visit, it won’t do much good, will it? Location is key, and the wrong choice could leave your rental struggling to attract guests or command decent rates. The good news is, with a bit of know-how, you can find that perfect sweet spot—a location where your vacation rental business will thrive.

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In this episode, I’ll look into the most important factors to consider when selecting the location for your vacation rental, from climate and local attractions to market saturation and regional demands. Whether you’re thinking about buying or building, these insights will help you make an informed decision that maximises your rental’s potential.

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Warm and Sunny, or Cool and Cosy?

The weather is one of the first things to think about. Are you targeting holidaymakers looking for sun and sand, or those who prefer cool mountain air? Different climates attract different types of travellers, and knowing your potential guests’ preferences can make a huge difference.

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Take, for instance, tropical destinations like Hawaii or the Mediterranean. Warm climates tend to attract tourists year-round but keep in mind that seasonal peaks could affect booking rates. Alternatively, cooler climates, like those near ski resorts or cabins in the woods, may offer a more seasonal income, but they can attract a devoted clientele during the off-season, such as hikers or nature lovers.

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Don’t forget about extreme weather events, though. Does your location of choice experience hurricanes, floods, or heavy snowfall? This could lead to higher maintenance costs and insurance premiums, cutting into your profits.

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Tip: If you’re after consistent bookings, go for locations with mild year-round climates or seasonal options with strong appeal in both peak and off-peak times.

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The Local Attractions

Once you’ve nailed down the climate, think about what’s in the area that will draw people in. Tourists flock to specific attractions, be it the beach, national parks, historic landmarks, or theme parks. If your vacation rental is near major tourist attractions, you’re already in a strong position.

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But what if you’re looking at a quieter, more remote location? You can still attract guests by highlighting the charm of local hidden gems. Some travellers crave peace and quiet, so don’t underestimate the appeal of a secluded mountain retreat or a quaint village. The key is knowing who you’re catering to. If you’re a beach person trying to run a mountain cabin, you might miss out on what your guests truly want!

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Market Saturation

Before committing to a location, look into how saturated the market is. Too many vacation rentals in the same area can make it difficult for you to stand out. Look at platforms like Airbnb or Vrbo to get a sense of how many rentals are nearby and what they’re offering.

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Are prices competitive? Are there more rentals than tourists? On the flip side, an underserved market might be a golden opportunity. Some emerging vacation rental markets, such as rural areas or smaller towns near major cities, can offer great returns without the cut throat competition of big tourist hubs.

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Tip: Don’t be afraid to go off the beaten path, but make sure there’s enough demand to support your rental in the long term.

Buy or Build: What Makes More Sense?

When choosing a location for your vacation rental, another big decision is whether to buy an existing property or build from scratch. Each option has its pros and cons, and your choice will depend largely on the region and market.

Buying an Existing Property 

If you buy a rental in an established market, you’ll have an idea of the potential income, guest demographics, and how much competition you’re up against. Plus, buying is usually quicker, meaning you can start generating income sooner.

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But don’t rush in. A lower price might be tempting, but be sure to factor in renovation costs. Is the property up to standard? Will it require substantial updates to meet guest expectations?

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Building New 

Building a vacation rental from the ground up gives you full control over the design, layout, and amenities. You can cater to specific guest needs that competitors might overlook. However, this option takes time, and there’s a learning curve if you’ve never developed property before.

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Consider Local Regulations & Taxes

It might not be the most exciting part of choosing a location, but local laws and taxes are essential to consider. Some areas are cracking down on short-term rentals with stricter regulations. Are you legally allowed to operate a vacation rental in your chosen location? What are the local taxes like? Are there limits on rental periods or the number of guests?

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Be sure to research these factors before committing. You don’t want to find yourself caught off guard by surprise restrictions or unexpected taxes.

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If you’re unsure, consult a local property expert or lawyer to guide you through the legalities of the region.

Discover the golden rules of vacation renting with our essential guide, ‘Unpacking Your Property – The Top 25 Secrets to Successful Vacation Properties.’ Whether you’re new to the game or looking to refine your strategy, this guide is packed with invaluable insights that will help you increase your occupancy rates and maximize your profits. Get your free copy now and start your journey to rental success!

What do you think makes the perfect location for a vacation rental?

Let me know in the comments.

In Conclusion

Choosing the ideal location for your vacation rental isn’t just about following the crowd. It’s about finding a balance between market demand, local appeal, and what you can offer your guests. Whether you buy or build, understanding these factors will help you choose a location that attracts guests and turns your property into a successful rental.

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By keeping climate, local attractions, and market saturation in mind, you’re more likely to pick a spot that’ll keep the bookings rolling in. And if you put a bit of heart into the process, it’ll show in your rental—and your guests will thank you for it.

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In the next episode, I’ll talk about Navigating Laws and Regulations.