No investment is recession-proof; however, vacation rentals in Maine are far more resilient than investments like stocks or cryptocurrency. In times of recession, people often downgrade their travel plans and stay closer to home. This means that vacation rental properties become even more in demand as people look for affordable alternatives to hotels. So, if you have the money to invest in a vacation rental property, now may be a perfect time!
Case Study: Growth During The Great Recession
The recession of 2008 was a difficult time for many people. Millions of jobs were lost, homes were foreclosed on, and retirement savings were wiped out. While the stock market was taking a nosedive, vacation rental properties were seeing growth. In fact, many people who owned vacation rentals actually saw their income go up during the recession.
According to HomeAway, bookings for vacation rentals grew by double digits each year from 2008 to 2010. And this growth continued even as the recession came to an end. So, are vacation rentals recession-proof investments? Well, yes, but with a few caveats.
First, recession-proof does not mean your income from Maine vacation rentals will never go down. It just means that it is less likely to go down than other investments. For example, if you own a stock portfolio, the value of your stocks can fluctuate greatly depending on the stock market. But with vacation rentals, people will still want to take vacations even during tough economic times. So, while your income from vacation rentals may fluctuate during a recession, it is unlikely to drop significantly, as other investments might.
Another thing to remember is that not all vacation rental markets are created equal. Some areas, such as Orlando, Maine, Florida, or Las Vegas, are much more recession-resistant than others. This is because these areas have a large number of tourists who come for the attractions and don’t necessarily care about the state of the economy.
While no investment is totally recession-proof, vacation rentals are far more resilient than most. Coupled with largely passive income from such properties that significantly outperform mortgage and maintenance costs, you have a recipe for success – even in the roughest of economic times.
How To Make Your Property Recession-Proof
While vacation rental properties are recession-resistant, there are still some things you can do to weather the storm.
Take Medium & Longer-term Guests
One way to recession-proof your vacation rental is to focus on medium and longer-term guests. This is a good strategy because longer-term guests are less likely to be affected by economic downturns.
For example, if someone has already planned a two-week vacation, they will not cancel just because the stock market drops. On the other hand, someone planning a last-minute weekend trip may be more likely to cancel if the economy takes a turn for the worse.
So, if you want to recession-proof your vacation rental, start marketing it as a place for longer-term stays. You can do this by advertising on websites like Airbnb and VRBO or by reaching out to corporate housing companies in your area.
Cut Down on Expenses
This doesn’t mean you should skimp on cleaning or repairs. But it does mean that you should be strategic about where you’re spending your money.
For example, try shopping at second-hand stores or garage sales instead of buying new furniture every time something gets a little worn. You can also save money by doing your own marketing instead of hiring a professional. And, if you have handyman skills, don’t be afraid to do some of the repairs yourself!
By cutting down on expenses, you’ll save money in the short term and make your vacation rental more profitable in the long run.
Take Advantage of Technology
In today’s day and age, there’s no reason to spend a lot of money on things like advertising and marketing. With the internet and social media at your disposal, you can reach a wide audience without spending much money.
You can create a Facebook page or Instagram account for your vacation rental and use it to post photos and information about your property. You can also use these platforms to interact with potential guests and answer any questions they might have.
You can also use technology to automate some of the tasks associated with running a vacation rental, such as booking appointments and sending out confirmation emails. Some software programs can help you do this, so be sure to do some research and find the one that’s right for you.
Research Your Metrics
Metrics are key when it comes to recession-proofing your vacation rental. By understanding which metrics to track, you can change your business model to help weather any economic downturn.
Some of the things you should keep an eye on include occupancy rates, average daily rates, and guest satisfaction scores. By tracking these metrics, you’ll see which marketing efforts are working and which aren’t. This will allow you to adjust your strategy as needed and ensure you always do everything you can to attract guests.
MashVisor reports that selling a property during an economic recession is not advisable. Selling a property is not an option for many people, but if it is something you’re considering, you should think twice before taking action. In most cases, hanging on to your property and weathering the storm is better.
Of course, there are always exceptions to this rule. If you’re in a position where you need to sell, then, by all means, do so. But if you don’t have to sell, it’s probably best to wait until the recession is over before putting your property on the market.
So, should you invest in vacation rentals? If you’re looking for an investment that is relatively recession-proof and has the potential to generate a steady income, then vacation rentals are a good option. However, it’s important to do your research and choose a market that is likely to be recession-resistant. You also need to be prepared for the possibility that your income may fluctuate during tough economic times. But if you’re willing to take on these risks, vacation rental properties can be a great way to invest in real estate.
At Integrity Mortgage, LLC (NMLS #1692497), we understand the market and the integrity needed to help you survive recessions and thrive through them. Reach out to us today to learn how we can help you secure a home loan or refinance an existing mortgage.