If you own a vacation rental home free and clear, no mortgage and no debt then you are in an enviable position!  Cash is King.  This is a great time to buy a second home or vacation rental in many parts of the U.S.  Prices have come way down in areas like Arizona, Nevada, California and Florida.  If you are a cash buyer then you are in the cat bird seat.

Cash can afford you the opportunity to close quickly on a property and you can start making income right away.  Not only will you have acquired the property at a greatly reduced price but your required income from the property is very flexible.  You will not have a mortgage each month and you can get really aggressive with your rental rates.  Chances are your rate of return on your investment on a free and clear vacation rental is going to be much better than what you receive in the financial markets – not a guarantee – but a really good shot at earning nice returns on your investment. 

You will still have taxes, insurance, association dues and utilities.  Most vacation rental by owner experts, such as Christine Karpinski, author of How to Rent Vacation Properties By Owner and resident expert at Homeaway.com suggest that you should aim for somewhere between 18-22 peak rate rental weeks.  This is often a break even for all of your expenses if you are carrying a mortgage on the vacation rental home.  If you do not have a mortgage then there is the potential for a great return on investment – not taking into account appreciation over the long haul.

Looking beyond your vacation rental condo or villa as a pure investment – you get the utility and enjoyment of staying there too!  Consult a professional Realtor in your area or destination choice for quality advice and local expertise.  Don’t forget that you need to still advertise your vacation rental online at sites that specialize in furnished rentals.  To attract visitors who are looking for vacation rentals online you may consider VRBO, Homeaway, VacationRentals and Furnishedhomes.com