What’s New in the Vacation Rental Business Landscape?

What’s New in the Vacation Rental Business Landscape?

This summer, it seems like everyone is traveling – whether it’s flying to some far-flung destination or taking to the road for some R&R at a vacation rental. In fact, the vacation rental business is booming, particularly among property investors who have bought up vacation homes to rent.

While the majority of homes listed on sites like Airbnb, Vrbo, and HomeAway are owned by small business owners, Wall Street and other investors have entered the vacation rental business fray. For example, short-term rental company AvantSay earlier this year partnered with a New York investment firm that purchased nearly $500 million worth of homes.  

Start-up Andes STR buys and manages short-term rental homes on behalf of investors and, according to an article in The Wall Street Journal, back in February made a deal with a Chilean investment firm that will purchase about $80 million of properties in the United States.

What’s the Attraction for Property Investors?

Investors like vacation homes, as they see nightly rentals generating more cash than a year-long lease. Low-interest rates (at least before our inflationary environment) also fueled demand for more traditional rental real estate, with some institutions looking at more niche opportunities like Airbnb rentals to generate a desired return.

In addition, recent trends made the preference for vacation rentals attractive. Throughout the pandemic, demand for traditional vacation rentals has increased as people have been able to work from wherever they want. Property investors saw this as an opportunity to capitalize on the remote work model.

We Cover Short-Term Vacation Rentals

While ISC’s Investor Property Program (IPP) is designed for real estate investors with multiple properties. We offer monoline Property or a package policy that also includes General Liability limits of $1M/$2M.  Our Property policy covers a minimum of five locations, with no maximum on the number of locations. Coverage is available for up to $2 million TIV for any one location. Our appetite includes short-term vacation rentals.