Listing a property on VRBO can be quite profitable, especially compared to a traditional long term rental arrangement. As long as you’re prepared for the challenges of running a night-by-night business (housekeeping, handling bookings, etc), the numbers add up nicely. This is particularly true in Vail, which has an Average Daily Rate of $461 and year-round tourist traffic.
Income
Vail is a high price, high occupancy destination. According to one study, a three bedroom in Vail earns an average of $42,665 a year, or $65,422 a year if you’re in the 75th percentile of successful owners. Across all rentals, the average length of stay is 3.5 days in the low season and the average daily rate is $225. In the high season, that rises to 5.2 days and $530 a night! Vail peaks in both summer and winter, so just by cherry-picking weekends in ski season and summer, you can earn a strong income with minimal wear-and-tear. A typical three bedroom is rented out 36% of the time, which suggests many owners are using the properties themselves much of the time (a VRBO home can pay for itself quickly—as you’ll see below—meaning your own vacations are essentially rent free). What if you rent it more often? If you were to rent it out 50% of the time, you’d take in $84,132 a year…or $117,785 a year at 70% of the time.
Costs
It takes money to make money, and buying a rental property does carry an up-front cost. The median list price of a Vail 3-bedroom is $1.4 million, though there are certainly less expensive options (some were showing at $900,000 on a Zillow search). Assuming a 20% down payment and 4.2% interest on a $1.4 million home, you’d pay right around $65,000 a year on a 30 year mortgage. There are also other costs like home insurance and utilities. VRBO has a modest flat annual fee for listing, so you don’t have to deal with a certain percentage being taken out of each rental.
Net Income
If you use the house yourself much of the time, you come fairly close to breaking even…and at the end of it all, you’ll have a $1.4 million house free and clear. If you market more aggressively and keep it rented 70% of the time, you will be paying off the house while pocketing over $40,000 a year. It all depends on finding a good property and marketing it well.
Several figures courtesy of Evolve Vacation Rental network