Owning a vacation rental can be rewarding and profitable—but like any business, it comes with operating costs. Whether you’re investing in a house or a condo, it’s important to understand the full picture of common expenses so you can budget wisely and maximize your return.In this post, we’ll break down the typical expenses you’ll encounter, and how they can vary between vacation rental homes and vacation rental condos.
Vacation Homes: Common Expenses
Vacation rental homes often come with more independence—but also more responsibility. Here are some key expenses to consider:
1. Mortgage, Property Taxes, and Insurance
- Principal + interest if financed
- Property taxes vary by location
- Vacation rental/homeowners insurance is typically higher than a standard policy- There can be the potential for a lot of liability with Short Term Rentals, so it’s important to have a robust policy.
2. Utilities
- Electric
- Water/sewer
- Trash pickup- Guests won’t always bring out trash on the correct day. It may be important to hire a company to take the trash out for your guests. This is typically $50/ month.
- We handle this for our Homeowner Clients.
- We handle this for our Homeowner Clients.
- Internet and cable/streaming- Many Guests will primarily use streaming services.
- Gas (if applicable)
3. Maintenance and Repairs
- Lawn care, landscaping, and irrigation systems
- Pest control
- Pool or hot tub maintenance (if applicable)
- HVAC servicing
- General repairs (appliances, plumbing, etc.)
- Power Washing- this typically needs to be done every 1 – 2 years
- Small upkeep- AC Filters, batteries, and lightbulbs are a few of the items that will need to be stocked and replaced. It is also a good idea to have extra paint available as paint touch ups will need to be done at the end of the year.
- Annual Inspection- with big homes it can be particularly valuable for a professional inspector to go through the home at the end of the year. There are many moving parts and systems in a 7 or 8 bedroom home and it’s great when you can spot issues before they turn into a major problem.
- At myBeach Vacation Rentals, we complete an annual reviews of guest feedback and what could be improved in the home to increase revenue.
4. Furnishings & Interior Upkeep
- Initial setup: furniture, kitchen supplies, décor
- Ongoing: replacing worn items, deep cleaning rugs and furniture, etc.
- Furnishing upgrades- just like a hotel, you’ll want to make consistent improvements and investments back into your property each year
- Kitchen Inventory- you’ll have to likely replace some kitchen inventory on a quarterly or yearly basis. It’s not a major expense, but pots / pans will go bad or utensils will go missing.
5. Cleaning & Turnover Services
- Professional cleaning between guests- this is something guests pay for but you want to keep the cost of this in mind as guests ultimately look at their bottomline when paying for a reservation.
- Deep Cleaning
- Linens and Bath towels- Cleaners typically expect an initial supply of 3 sets for everything. A set or two may need to be replaced each year.
- At myBeach Vacation Rentals, we pay for and replace any worn sets.
6. Software & Marketing
- Property management software (PMS)
- Listing platform fees (Airbnb, VRBO, etc.)
- Direct booking website costs
- Professional photography and Video
- Paid marketing efforts
- Social media and email marketing
7. Licensing & Permits
- Business license- another common expense, this is usually between $100 – $300 a year in this area
8. Security & Monitoring
- Smart locks
- Ring cameras or security systems
- Noise monitoring devices
- Smart Wifi- this is a branded wifi system that can be used to capture guest emails for marketing.
Condos: Common Expenses
Condos typically have fewer maintenance needs but come with monthly association dues and other considerations:
1. HOA or Condo Fees
- Covers exterior maintenance, landscaping, pest control, and often cable/internet
- Can range significantly based on location and amenities
2. Mortgage, Property Taxes, and Insurance
- Mortgage + taxes as with homes
- Insurance- may be cheaper than a home, but you may still need a condo-specific or HO-6 policy
3. Utilities
- Some utilities may be included in HOA fees
- Remaining may include electric, water, or Wi-Fi
4. Furnishings & Upkeep
- Upkeep of interiors still falls on the owner
5. Cleaning & Turnover
- Same as homes
6. Elevator/Building Rules
- Parking passes or Pool Wristbands- a very minor expense
7. Special Assessments
- Occasionally, HOAs issue assessments for major repairs (roof, elevators, etc.)
- These can be unexpected and costly
Pro Tips
- Budget for CapEx: Set aside a portion of your income for long-term upgrades and replacements (new roof, new HVAC, etc.).
- Track every expense: Use property management software or spreadsheets to keep detailed records.
- Maintenance Account: It may be a good idea to take a flat number or percentage of your Income from the Property each month and place it in an account dedicated to unexpected maintenance. This way you have it, when you need it.
- Evaluate ROI per expense: Some upgrades—like game rooms—can lead to more bookings or higher nightly rates.
- Talk to a local expert: Partner with someone who knows the area and the hidden costs. In the world of Vacation Rentals, there is always something that happens which you don’t plan for.
If you’d like to talk more on how common expenses will impact your ROI or how you can budget effectively for each of these items. Reach out to us on our Management Services page HERE.
