Are Short-Term Rental Lake Houses a Good Investment?
by Hunter Croan
on Monday, January 22nd, 2024 at 7:41am.
A lake house is no small investment. It’s understandable that many homeowners (or prospective investors) are interested in turning their properties into short-term rental lake houses. However, there are some things to consider before you dive in. We’ve got the insight on STR lake houses in Texas that you need to make an informed decision.
What Are Short-Term Rentals (STRs)?
Broadly speaking, a short-term rental (STR) is a unit available for short periods of time, usually from a few days to a few weeks. STRs are also sometimes known as vacation rentals. They typically house guests for less than 30 days at a time, but maximum length limits can vary from one jurisdiction to another. They serve as a strong alternative to hotels, especially since guests can access more space and privacy.
Pros and Cons of STR Lake House Investments
Clearly, STRs hit on a demand that’s attractive to investors. They give you a foot into the hospitality industry and allow you to make passive income on a home you’re not using.
STRs do bring in money; they indeed can partially or fully cover the cost of a lake house. The mistake most buyers make when looking at the books on a potential STR investment is considering only the rental income. You must also consider future appreciation. Lake houses typically appreciate at a much higher rate than off-water homes. Think of the rental income as someone else essentially foots the bill for your property. Some homes can even produce enough rental income to pay for the taxes, insurance, property manager, and sometimes even your mortgage. And, unlike a long-term rental like an apartment, a STR can be accessible to you whenever you want.
But it’s not necessarily true to say that there are no potential drawbacks to consider when investing. For one thing, one of the main reasons to invest in a lake house at all is because it’s a lifestyle asset. It’s not just there to make money; it’s there to give you a space to enjoy time with loved ones.
The same times you naturally feel the urge to use your lake house may overlap with peak demand. In this way, maximizing your profits might conflict with the intent behind the investment. Plus, allowing others to use your property can inherently come with some risk. Likewise, not all communities are well-suited to STRs; in some areas, short-term rentals may not be allowed at all. We at The Lakefront Group can point you toward areas that allow STRs and those that don’t.
Short-Term Rentals Near Texas Lakes: What to Know
If your lake house is well-maintained and well-loved, it’s an investment that will only keep giving. Remember, lake houses are lifestyle assets. While you can rent them out when you’re not using them and go the STR route, they’re mainly pursued by people who are also interested in using them personally.
We see lake houses as an investment you get to play with. A lake house might not be the best first choice if you’re a committed investor looking for something more hands-off. But if you’re looking to build your individual portfolio with assets that you have control over and can personally enjoy, a lake house – whether an STR lake house or not – might be for you.
The Bottom Line: Are Short-Term Rental Lake Houses Worth it?
Anyone looking to buy a lake house might be able to benefit from renting it out when it’s not in use. But it’s important to consider the unique traits of a lake house that make it highly desirable – but also not the easiest to completely step away from. After all, why would you want to step away from a space with breathtaking views and unparalleled access to fun?
The first step toward making the final call on how to invest your hard-earned cash is learning more about your options. The Lakefront Group is your source for all things Texas lakes. We’re here to answer your questions, discuss your concerns, and point you to the best Texas lake houses for sale based on your needs. Don’t wait to find the property and investment of your dreams!