Businesses have considerably slowed down in recent years amid the post-Covid recession, while the travel and hospitality sectors have taken the hardest hits. There are increasing reports that show concerning data that vacation rentals may no longer be profitable, at least temporarily.
Many vacation real estate investors are wondering what can be done to avoid losing profits and remain afloat while the industry is slowing down.
Ilan Rakhmanov, a young American entrepreneur who invests in real estate and other markets, managed to keep his properties profitable during the recession and wanted to share his secret with his peers and contemporary business owners.
“Investors must come to terms with the notion that vacation rentals are not always simple investments and they are not entirely passive income sources. Although they can be prepared in a way that makes them more passive, they will never be completely hands-off. When investors accept this, they are more likely to make better investments. These days, many social media influencers are giving the impression that Airbnb and vacation rentals are effortless and totally passive, but this is not the case. In my opinion, this misinformation leads investors to select the wrong kind of rentals, which may be successful during a time of economic growth but will suffer significantly when the travel industry slows down and there is an overabundance of supply and not enough demand.“ said Ilan.
Regarding what investors have to do differently to ensure that their vacation rental investments remain profitable, Ilan stated the following:
“My top priority is making sure that my vacation properties are the top choice among travelers in the area. To make this happen, I invest significant money into the design and furnishings of the properties, pick ideal sites for my rentals, and offer much better service than competitors. Additionally, marketing is essential to our success. To this end, my properties are listed on the most popular rental sites (Zillow, Airbnb, VRBO, etc.), plus regional sites. The listing itself is also a major factor. I employ professional real estate copywriters to concisely describe the property and its advantages, the best real estate photographers, and emphasize the special features that our rentals have compared to others.“ Ilan said.
Here are examples of some of Ilan’s beautiful vacation rentals:
- a Luxury beachfront condo on Marco Island, Florida - https://southseaswest.co
- Chic villa in Woodland Hills, California (Los Angeles) - https://DonPioEstate.com
Ilan is heavily investing in Los Angeles, CA, and Marco Island, FL, and according to him, selecting the right place is extremely important for the success chance of a rental:
“Creating a successful vacation rental business that will bring in both steady income and an increase in the property's value is a challenge, but it is possible. When I am searching for properties to buy, I look for those that may not look great yet, but have good locations and potential. After that, I examine other properties in the area that have been updated and look modern, and I ask myself if I will make money off of this property once I am done renovating it. If the answer is yes, then it is a wise investment for increasing the value of the property.“ Ilan Rakhmanov said.
“My rentals are usually 2x-3x more than the prices of the competition. Despite the higher cost, they are in high demand. That's because they offer more value than the competition. It takes a lot of effort and preparation to make each rental property perfect, but it pays off. The cash I bring in is more than the cost of the property, and the value of the property increases. For example, I bought a condo on Marco Island for $690K in 2021 (20% down, 2.8% interest rate). I invested another $65K in renovations to make it look modern. The cost to maintain it is about $5K a month, but I make $12K-$17K off it in rent. That's a $7K-$12K monthly profit, not counting the fact that the mortgage isn't an expense. Now, in November of 2022, the property is worth $1.2M, which is more than I predicted when I originally bought it. This is just one of many profitable real estate investments I've made. There are plenty of other opportunities out there; you just need to find them.”
Ilan Rakhmanov’s vacation rentals and more information about his work are available on his official website. Ilan is not a financial advisor or an attorney, and none of this information is financial advice, just his personal experience.
Contact Person: Ilan Rakhmanov
Email: Send Email
Country: United States