Vacation rental ownership among young adults is climbing. Even despite limited credit histories or down payments, young adults are finding a way to purchase a vacation rental, eyeing it as a lucrative investment.
The proportion of homeowners under age 30 who purchased a vacation property doubled between June 2019 and June 2021, according to Evolve, a vacation-rental management and hospitality firm, which has properties bookable on its website as do Airbnb, Booking.com, and Vrbo. That percentage is significantly higher than the 17% growth during that period among homeowners between 31 to 56 or the 11% decrease among those ages 57 to 75.
“This is quite clearly a growing segment,” Brian Egan, co-founder and CEO of Evolve, told The Wall Street Journal.
Just prior to the pandemic, Zack North, 27, purchased a 2,000-square-foot, four-bedroom vacation rental home in the upper $200,000s outside of Asheville, N.C., with a friend. “I believe real estate is the safest and most sustainable way to grow wealth,” North told The Wall Street Journal. He began renting out the home the first week the outbreak struck the U.S. last year.
Young adults are looking to take advantage of the hot housing market and the demand for short-term rentals, both for vacations and “workcations.” Young adults view the rental income they generate as extra income while also building equity.
“Young people I’m working with are tired of the norm,” Jeramie Worley, managing broker at Worley & Associates, a real estate firm in Branson, Mo., told The Wall Street Journal. “There were no jobs when millennials came into the working world. They’ve been forced to find a better way to make a living. Vacation rentals give people that without the fear and anxiety of losing their jobs.”
Online booking websites also have changed second homeownership and made it more attractive to young adults, Taylor Marr, lead economist at Redfin. “In the past, most people would buy a lakeside cabin that they’d use for one month, and then it would stay vacation the rest of the year,” Marr told The Wall Street Journal. “These portals have lowered the functional cost of the vacation home. You can rent it out to offset your cost.”
Other sites are also popping up to help with the financials of purchasing one and maintaining it. For example, AirDNA crunches data on more than 10 million short-term vacation rentals to help homeowners determine the potential revenue. Other companies like Evolve can handle the rental listing and photography, pricing booking rates nightly, and offers 24/7 guest support.
Jonathan Nawrocki, 26, says he was able to project revenue of about $30,000 per year on his 800-square-foot, one-bedroom cottage in Toledo, Ohio. He purchased it last October for $80,000. The bookings have more than covered his mortgage and cash flow, he says.