Investing in rental property has become an increasingly popular way to generate additional income and build wealth. Whether you’re contemplating becoming a landlord for long-term tenants or a host for short-term vacation rentals, making informed decisions about the type of investment property you want to buy is crucial.
As the popularity of “glamping” maintains its momentum, and because buying single-family homes is simply out of reach for many millennials and Gen Zers, many people are considering alternative vacation accommodations and long-term rentals. So between a cabin, yurt, or dome, which is the best investment? Find out more below.
Short-Term Vacation Rental or Long-Term Tenant?
When you’re investing in a property, one of the first decisions you’ll need to make is whether to rent it out for short-term vacations or long-term tenancies. As a prospective property investor, you must make an honest self-assessment: Are you ready to be in the hospitality business, which involves cleaning and preparing your property every few days? In the case of auxiliary dwelling units and single-family home rentals, are you ready to be on call every time something needs repaired or pay a property management company to fix things for your tenants?
Your role in maintaining your investment property is an important factor when you’re choosing what type of investment you want.
If your aim is to attract families, a cabin or cottage with multiple bedrooms and a yard may be ideal. Younger, adventurous renters might be attracted to unique accommodations such as yurts, geodesic domes, or houseboats.
Location and Amenities
Properties in gorgeous natural settings, in tourist hot spots, or near popular attractions can command higher rental prices. Amenities such as a fully equipped kitchen, high-speed internet, or access to recreational activities can also add value to your rental property.
Permits, Plumbing, and Disaster Planning
The summer of 2023 taught the world that disasters can happen anywhere and that they can be unpredictably extreme. The unfortunate truth about buying property in the 21st century is that you must consider and plan for vulnerability to fires, floods, and blizzards.
More mundane considerations include permits for building the type of structure you want, if that’s the route you’re taking. You also must consider the availability of high-speed internet connections, cell phone service, and utilities such as electricity, sewer, and potable water.
Types of Rentals
Cabins can offer a rustic, cozy experience in natural settings. Houseboats provide a unique living experience on the water, which can command premium rental rates. Yurts and teepees offer “back-to-nature” experiences. Yurts can be relatively inexpensive to set up, but they may not appeal to all types of renters, especially those unaccustomed to camping. Hard-sided yurt cabins, however, combine the best of both cabin and yurt living. Because of their versatility, they can make good long-term investments.
Geodesic domes are modern, energy-efficient structures, but they can be expensive to build and maintain, while existing cottages can appeal to a wide range of renters, from honeymooners to families. Their historic charm, however, might require significant maintenance.
The best investment property depends on your goals, your target audience, and the amount of time and resources you’re willing to invest. Carefully consider each type of rental property and its unique advantages and challenges before deciding to invest in a cabin, yurt, or dome.