More and more people are considering renting out a vacation home. Whether to generate additional income, maximize the utilization of their property, or make an investment profitable. But the big question is: Is renting out a vacation home really worth it?
There's no one-size-fits-all answer, as it depends on various factors: location, demand, costs, and even how well you organize your vacation rental. This guide will help you make your decision: We'll explore the opportunities and risks, show you when a vacation rental is worthwhile, and give you tips on how to make your rental process efficient and profitable in the next step.
Why rent out your apartment or home?
Renting out a vacation home offers several advantages: You can secure additional income, make better use of your property, and simultaneously provide guests from all over the world a temporary home. Many owners also feel good about having their apartment actively used rather than empty – this often makes running costs easier to cover.
Short-term rentals, available through platforms like Airbnb or Booking.com, have gained popularity in recent years. They allow for flexible occupancy, adapt to your daily routine, and generally generate higher income than traditional long-term rentals – especially in popular regions and during peak season. But are Airbnb rentals really worth it? That depends mainly on the location, demand, and your own organization: In tourism hotspots, it can be very profitable, while in less popular areas, more sensitivity regarding pricing, target audience, and marketing is required.
Flexibility
In addition to the financial aspect, renting also offers flexibility: You decide when you use the property yourself and when you rent it out. This combination is beautiful for vacation properties – you can still use it yourself without foregoing potential income. At the same time, as a host, you build a base of regular guests. Good reviews, personal recommendations, and recurring bookings predictably increase your occupancy.
Passion
There are also intangible benefits: Many rent out their properties because they enjoy creating a positive experience for guests—from thoughtful furnishings to insider tips for their stay. This sense of hospitality contributes to your brand image and can also be economically worthwhile in the long run, as satisfied guests tend to return more often.
Financial freedom
Suppose you're looking for revenue, financial freedom, and passive income. In that case, a well-managed short-term rental can turn a solid side income into a predictable cash flow—a building block toward financial independence. It's not entirely passive, but with transparent processes, the effort remains manageable, and surpluses can be used to finance loan payments, reserves, and personal goals. If the location, occupancy, and fair prices are correct, the answer to the question "Renting out a vacation home—is it worth it?" is increasingly a yes.
What factors determine whether renting is worthwhile?
The honest answer to "Is it worth renting out a vacation home?" is: It depends on the circumstances. You don't need formulas, just clear guidelines. Use the following questions and signals as a guide for your decision.
Location of the holiday property
You can sense a good location before you calculate it: weekends are often in demand, comparable properties' calendars seem well-filled, and reviews are strong. Ask yourself: Who is traveling to me – families, outdoor enthusiasts, city travelers, workcation guests/digital nomads?
✅ Green flags: tourist hotspots, multiple travel reasons throughout the year, clear seasonal peaks.
❌ Red flags: low demand outside of vacation times, few comparable offers, negative location reviews.
Seasonal demand & utilization
It's not just the high season that determines the decision. Consider the good reasons for the off-season (events, spas, hiking, trade fairs). Dynamic pricing smooths out dips without losing your position.
✅ Green flags: regularly popular weekends, plannable events, willingness to use dynamic pricing (vacation rentals).
❌ Red flags: strong dependence on one season, lack of ideas for off-season arguments.
Costs & ongoing expenses
In addition to the purchase price or possible financing, you have to factor in fixed costs such as maintenance, cleaning, insurance, and utilities. Additionally, commissions are earned from booking portals such as Airbnb or Booking.com. The more accurately you calculate your costs, the more realistically you can assess whether renting out your property is worthwhile.
✅ Green flags: conservative calculations, emergency funds for unexpected costs, realistic service prices.
❌ Red flags: backlog of renovations, wildly fluctuating utility costs, underestimated commissions.
Legal framework
Many cities and regions have strict regulations for short-term rentals—from registration requirements to rental caps. Those who don't comply properly risk fines. It's worth familiarizing yourself with the local laws in advance.
✅ Green flags: Rentals are clearly permitted, transparent processes at the municipality/authority.
❌ Red flags: Hard caps, prohibitions in condominium associations/HOAs, complicated permits.
Administration & Resources
The answer often falls to the vacation apartment management team. You don't need constant availability—but you do need functioning processes.
✅ Green flags: Willingness to use a channel manager and a PMS, access to cleaning/key handover, and a digital guest directory for standard questions.
❌ Red flags: Everything is manual, no service provider network, little desire for communication.
In practice: If you use tools, "a lot of work" becomes a smooth process—and the question " renting out a vacation apartment, is it worth it? " tends to be " yes. "
Appearance & Offer
Your listing determines clicks and bookings: strong photos, clear value propositions, fair rules. A dedicated website with a booking system makes you less dependent on commissions.
✅ Green flags: well-thought-out positioning (e.g., family-friendly/dog-friendly/workation-friendly), quick responses, consistent pricing on portals and website.
❌ Red flags: interchangeable images/text, unclear fees, slow response times.
Traffic light conclusion for the decision
Relatively NO: Legal hurdles, weak off-season, no resources for operations & service.
Somewhat YES: More green flags than red flags, legally sound, noticeable demand, digitally lean administration.
Holiday home as an investment – is it worth it?
Many owners view their vacation rentals not only as a retreat or source of income, but also as a valuable investment. In popular vacation destinations, a vacation property can appreciate while also generating regular rental income from short-term rentals. Whether this is worthwhile for you depends on location, demand, cost structure, and your management.
How do you recognize potential?
- Demand is clearly evident, as evidenced by high occupancy in comparable properties, strong reviews, and tourism data.
- Your financing is solidly planned, with conservative assumptions, realistic interest rates, and reserves.
- The property aligns with the market, as its location and target group are attractive in the long term (e.g., a family-friendly region, a workation location, or an event hotspot).
- You want to play an active role: administration, communication, and marketing are part of the equation.
What does “worthwhile” mean – the most important key figures (briefly explained)
- Gross rental yield = annual rental income/purchase price
- Net rental yield = (rental yearly income – running costs) / (purchase price + acquisition costs)
- Cash flow (annual/monthly) = income – all expenses (including financing)
- Cash-on-Cash-Return = Annual cash flow/equity employed
- Break-even occupancy = (fixed costs + financing) / (ADR – variable costs per night)
- ADR = average daily price
These key figures give you a quick idea of whether and when a holiday home is a worthwhile investment.
Example calculation (simplified scenario)
Suppose you buy an apartment for €250,000. Acquisition costs (10%): €25,000—total investment: €275,000.
You contribute €60,000 in equity, financing €215,000 (assumptions: 4% interest + 2% repayment ⇒ approximately €12,900/year or €1,075/month annuity).
Rental assumptions:
- ADR: 130 €
- Occupancy: 55% ⇒ approx. 201 nights/year (365 × 0.55 ≈ 201)
- Annual turnover: €130 × 201 nights = €26,130
- Variable costs: approx. 20% (portals, consumption, etc.) ⇒ €5,226
- Fixed costs (without financing): maintenance fees/insurance/internet/maintenance/taxes ≈ €4,360
Invoice:
- NOI (before financing): €26,130 − €5,226 − €4,360 = €16,544
- Cash flow (after financing): €16,544 − €12,900 = €3,644/year (≈ €304/month )
- Net rental yield (≈) €16,544 / €275,000 ≈ 6.0%
- Cash-on-cash return: €3,644 / €60,000 ≈ 6.1%
Break-even occupancy:
Variable costs/night ≈ €130 × 0.20 = €26 ⇒ Contribution margin/night = €104 .
Fixed costs + financing = €4,360 + €12,900 = €17,260 .
Required nights = €17,260 / €104 ≈ 166 nights ⇒ ~45.5% occupancy .
Interpretation: In this scenario, the financing is paying off, you're generating positive cash flow, and you're above breakeven. With a better location/price or more efficient management, the return can increase further.
When is it not worth it?
- Capacity utilization is significantly below break-even, e.g., < 40% with moderate ADR.
- Regulatory restrictions (misuse, permits, rental caps) are pushing down the rental window.
- High running costs (maintenance fees, energy, renovations) or long periods of vacancy.
- Overly optimistic ADR assumptions without reliable demand.
Keep an eye on (and manage) risks.
- Vacancy & seasonality: With Smoobu Dynamic Pricing, you can react to demand, season, and events.
- Cost surprises: Plan for maintenance/inventory reserves; PMS statistics help with forecasting.
- Legal & Taxes: Check local regulations (registration, fees). Seek tax advice (depreciation, business expenses, sales tax, depending on the model).
- Operational risks: appropriate insurance (e.g., liability, inventory). Standardize processes (cleaning, check-in, keys).
✅ Green flags (per investment)
- Property in a region with stable or growing demand.
- Explicit calculation including additional costs, taxes, and maintenance.
- Willingness to use tools for administration & pricing.
- Long-term perspective: you see returns over years, not months.
❌ Red flags (contra investment)
- Financing is based on overly optimistic assumptions (capacity utilization, prices).
- Dependence on only one season or portal (e.g., only summer guests, only Airbnb).
- Legal uncertainties: prohibition of misuse, unclear WEG rules, and approval hurdles.
- No reserves for unexpected costs (renovations, vacancies).
Traffic light conclusion
- More likely YES: If there is demonstrable demand, the costs are conservatively calculated, and you are willing to organize the rental professionally.
- Somewhat NO: If you are only hoping for a quick increase in value without considering any questions or legal clarity.
A vacation home can therefore be an attractive investment – with realistic assumptions, a transparent cost structure, and efficient guest communication. However, vacancies, legal hurdles, or unexpected expenses can reduce the return on investment.
👉 For more in-depth figures and calculation examples (revenue, ROI, scenarios), read our article about how much you can expect to earn.
Administration and organization: The underestimated success factor in rental
Whether renting a vacation home is worthwhile often depends more on the management than on the location. When inquiries are answered promptly, calendars are synchronized, and cleaning is done without follow-up calls, renting feels like a peaceful experience, and that's precisely when it becomes profitable.
A channel manager prevents double bookings and keeps prices consistent across Airbnb, Booking.com, and other platforms. A property management system (PMS) consolidates bookings, payments, and statistics (e.g., occupancy, ADR). With templated guest communication and a digital guest directory, you'll field fewer standard questions.
Dynamic pricing like Smoobu Dynamic Pricing helps you adjust prices to seasons, demand, or events without having to make daily adjustments. If you also offer a small website with a booking system via the website builder, you can increase direct bookings and reduce commissions – a real boost for profitability.
✅ Green Flags:
- Central control is desired (👉 Channel Manager, PMS )
- Reliable cleaning/key handover, preferably with a smart lock
- Willingness to use dynamic pricing and short response routines
- Result: lower time costs, more stable utilization, better overview.
❌ Red flags:
- Everything manually (Excel, copy-paste, multiple calendars)
- No guaranteed cleaning during changeover times
- unclear rules/billing processes, slow responses
- Risk: Stress, cancellations, bad reviews, and the return suffers.
The bottom line: The more quietly and digitally you manage your vacation rental, the more likely the answer to "Is it worth renting out a vacation rental?" will be yes. And suppose you decide to rent out a vacation rental later. In that case, you already have the tools at your disposal with a channel manager, PMS, digital guest directory, and dynamic pricing to turn a good location into a good business in the long term.
Increase revenue potential – practical tips for landlords
If the fundamentals are proper – location, demand, and solid management – you can further increase the revenue potential of your vacation rental with a few levers.
Smart pricing
Instead of fixed prices, you rely on dynamic pricing. This means your rates automatically adjust to the season, demand, or events. This way, you get more value during peak times and remain attractive during quiet months.
✅ Green flag: Openness to flexible pricing, willingness to work with tools like Smoobu Dynamic Pricing
. ❌ Red flag: Prices remain the same year-round, regardless of demand or season.
Promote direct bookings
Airbnb and Booking.com are valuable, but booking directly on your own gives you more independence and reduces commissions. A website with an integrated booking system strengthens your brand – and repeat guests prefer to book directly if there are small advantages.
✅ Green flag: Investing in your own website, straightforward SEO basics, and a bonus for direct bookers.
❌ Red flag: Dependence on a single portal, no own channels.
Automated guest communication
From booking confirmation to requesting a review: Templates and automation save time while still feeling personal. Guests feel welcome and cared for, even when you're not constantly on your phone.
✅ Green flag: Willingness to work with standard processes (e.g., via a digital guest directory + templates).
❌ Red flag: Communication is always ad hoc, lacks consistency, and has a high error rate.
Additional Services & Upsells
Added value for guests = more revenue for you. Whether it's a breakfast box, bike rental, or flexible late checkout: little extras make the stay more attractive – and increase revenue at the same time.
✅ Green flag: Guest-centric thinking ("Which services would really delight?").
❌ Red flag: "Extras aren't worth it" – unwillingness to offer added value.
Listing quality & conversion
Your presence determines clicks and bookings: strong photos, clear descriptions, transparent rules. Even minor optimizations can significantly increase your conversion rate.
✅ Green flag: Investing in high-quality photos, clearly positioning for a target audience, and actively managing reviews.
❌ Red flag: Outdated images, unclear house rules, and no response to feedback.
👉 Conclusion: Those who dynamically manage prices, build direct bookings, automate communication, and maintain a professional image will unlock the full potential of their vacation rental. This question is answered not only mathematically, but also through the increasing professionalism of your image.
The mindset for managing a holiday home
Ultimately, the answer to the question "Is it worth renting out a vacation home?" is often determined by your mindset. Numbers, management, and location are significant, but the heart and soul of a host and a business mindset make all the difference. You don't need 24/7 availability, but you do need a passion for transparent processes, friendly communication, and continuous fine-tuning.
A good host mindset is both service-oriented and pragmatic: You appreciate reviews, embrace feedback as an opportunity, and think in terms of solutions ("How can we make this easier next time?"). At the same time, you set boundaries with clear house rules, keep administration streamlined, and make decisions based on signals: demand, seasons, and guest expectations.
Anyone willing to standardize recurring tasks (templates, check-in procedures, cleaning slots) and adjust prices according to the situation will quickly notice: Renting out vacation apartments feels less like work and more like a well-rehearsed process.
✅ Green Flags (Mindset):
- Enjoy being a host and an appreciative tone – even with minor problems
- Willingness to build routines (templates, checklists) and use tools in a targeted manner
- Learning attitude: test, measure, sharpen (photos, texts, prices, minimum stays)
Long-term perspective: You see renting not just as a quick profit, but as a project that can be continuously optimized.
❌ Red flags (mindset)
- Aversion to communication or clear rules (“It will all work out”)
- Wanting to solve everything manually, even though it can be standardized
- No desire for minor, regular improvements
Short-term thinking: Expectation of immediate maximum returns without patience for development and optimization.
In short, if you are interested in structured hospitality, you like to simplify processes and are open to smart support, chances are good that renting out a holiday apartment will be worthwhile for you - whether as a side income or as a step towards a professionally managed holiday property.
Conclusion: Is renting a vacation apartment worthwhile?
There's no one-size-fits-all answer to the question of whether renting out a vacation home is worthwhile—it depends mainly on the location, demand, and your personal goals. One thing is clear: If you keep an eye on costs, skillfully manage occupancy, and efficiently organize your administration, you have a very good chance of running your vacation home profitably.
For some owners, a vacation home can be an attractive investment; for others, it's more of a flexible way to generate additional income. It's essential to calculate realistically and carefully examine the general conditions.
If you decide to rent out your vacation rental, innovative tools can make a decisive difference: They help you save time, present yourself professionally, and increase your return on investment. With Smoobu, you have everything in one solution – from a channel manager and PMS to a digital guest directory and dynamic pricing.
👉 Try Smoobu free for 14 days and find out how profitable your vacation rental can really be.