I Didn't Think I Could Afford a Vacation Home — But Now It's My Most Profitable Investment The right rental strategy makes owning a second home possible.
By Katie Cline Edited by Mark Klekas
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Entrepreneurship is often romanticized in our culture. From the pitch-perfect moments on "Shark Tank" to the social media highlight reels, business ownership is put on a pedestal. And it's working — more than 54% of Americans say they're considering starting a new business in 2025, according to QuickBooks. But first, they have to answer the key question: which business should I start?
When starting mine, I decided to combine two American dreams — entrepreneurship and real estate ownership — into one venture. Living in New York City meant home ownership felt completely out of reach for me, until I chose to buy my "second home" first and turn that into a thriving short-term rental.
Related: This 'Dream' Side Hustle Out-Earned Her Corporate Salary in 2 Years — Now It's a $2 Million Business
If you are dreaming of starting a business and owning a vacation home, know that the income potential from a short-term rental can make buying a "second home" not only possible, but profitable. That's because (when done well) the rental income can offset mortgage payments, cover annual expenses and even generate profit.
Of course, "done well" is the key phrase here. Travelers have become more discerning, meaning you can't just post a few photos online and wait for bookings to roll in. The properties that perform best are run like real businesses — with clear branding, operational systems, and outstanding guest experiences. So is this business for you? Maybe you're intrigued by real estate investing or are looking for a business where you get to meet new people. Or maybe, like me, you've always dreamt of owning a vacation home but didn't think you'd be able to afford one. This strategy changes that, letting your second home double as a personal getaway — a place to make memories with family and friends when it's not booked by guests.
Setting up for success
To run your "second home" as an effective business, here are some key factors to consider:
Finances: From day one, separate your rental finances from your personal ones. You don't need to open formal business accounts, but you do need dedicated checking and savings accounts. Your checking account will handle income and expenses, while a high-yield savings account can act as your safety net — aim for at least six months of expenses, plus budget for the slow season. Remember: a bustling summer may make you feel flush with cash, but without planning, you could be caught short in the off-season.
You'll also need to budget for the upfront cost of furnishing, renovating and stocking your property. A 0% interest credit card with a long repayment window can help spread out those expenses.
Branding: In today's market, you're competing for attention, so brand your home like a pro.
- Give it a name — it signals professionalism and makes your property memorable.
- Secure the URL and create a simple website using tools like Squarespace or Wix.
- Define your target guest: Who are they? Why are they coming to your area? What amenities matter most to them?
This clarity should shape your listing, photography, and even your decor choices.
Leveraging online travel agencies (OTAs):
There's debate in the short-term rental world about whether to rely on OTAs like Airbnb and Vrbo or focus on direct bookings. While direct bookings avoid platform fees, OTAs offer instant exposure to millions of travelers and handle key details like payment processing and rental agreements.
One underrated perk? Double-blind reviews. Guests care about their ratings almost as much as you care about yours, which can lead to better behavior and smoother stays.
Your physical space: Think like a guest. Stay in your property for a night or two and notice what's missing or inconvenient. During one of my first stays at my own place on the rental market, I discovered that charging my phone at night required moving the bed — a problem easily solved by adding bedside charging cubes.
Other must-haves:
- An exterior security camera (clearly disclosed in your listing), crucial to protecting your property when you're not there.
- Smart locks with unique codes for each guest, to make them feel extra secure.
- Three sets of linens and towels to make turnovers easier and prevent shortages.
Welcoming your first guest
The moment you accept your first booking, you shift from real estate investor to host — you shift into hospitality. Communication before and during a guest's stay should be prompt, friendly and clear. A positive rapport not only improves the guest experience but also increases your chances of earning a five-star review, which directly impacts your listing's visibility and revenue potential.
A more passive route: Running a short-term rental is real work, but then again, so is every business. But the beauty of this space is that a more passive option exists. If you'd rather avoid the day-to-day operations, consider hiring a property manager or a co-host. They can handle everything from guest communication to turnovers to maintenance.
Of course, this convenience comes at a cost, usually a percentage of each booking. But if you're willing to trade profits to avoid the rare middle-of-the-night phone call that the toilet's clogged, this trade-off might be worth it.
A "second home" can be more than a personal retreat — it can be a profitable, scalable business. With a clear financial plan, a strong brand, and a hospitality mindset, you can create a property that generates income, builds equity and provides a place for you to make incredible memories with family and friends.
