Vacation Home exterior. Text: Minnestay.

Investing in rental properties has become increasingly popular in the last two decades or so. In fact, vacation property investment has become a billion-dollar industry, and the future of this market looks just as promising. Vacationers are looking for easy and affordable ways to fit trips into their budgets and schedules and many vacation property owners are banking in on this desires to see increased rentals. All over the country vacation property owners are making significant profits renting out their vacation homes, and the Twin Cities and surrounding Minnesota areas are no exception.


Most people yearn for a vacation so that they can get away from their urban setting, and renting a property rather than spending their hard earned money on hotel stays is an attractive option for such wanderlust-struck individuals. Because of this desire to rent as opposed to own, a win-win situation has developed for both travelers and rental property owners alike. Those who already own a vacation rental property and are looking for renters have been seeing a significant boost in revenue of late. By renting out their own vacation rental homes, property owners are able to offset a significant portion of the cost of property ownership by renting out their space to travelers.

Due to this increased demand of vacation rentals, websites like Airbnb, Expedia, TripAdvisor, Priceline, and the like are now offering vacation rental listings to those looking for both a quick weekend getaway or lengthy vacation. These websites have made it easier than ever to list a rental property, but listing your property is only the first step towards success. There are many more factors you will need to assess and address in order to turn your rental property into a profitable business venture.


Many people who have an interest in vacation property investment are unsure of where to begin. However, owning a vacation property is not as difficult as many would assume. To get started, there are four simple factors you need to keep in mind when investing in your vacation rental property.


Lenders are very cautious when it comes to mortgages on investment properties as opposed to a primary residence. Lenders feel that if you fall into financial difficulties, you are more likely to pay the mortgage on a primary residence as opposed to your investment property.

When you apply for a loan or mortgage, lenders try to mitigate their risk by asking you for a larger down payment as well as higher interest rates. Typically, you will be asked to put down a deposit anywhere from 20-40%, and you should also expect to pay at least one percentage point higher interest than what you would on a primary residence.

As more travel websites like Airbnb enter the market, it is becoming easier to find financing for short-term rental properties. More and more options of private financing are becoming available for short-term deals every day.


If you are buying a property for investment than it is essential to choose one that resides in a popular destination that will maximize your return on investment. The area around Minneapolis or any of Minnesota’s larger towns is a great place to start. Minnesota as a whole boasts many exciting events and activities including funfairs, carnivals, marathons, fishing, hunting, bird watching, and water ski shows. No matter the time of year, there will be plenty of events to entice your renters.

There are many opportunities for travelers to explore everything Minnesota has to offer while  visiting or vacationing in the land of 10,000 lakes, such as by visiting the Franconia Sculpture Park, Minnehaha Falls, Split Rock Lighthouse, or the Red Wing Shoe Museum. Vacationers can also enjoy a wide variety of outdoor activities such as biking, hunting, canoeing, Kayaking, and enjoying the natural wildlife.

Minnesota also host an annual Oktoberfest complete with two whole weekends of live polka bands, beer, and delicious German food. With its abundance of activities to enjoy, Minnesota is the perfect place to buy a vacation rental property.


The next step to take after purchasing a vacation property is to get it insured. Remember that homeowners insurance and long-term rental insurance are different than short-term rental insurance, and short term coverage will not cut it when it comes to securing your vacation rental. Insurance is essential if you want to avoid getting into trouble if a guest damages your property or is injured while in residence.

Furthermore, the cost of insurance for rental property varies; for example, a property with a pool will have a greater risk value than one that does not due to the potential for visitor harm or property damage. Make sure to look around and ask for quotes from different lenders to get the best deal.


Owning property comes with its fair share of expenses which you will need to cover. You will need to pay for regular maintenance for your rental property and bear in mind repair costs which may arise from time to time. You will also need to cover utility bills which can increase considerably if you have a luxury property and fluctuate with the seasons. At the same time, you should keep in mind that people will be tempted to use more heat and water when they are not the ones paying for it.

For example, the cost of heating the pool or regular refilling of the jacuzzi with water will all add up and increase your utility costs. Another cost that is often forgotten is that of furnishing your rental property. You will need to spend a good amount of money on the furniture and décor if you want to attract rentals. Keeping the theme neutral is a safe bet for attracting a maximum number of travelers.

Moreover, if your rental property is a part of a homeowners association, you will need to keep up with their fees; which will increase with time. So, make sure you consider that fee increase as well when planning your budget. And lastly, you may want to consider hiring a property agent or manager to look after your property if you live far away from it. Having someone on hand to handle repairs, maintenance, cleaning up after your guests, and seeing to your property’s needs can give you peace of mind while you’re renting your space out to others.


Owning a vacation property is a lucrative investment which promises good a good return on invest if done correctly. You can earn a handsome income if you plan everything properly and are prepared to put in the effort to make your vacation rental stand apart from the rest. Although renting out a vacation property is a time consuming process it will be worth it in the long-term. If you’re looking for a way to earn some passive income, then renting out your vacation property may be the best choice for your wants and needs. At Minnestay we can help make your vacation rental a success. Contact us today to learn more about how to better optimize your vacation rental investment.