Rent out your vacation home for extra income

updated 12:30 p.m. ET Nov. 7, 2008

MIAMI BEACH, Fla. - Whether it's the snowy slopes of Colorado, the blue waters of Miami Beach, or the picturesque golf courses of Hilton Head Island, finding a quality vacation rental is becoming easier every day.

That's especially true now as the economy sinks into recession. Vacation home owners who once refused to open their prized retreats to renters are now reconsidering, seeking more cash for their pockets.

Homeowners interested in becoming temporary landlords can benefit from some advice to help them along in a process that can be both time consuming and mined with expensive pitfalls.

About 25 percent of vacation home buyers last year said they planned to rent out the property, up from 18 percent in 2006, according to the National Association of Realtors. And real estate agents in vacation hot spots say that trend is continuing because more owners are watching their retirement savings slump with the stock markets.

"People who have second homes have found the price of operating and maintaining their home have gone up," Justin Halloran, vice president of HomeAway.com, which operates a series of Web sites that lists vacation homes for rent. "Other expenses in their lives have also gone up, so they have less money to spend on their second home."

Vacation rentals are homes or condos that can be rented for several days, weeks or even months at a time. They have a more homey feel than a hotel room, and often extra features like flat-screen TVs, swimming pools, and fully equipped kitchens.

And while they can be pricey compared to a budget hotel, they're often more affordable for groups who can share one home instead of renting several small hotel rooms.

"It's just a different feeling," said Tom Ridgway, owner of Hilton Head Rentals & Golf in Hilton Head, S.C., which provides listing, property management and rental services for homeowners and travelers. "In a hotel, you can't go down to the lobby in your pajamas with a cup of coffee and talk to your sister who you haven't seen in two years."

While mansions in the Hamptons, N.Y., and Palm Beach, Fla., attract the most affluent buyers, an eager investor doesn't need to spend millions. Consider affordable areas like Gatlinburg, Tenn., central Florida, Colorado skiing destinations like Winter Park and Keystone, and even exotic locales like Costa Rica and the Bahamas.

Dennis Johnson, a real estate agent with Paffrath & Thomas in Breckenridge, Colo., said it varies by resort, but buyers can snare a one-bedroom condo with "ski-in, ski-out access" for about $300,000. Properties with two or more bedrooms start at $650,000 and top $1 million. Vacation rental rates range from about $125 to $1,000 a night.

msnbc.com travel teasers See the latest contest winner and take the quiz

"There's always going to be that demand for people to come to ski areas because our society is so stressful and we want to get away," Johnson said.

In Miami Beach, Fla., Jayson Wingfield rents out his $600,000 studio-style condominium with a water view. Located in the upscale Setai condo-hotel, his condo produces an average of about $3,000 per month on vacation rentals. Bookings and maintenance are handled by the condo-hotel, though cheaper third-party managers are available, Wingfield said. His condo is rented about 65 percent of the year.

"It's perfect for the absentee owner that doesn't want any responsibilities, who wants to use it part-time and maximize the investment," said Wingfield, 31.

MORE FROM TIPS

Tips Section Front

A traveler's guide to shopping abroad Tips for choosing a hotel 7 ways to avoid checked baggage fees No ticket, but they remembered the bill How to get fit on vacation The travel secrets of war reporters The best iPhone apps for travelers Great things to do in the airport Airline safety course teaches life-saving skills How to leverage social media for a better vacation Tips Section Front   Add Tips headlines to your news reader: