New, motivated, and going to look at properties this weekend!

[Andrea M.]

After hitting my 40s and working as an Executive Assistant for countless years, I've decided I don't want to go to a job anymore, I want to own and manage vacation properties to make my money that way. I understand I will need to own at least one property before I can quit my job :) We do not plan on using this property for maybe more than a week or two a year for personal use.

My husband and I both currently have stable jobs, no debt except our mortgage for $145k. Both cars paid for and in good shape, house is in good shape. We earn $100k between us and have over $20k in savings. We also have 401ks and IRAs with various amounts, but we don't really want to touch those.

We are looking at properties around $80k in the Gulf Shores area (1 block back from the beach). I've spoken to a property owner there at length, and he highly recommends that area and says he is doing extremely well with his one rental there which is in the area we are looking. BUT he only has one property, so I'm not sure how much I can trust his opinion....

We are going to look at some properties this weekend, and I just want to make sure this is the right move and we are not making a big mistake in investing in the vacation rental area in Gulf Shores. We will be pretty much using all of our saved cash for a 20% down payment so it is a little worrying.

I have read and researched everything I can online and in books, about vacation rentals, investing, taxes, insurance, how to manage them etc. etc. so I feel I am pretty well informed overall, but I really want to get some experts take on this also :)

I appreciate anyone's time and experience on my little investment!

[J Scott]

You mentioned three seemingly pertinent data points in your post:

- You want to quit your job;
- You're probably making about $50K in income at your job (you mentioned $100K for both you and your husband combined);
- You have $20K to invest.

Just to set expectations appropriately, consider that a great real estate investment will probably generate about 20-30% cash-on-cash return (about 20-30% ROI each year).

So, with $20K to invest, if you find a great investment, you're likely to earn about $4000-6000 in cash-flow each year.

That's a LOT less than the $50K it appears you're trying to replace.

In addition to that, you may need some cash reserves for things like renovations, repairs, vacancies, etc -- so don't spread yourself too thin on the purchase.

I don't mean to burst your bubble, but wanted to ensure that you had realistic expectations for your investments.