Vacation homes

[Libby Kelly]

My husband and I have been toying with the idea of a vacation home in Virginia.  The town is turning into a second home community with deals to be had.  We love the location on the Chesapeake bay for our kids and the Mayberry like lifestyle!!

While down there this summer for 2 weeks we found most houses were listing for over 260k to 1.1Mil. We found a fixer upper 3/4 of a mile to the beach with more square footage then most rental homes. It is listed for 60k and we are contemplating the purchase.   My father is a contractor and feels we can do the renovations for 100k. With a contingency budget of 25k for the unknown, which there shouldn't be too many as it's down to the studs.  He would work on it starting this winter with the idea of us using it in 2015  to work out  the kinks then renting in 2016.  

Looking at vrbo/ home away we can rent for. 1400  a week and if we have  75% occupancy that is about 11,000. Doing a basic expense list tit would cost  $15000 a year to cover taxes, Reno loan, water/sewer/garbage, insurance, property management, heating/cooling and electric .  Now we won't break even but we spend 3500-4000 on 2 weeks of rent so if we are only out what we spend a year on vacations.... Would it be worth if financially??? 

So many people are positive on a vacation/ second homes that it has made me nervous. The negative talk is mostly people who bought pre bubble.  

We are located in NY and would need maintenance for weekly rentals as I plan to do the bookings, listings etc....   

Is there a profit margin where a vacation home becomes not worth it or is is all based on personal finances? It would be nice if when we rent it we break even so we can enjoy it for 2 weeks in prime season and off season maybe April / may to get it ready etc....  I'm hoping after getting into the landlord mode we can increase our occupancy and rates to break even within a year or two.  The nice thing is per the vacation rental sites there are only  a handful of 4/5 bedroom rentals and they rent for closer to 1600 so there is room for improvement on our business model!!!

I need to get my rose color glasses off and see the truth.... Thoughts on what else I should take into consideration?