Anyone own vacation homes and rent them out??

Question

I am not talking about small condo's but actual single family houses in the mountains or on the water etc.?? I would like to hear condo experiences as well but just not thinking of buying one of those.

I watch the show with my wife just for fun.

http://www.hgtv.com/vacation-house-for-free/show/i...

It seems they always mention in the show finding a fixer upper and buying it and then renting it out during peak rental season for 14 weeks at XX a week to pay  mortgage, expenses, etc. and essentially have a house for free.

The house doesn't talk about renting during the offseason. What happens those other 38 weeks out of the year?? Can you still rent your property but just for less money than peak season rates or is there some association that puts a crappy restriction on you??

What I am getting at is thinking if I buy a house on the beach and break even for high season rental rate then the rest of renting it out for the year would be all profit etc. except for of course the PM and rental lease up fees etc. The rate wouldn't be the same as peak but I would think people would still take vacations and lease it up at  a decent rate.

I don't like being in a building having other owners tell me what I can or can't do and affecting my investment which is why I do not like condo's. It seems like even if you bought for cash you could get a nice return on your investment for a SFR property.

I am not big on the mountains as I have lived in GA and seen it all my life. I do like the fall leaves changing etc. but I love the beach and the ocean. I am just drawn to it hearing the waves roll in at night with the peace and quiet. Something just so calming for me about it.

Colleen F. · Answer

One of our rental is a beach house with ocean views a block from the ocean. The RI market is unique in that you can do summer rentals and rent to the students in the winter. The advantage we had was when we bought it the house was a wreck and needed a lot of work. We do alright on the rental and could do very well if we didn't like it so much ourselves. We have analyzed other rentals in Florida and RI to see how they cash flow but haven't found anything else we wanted. What we learned is it has to be a seasonal area and that a block can make a difference in the rental market. Beach view or Beach front is always going to have a better occupancy but you may get a good value that rents just as well a block back and no flood insurance. If the unit you are looking at isnt' a rental look at the numbers on something close to see if they work. Figure 80%-100% of the high season market and the low season market depends on the area but it is not as high as 80% for sure and may be as low as 20% of the time it is rented. In our area it is all about repeat customers. I don't think that is true in other areas. Figure higher expenses, amenities really matter, and there is more management. Also don't forget furnishings and housewares for those weekly rentals. When you do a year round you don't have to worry about how worn the couch gets or if the last renter ruined the pots. Most people take ok care of things but it is one of the things like linens you figure in to your costs.

I too love the beach and hope to add some more properties along this line but we haven't found the right one yet. I hope you are lucky enough to find one that works for you.

Account Closed · Answer

@Joel Owens

Hey Joel,

I don't currently own any vacation rentals, but I've been gaining some traction for a knowledge base.  My girlfriend and I stayed in Levenworth, WA for a few days in a VRBO.  It was actually adorable and a busy unit.  I picked the owners brain and he was quite excited about his profits in this unit.  He highly suggested me doing the same - VRBO for manufactured units.  He described the structuring as similar to a regular home and the income is very favorable.  I've never been a fan of manufactured homes, but it might be something worth looking into as a VRBO.

Jeremy Baker · Answer

@Joel Owens my wife and live in Denver and own a condo in Kihei, Maui.  We've owned it for three years and have been very successful renting it through VRBO.  I understand the trepidation of owning a condo w/ an HOA, however we are lucky and most of the owners rent their condos so we all do our best to make sure that our complex is attractive for short term rentals.

One thing we did while looking for a place, we checked out listings in VRBO and looked at the availability calendars of all the units within a certain complex and certain area to judge where would give us the greatest opportunity for success.

We've constantly stayed above an 85% occupancy rate and have been cash positive each year (even though we purchased w/ 25% down), but we are also lucky that there's really no down season in Maui.  Something that keeps us from buying a place in the mountains of Colorado, especially since prices are very similar to some condos in Maui.

I know you are looking more for someone w/ experience short term renting a house, bu feel free to PM me and I would be happy to share our numbers and experience in more detail if you like.

Walt Payne · Answer

@Joel Owens  I'm another one who has used VRBO and really like it. I have had great experiences over the years with it. Mostly in the Orlando area when my kids were younger. But getting a 3 or 4 BR for about $100 a night in Kissimee was a great deal and a wonderful way to spend a vacation as opposed to cramped into a single hotel room.

I too have been thinking about the idea. For me it would be a great way to subsidize my stays in Fla, that I hope to make much more frequent in the next year or two. I know from having talked with a few rental owners that it can be quite lucrative. And they say that you get a better clientele who generally have  too much to lose to cause serious damage. And if they did, they have too much to lose to go to court over it.

Andrew Fingado · Answer

I help my father manage his vacation rental up in South Lake Tahoe.  It's in a private community right on the South Shore just a half mile from the Nevada state line.  We only rent it out for about four months out of the year, and use it ourselves.  It's been in my family since the early 1900's and it's just one of those legacy properties you hold onto.

The reason we only use it as a summer cabin is because there is an oversupply of vacation rental in the South Lake Tahoe area in my opinion.  To get it fixed up, heated, and maintained year round would cause him to lose money.

When a vacationer has a choice of ski lodge condo (right next to the slopes), casino hotel, motel, or house, they often choose the former before the latter.  So I would just be careful of markets that have oversupply.  We had someone in our subdivision up there build a brand new cabin years back and from what I have heard it's not renting out as consistently as the owner thought.

So the cabin really isn't a money maker, and it is nice to have around.  So if you are OK with just having your vacation home paying for itself (or taking small losses), it's a great thing to pass down and share good times with family.

Of course, every market is different.  I've been interested for a while in purchasing a vacation property up around Bodega Bay.  I know a guy who's done real well up there.

Micki M. · Answer

@Joel Owens I love the vacation rental model of ownership. My first condo in Denver is now a full time Airbnb rental. I didn't think I would be able to make much money in Denver as a "vacation destination" but I've found that if you do your research and market appropriately you'll find your audience.  I focus on nurses & grad students who are doing 2-6 month rotations in Denver.  It's low turnover so not much work on my end (3-4 times a year), and I make 50% more than I would as regular monthly rental.  Check out Matt Landeau's blog http://www.vacationrentalmarketingblog.com/ and Podcast 57, he's got some great info.

Ryan Dossey · Answer

I go to Topsail, NC with my wife and her family once a year. It is absolutely beautiful. The beaches are not super crowded and the people are very friendly. When I started getting into REI one of my thoughts was I should own one of these ocean front homes and rent it out! The cost of them to rent can get VERY expensive especially during peak season. The homes can be bought for under 300k if you look hard enough. It sounded great till I talked to the next door neighbor of the house we were renting. They bought theirs as a rental and said they would absolutely positively discourage anyone from doing it. They lose money every year. Even after selling several other properties and owning it free and clear they still consider breaking even an incredible year. I've decided when I've "made it" I will live there but not consider it an investment.

Cal C. · Answer

I had a vacation rental in Davenport, FL 1998-2004.  I lost money on  it every year.  Fortunately, the market went up enough for me to come out ahead overall.  It was much more trouble than it was worth.

Arlan Potter · Answer

We bought this in 2008. It is a doublewide, but has 5 bedrooms, 2 living areas, and 3 full bathrooms. It was very distressed when we bought it but over the years we have done extensive remodeling. We rented it out for 125 days last year. Should hit 115 days this year.  We use it for our family 5 to eight weekends a year. It is in a mountain valley at 8258' above sea level in Eagle Nest, NM. Near 2 ski resorts. Year around fun. It rents for all I want in the summer, and quite a bit during ski season. It is not a major money maker it that the utilities(propane) insurance and taxes are not cheap, but I usually make about a 6 % return on my cash invested and use it as much as we can get there. We use VRBO.com to rent it.

Mark Del Grosso · Answer

I have been thinking about this also. I have made three trips to Florida where my mother and sister live and every time I look at property. So I'm looking forward to hearing more replies.

Anyone own vacation homes and rent them out??

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