Hmmm, Am I Making a BIG Mistake? Out of State investing

[Gayle Eisner]

I love Montana, Gardiner, especially & am contemplating purchasing a house near the YS river and in town.  This town is surrounded by Yellowstone Natl Park and forest service lands, so I predict real estate will always be at a premium ...  I see that homes in that area rent out for $350 night for a 2br 1 bath (pristine condition). The season runs roughly May-Sept and there is no housing in the area for Park employees and others to live...It is crazy... I would love to make it work so I could at least break even and stay there some times.  I calculated roughly that if I get 19 nites / 5 months of tourist season I could do that? OW, I can just rent the property out to employees at a profit. It is right on the Yellowstone River.   I am just thinking about it and was wondering if anyone has experience with vacation rentals, esp in the greater yellowstone area? Or dealing with this kind of thing.  I would have to have a property mgr for AirBNB, so it might not even be worth it.  I see on VRBO.com and airb&b, they are pretty booked right now from June-Aug and it is only February.... thoughts, suggestions?  Housing in that area is very expensive because the Park is right across the street! thanks!

[Nathan Gesner]

You can read a lot of success stories on BiggerPockets but most of them are not honest about the income and costs.

I managed nearly 70 vacation rentals in Cody, Wyoming. It's a big tourist town with a short season of 4-5 good months. Despite increasing tourism for several years running, income was stagnant or dropping. Why? Because competition is higher thanks to VRBO, AirBnB, and other sites that allow anyone to manage their own vacation rental.

I also manage nearly 300 long-term rentals. In most cases, a long-term rental generates a better return than a vacation rental and requires far less effort. You can increase the income by handling bookings, turnover, maintenance, and everything else by yourself, but the additional return is still unlikely to produce much better than a long-term rental despite all the additional effort.

Consider all the expenses. Purchase, furnishings, setting up and paying all utilities to include TV and internet, landscaping, marketing, booking fees, city/county/state taxes, etc. Then consider the amount of time required to handle inquiries, bookings, complaints, cleaning, repairs, credit card disputes, maintenance, questions about how to operate the remote control, dealing with vendors like landscapers, and so on.

There's much more to it than just throwing it on AirBnB and watching money roll into the bank account.