Possible 1st "deal" (?)

[Bill Nolan]

Hello BP I have been on site, forums, reading and listening actively for 6+ months and interested and started educating myself 15+ years ago. I would like to become a buy & Hold investor and can at current time purchase some property(s) with cash. However finding deals, family comitmints, working full time (60+hrs), life in general, blah blah blah....I'm making excuses...I have not pulled the trigger on anything. So here we are....I recieve a call from my brother where we have a mutual friend who's parents are thinking of selling their duplex (3/2 each ski chalet) in Michigan UP. It is turnkey, which I like. we would both own a unit, we would be able to use it as we with and "rent" to both small and large groups. It comes fully furnished and maintained...which we both see as needing anywhere from $2500 to $8000 on updating depending on how far we want to go which includes known CapEx. Now this is manaanged, maintained, cleaned and has low taxes, by a local group, Big Powderhorn Lodging Association whom previous owners have been with for over 10 years....anyone have any experience? BPLA takes 30% for each night's room rate which in high season is ~$200/night. currently waiting on historic booking rates for past 5 years. My wife is on board, which to date has been a hurdleas she is more risk adverse and sees this as a second home for us when we want it. I like the scenario as a first "deal" ...I am in with a trusted partner, it is cheap, it is tuenkey, and i will hold for 15 yrs with the option to use for personal time.nt Please tell me yours thoughts and any pitfalls I am missing.

[Adam Gollatz]

Hi Bill,

Lot going on there and without the numbers of the investment, there are 2 things I would be mindful of.

1 - Buying an investment that takes daily management when you are so far away. You are placing a lot of trust in the property management company, especially if you are busy 60hrs a week with work. Do you have more options for PM companies if that one doesnt work out? How is the long term year round rental market up there? Managing 1 duplex that is 4hrs away is more doable that an short term rental business.

2 - Going into business with a family member. Have you done business together before? It also sounds like you are going to buy it together but each have a unit separately. If thats the case, I think thats also a recipe for disaster. What happens when the PM company can only rent 1 unit? Or you need to fix a common house element? Id say run the whole thing as one business, and split it down the middle, or whatever you agree on. If you are set on being separate, then Id say look into converting it into a condo/twindominium. 

Would you mind sharing some of the numbers? net income, expenses, vacancy rates etc? Feel free to message me if you are more comfortable with that.

[Bill Nolan]

@Adam Gollatz Thanks Adam, still getting some of the numbers together. It would be a 50/50 split. And it would be an issue on if one rents and one doesn't IF we were to really get down to it but plan it to start with 1 or 3 yr plan and split all costs & profits from two units after our personal use was done. I.am not sure on other PMs, but I'm sure there are some. Still researching...and seeing if we can negotiate with owner to make the deal best for us....made at purchase.