High-end rentals questions

[Glenn R.]

I was reading the "Who pays $1300 for rent" thread and many of the replies mention ultra high rents in NYC & SF, etc.  It made me wonder about "the numbers" that make high end rentals work for the owners.  

How much rent should a $2+ million place rent for?  What's the rough formula, or rule of thumb to determine what works financially for the owner?

The reason I'm asking is I was given a waterfront property that is surrounded by an expensive golf course / country club / lake development.  My place has an old double wide mobile home, that is on a lot which is large enough to divide into 2 lots.  Neighboring lots have recently sold for $1.2 million & most of the waterfront homes are worth $2-3 million (a few of the larger ones are close to $5 m ).

Since it was a gift I'll have to pay capital gains if I sell it, so I'm considering different options.  I've grown up here, so there is some sentimental value here.  I'm wondering if it might make financial sense to build a couple of homes here and rent them.  (The city bans short term rentals, so I'd need to confirm what that means.)

Can you guys give me some "blanks to fill in" & a formula to help decide what makes financial sense?   I guess I should ask some local realtors about the demand & rates for rentals here.  I don't think there are many rentals around, but that doesn't necessarily mean there isn't demand for them.  

Does this scenario scale up well?  If I had more lakefront rental homes available nearby would it be easier to manage?  

[Diane G.]

@Glenn R.

I have a couple of 2/2 condo in San Francisco that I am renting $4500 EACH now... In the past 10 years of renting, I have a CEO, a JP morgan analyst, high tech marking director, so on and so forth....They tend to stay 3-5 years, so I only had 3-4 tenants for the two properties combined in 10 years..... And I usually hear from my tenant once or twice a year, because they are always travelling or busy otherwise...

BUT you can only get these tenants easily if the property is in a urban core, very close to LOTS of high paying jobs....

I am not familiar with your local market, but if it is NOT a big urban core, you are probably going to hard time finding someone willing to pay $5K in rent.....EXPECT long vacancy