Owner Occupied Vacation Rental Multi

[Michele Fischer]

I have stayed in vacation rentals that are primary residences and they must couch surf when it is rented; that isn't what I'm talking about.

The recent podcast has my brain chugging about vacation rentals.

My husband and I have discussed opening a B&B in retirement, but decided it is too involved and maybe not playing to our strengths. I am open to living in a multi-family, but understand that there are downsides to that as well. I’ve been wondering if getting a triplex or quad, living in one unit and vacation renting out the other units would be a viable option.

One issue it could solve is wanting to downsize but what to do with family when they come to visit if we had significantly less square footage. It would more fit our strengths of tour guide types than full blown hospitality types.

This would be close to downtown Seattle, and I’m wondering if there is really enough of a market. There seem to be plenty of vacation rentals options up already in all price ranges. By the time you add the furnishings and extra touches, can you cover the incremental costs of a bigger property? This would be an appreciation focus rather than a cash flow process, but it would need to not be a losing proposition.

Thoughts?

Love how the podcasts get us considering different options, regardless of the outcome.

[Account Closed]

@Michele Fischer : I actually LOVE vacation rentals (VRs) and got started that way. I bought a home in Portland, OR and within 2 months of having it on the market had it rented out for 2 years! Now this house stays rented out 8 to 10 months in the future. In Feb I realized I did not have renters past Sept 1, so I got to work and it is now booked through November!

I bought the place in Feb 2012 and broke even through the end of 2012, but then lost money in 2013 because I under estimated expenses (newbie mistake) and was locked into a 12 month rental agreement under market rates (another newbie mistake). I really did not care though because of the monster appreciation. This year I will do very well indeed and actually have an accepted offer on our second property, which is a loft in the Pearl District.

Based on the cost in the Northeast I think the only way to cash flow is to do a VRBO because of the income you can bring in.

Make sure to connect with Matt Landau, he is the VRBO guru and can teach you what you want to know.

My rule of thumb (which worked for all 1 of my properties so far :)) is to use VRBO.com to determine the number of rentals available and how far out they are booked. For example, the majority of rentals in Portland in the Studio/Loft space were booked out for Feb and March and there were very few that would allow a 7 day stay, most required a month or more. As a result, I know there is unmet need especially since my 700 square foot loft which will sleep 4 comfortably and is decked out to the 9's with a roof deck will be AT LEAST $50 to $75 less per night than a Hotel w/ no Kitchen, etc.

On a final note, be really careful about zoning. In Portland, VR's are only allowed in commercially zoned places, which usually puts a premium on the property cost. I think I looked at 50 different condo's in Portland and found 2 that were zoned commercial AND had HOA that allowed less than a 30 day stay.

If you do decide to go this route, also be aware it is ALL about response time and the local knowledge of the owner to provide an experience to renter and not just another place to stay. The folks looking at vacation rentals can send out 10 to 20 inquiries in 10 minutes so the first one to respond and follow-up with meaningful information is the one who usually will get the booking.

Thanks and let us know if you have more ?'s, we are all here to help!