Rural Vacation Rental Deal Analysis

[Timothy Doenges]

Hello all, first post here. My wife and I have been talking about investing in real estate for some time now, and have had an unique opportunity arise over the last week. We live in very rural area, but we are also around 5 miles from a man-made lake that is a popular vacation destination for water sports, fishing, rock climbing, and hiking. As a result, land values are on the lower end, but there are some successful vacation rentals in our area. We have been presented with the opportunity to purchase a successful rental business comprised of 4 rental cabins, and the property has held an average of 37% occupancy for the year, with occupancy closer to 65% during our peak season of May-November. This business has a website and client list, which would be sold with the property, but there has been virtually no internet marketing via AirBnB or HomeAway (or even TripAdvisor), so there seems to be a lot of room to improve those occupancy rates. Also, the rents are well below market rates for cabin rentals in our area, and these cabins appear to be higher quality than other cabins, as well as more secluded. There seems to be lots of room to generate income here on top of the cash flow it is already generating.

I have attached the PDF of the deal analysis is it would stand if we purchased the property. It is listed at 300,000, and we would likely offer list price since the property already cash flows. Also, we would intend to finance a down payment to "get in the game" and keep our cash reserves since vacation rentals are a high-turnover, and therefore higher-risk, rental game than long-term leases.

Any thoughts on the deal?

Thanks so much,

Tim Doenges