Short-term Vacationrental turned long-term

[Hampus Langendorf]

This is my first and so far only deal. I bought it in july 2016 with the intension of using it as a vacationrental, since it is located in the ideal place for that. Im Swedish, and the deal is in swedish currency, I'm doing my best to convert it into dollars. 

The deal:

Purchase price: $136 100 

Down payment: $20 415 (15 %)

Closing costs: $2 300 

Total cashinvestment: $22 715

Monthly costs:

Amortization: $200 

Interest: $190 

Utilities: $220 

Insurance: $32 

Total: $642

I rented it out with Air BnB april - september during 2017 and july-august during 2018. Average monthly income from Air Bnb during these 8 months was $932. The rest of the year my plan was to get a tenant to live there during the 6 months off-season. It was easy to get tenants - hard to get them to stay. The rent was $655/month, including utilities. However but 2 months each year became vacant due to tenants moved out. If we average the income over these 2 years, I basically got $638/month in rent. 

Monthly costs:

Amortization: $200

Interest: $190

Utilities: $220

Insurance: $32

Total costs: $642

Monthly income: $638

Monthly profits: -$4

During the summertimes it felt like I was making mad profits, but as you can see, if you spread it out over the whole year, I actually lost money. I managed the property myself, which ment going over there to clean a couple times a week, screen tenants for the off-season, etc. It was a pain in the ***. 

So this year I decided to change my plan. I switched it to a yearly rental instead, where the tenants pays most of the utilities. The vacancy drops, since I get more quality tenants that really wants to stay there for the long term. 

Monthly costs (yearly rental):

Amortization: $200

Interest: $190

Utilities: $50

Insurance: $32

Total costs: $472

Monthly income: $655

Monthly profits: $183

It turned out that switching to a yearly rental, which drastically decreases my work, actually made it profitable. Now I am enjoying monthly payments (which I reinvest in improving the property), and at the same time getting my mortgage payed off while spending very little time on the property. 

So, this was my little story on my first (but hopefully not last) investmentproperty. I still hold it today, but I am considering maybe selling it to free enough cash to buy 2 rentalproperties instead. But we'll see!

I will keep you posted on what happens :)