Short Term Vacation Rental

[Christian Becker]

Investment Info:

Single-family residence buy & hold investment in Island Park.

Purchase price: $250,000

Vacation cabin rental in Island Park, close to Yellowstone National Park. Our second buy-and-hold property. I wanted to get another MF, but my wife said a cabin was next. It's been her dream. My condition was that it had to at least pay for itself. It's dual use. We use it as a family for a few summer weeks and throughout the winter and it's rented the rest of the summer, paying for itself or better.
We're self-managing this one through VRBO and Airbnb.

What made you interested in investing in this type of deal?

Personal use, but paying for itself. Growing equity by appreciation (market is going crazy) and having other short term renters pay the cabin off for us over the next 10 years. Also did some property improvements to add value.

How did you find this deal and how did you negotiate it?

MLS, but still got a great deal. Was listed on a Thursday, went to see it next day and made our offer, added $2K above asking. Still got a smoking good deal on it. Could probably relist immediately and get $50k or more for it now. One of those you can make shine with a few improvements and new furniture to make it pop.

How did you finance this deal?

10% down loan with local credit union, portfolio loan product.

How did you add value to the deal?

Was sold as a 4 bedroom, 3 bath. Added a 5th bedroom in the basement by separating off another room with a wall/door and adding a window. Improved outside landscaping with firepit, etc. Added dishwasher and some other items and other small improvements, making it a short-term vacation rental. Completely replaced old furniture throughout with brand new everything, which was the costliest of the whole project.

What was the outcome?

Renting out well. Now in second season. We're happy because we can use it whenever we want. Is about 1.5 hours from our house, so easy weekend get away for us. Well worth it. I'm glad I listened to my wife. Also has the chance to cash-flow nicely if it books out every summer.

Lessons learned? Challenges?

Didn't realize how expensive to furnish a 5 BR, 3 BA cabin with everything. We replaced even silverware, cups and plates with new. Beds, mattresses, sheets, towels. Did I say everything... it was every item. Threw out everything and started over. Bought everything new. But also gives that impression now and feels brand new.