My second vacation rental purchase -- $80k per year in cashflow

[John D.]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $485,000
Cash invested: $140,000

Purchased this property for $485k in August 2016. Spend close to $200k to remodel, rehab, and furnish this large home in the mid-century modern style so popular in the area. This home grosses approx. $240k per year in short-term rents, as an 8-bedroom, 4-bathroom mid-century modern home with a large pool located on a golf course. After all expenses including mortgage, property management, capex, maintenance, I net around $80k per year with this vacation rental.

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

I was staying in a vacation rental in the area, and wondered why rents were so high, as compared to property values.

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

MLS listing.

How did you finance this deal?

Standard mortgage + cash saved.

How did you add value to the deal?

I took a lot of time understanding what improvements would help maximize the rents we could charge.

What was the outcome?

Existing vacation rental in our portfolio generating $80k+ a year in cashflow.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Rich Tomlin was our realtor on this purchase.

[John D.]

Hi @George Mevawala -- people from LA and San Diego come to the greater Palm Springs area for vacation, all the time.  It's just what they do.  We also have tennis tournaments, lacrosse tournaments, art exhibits, and many other events.  Outside of that people from LA and SD come all of the time, family reunion, bachelor party, general vacation.........its a quick drive to a recognized vacation destination so people can get out of the city and hang by the pool.  I didn't understand it at first either, and I'm not sure I do entirely even know, but it's hard to argue with numbers.