Short-term vacation rental

[Scott Simpson]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $800,000

Custom new construction build. Waterfront short-term vacation rental purchased with a co-investor.

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

I was looking for an investment and a vacation place to enjoy with family. We chose the San Juan Islands in WA because of it's beauty and local market appeal.

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

After a few homes slipped through our fingers we decided to look for land and build from scratch. Our real estate agent suggested that lot because it had been on the market for over a year and the seller was motivated.

How did you finance this deal?

Cash to buy the land, construction loan to build, and converted into a traditional (second home) mortgage upon certificate of occupancy.

How did you add value to the deal?

Cleared the trees to expose a nice ocean view.

What was the outcome?

So far, it's a free vacation home. Airbnb revenue covers all expenses, mortgage, etc.

Lessons learned? Challenges?

Building from scratch is expensive, and time consuming. Much more so than I originally envisioned. It's also easy to up-sell yourself during construction if you get emotionally attached to an asset you plan to use and enjoy. We rushed to build in order to start collecting Airbnb revenue, and I wish we had taken it slower, been more thoughtful of the expenses and spoken to more short-term rental experts on what features to add to the property to maximize on revenue.