Investing in a Vacation Rental - Is it a BIG money maker?

[Linda VanSprange]

Investment Info:

Single-family residence buy & hold investment in Shelby.

La Bella Vie Cottage - Vacation Rental
Guests love our cottage. Located in a peaceful neighborhood with tree lined, meandering roadways. A private yard perfect for sunning, grilling out or curling up with a good book. They love our sugar-sand beach, crystal clear water and spectacular Lake Michigan sunsets. Returning to a shaded yard filled with blooming flowers offers peace and tranquility. Relaxing around the crackling fire pit, you hear the sound of the waves drifting through the trees.

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

La Bella Vie Cottage is located in a quiet, secluded forested area with 1/2 mile association access to beautiful Lake Michigan - perfect spot for a vacation rental.

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

LOL, husband has always wanted a pole barn, we were moving to our fully furnished cottage - making it our primary residence - and we had tons of extra furniture from our old home. We spotted this home with a pole barn in the dead of winter, in the neighborhood we were moving to, did some comps and made a low-ball offer. To our surprise, it was accepted. Husband gets his barn and we have a place to put our extra furniture. Win - Win

How did you finance this deal?

Cash from the sale of our personal residence.

How did you add value to the deal?

Tiled the bathroom floor. Redesigned the layout of the kitchen, adding a snack bar. Because of the redesign of the kitchen, we were able to add another bedroom. Landscape updates to create an outdoor dining, grilling, and firepit area. Turned a shed into a 'bath house' adding a 1/2 bath.

What was the outcome?

We have the pleasure of introducing guests to the beauty and majesty of Lake Michigan and the rural charm of our area, which is packed with a ton of activities for families. Since we maintain it, it is spotlessly clean and cared for, as a result, we have a solid rental history, generating a solid income.

Lessons learned? Challenges?

While our net of $440 to $1350 per month sounds great for a single home, it does not take into account the work involved (which my husband & I do) on a daily and weekly basis to clean, maintain & improve our vacation rental. If we had to pay others to do this work, income would be SUBSTANTIALLY reduced. Do the math yourself before you take this on, if you have more time than money - go for it. Otherwise, all said and done, you'll be making $10 to $15 an hour. Annual costs are 10K w/o a mortgage.