Investing in Vacation Properties
Back in 03 I started buying up properties around the country in resort destinations like Vegas, Clearwater Florida, Santa Barbara CA, San Diego etc. I have around 12 properties and I furnished them and put them in the vacation rental program which usually returned my monthly costs at the least but most months we cash flowed pretty good, some more than others pending location and season but usually at year end we would NET a pretty good return on each property.
We ended up liquidating when we saw the crash coming and actually made some money on the sale but now we had cash and it was a horrible time to buy since the prices were dropping like crazy and we had no idea when the bottom would hit plus who the hell goes on vacation when they just lost everything they had?
Well, the time has come to get back in the market for vacation properties and now with all of the home share companies like Air B&B the additional rental income possibilities are up 30-40%.
Our guidelines are simple, no more than 2 miles from the beach unless you can buy a unit with an ocean view, on a golf course preferred but in a golf community, view of the ski resort or preferably close to the main st. or lifts.
Utilize financing with no more than 30% down and then after a few years when you recoup your down the rest is straight profit. Make sure to set aside a portion of your income to chunk down the principle which will gain equity and if you ever need access to it you have some room to play with when looking for funding.
If you are just getting started with no money then try to buy equity in a house that you can secure with a loan. I used to do this with my higher end properties. I would buy, finance, furnish, show income and then sell off portions of equity in the LLC that owned each property. We share the income based on equity %'age and then we all get to use the property when it's available rotating holidays as needed.
It's a lot of fun to go on vacation and spend money on real estate as a career so if this is a route you wish to look into and you have questions you can contact me at anytime!
Comments (2)
In all reality finding money is actually quite easy. The hard part is getting the money!
People invest in people with experience and a track record, as you would too if it was your money. I'd say 1% take a risk on the long shot new guy on the block so it's like playing the lottery.
My advice is to go to local meet ups, investor meetings etc. find a mentor or a partner and ask if you can learn and help out in any way to gain experience.
This is what I did and even though I did a ton of work for free the education that I got has returned 1000 fold.
Save your cash and utilize financing when possible but if you want to park your money go with the big boys like an equity fund or private network (I have resources that can get you 9%+)
Invest with people who this is all they do all day every day, less headaches for you and the checks come in monthly but you should re-invest to compound the interest!
My firm owns a blog www.rerelated.com which is a site for all real estate industry pro's where they have good articles and we have a ton of partners who we promote for in every aspect of the business. It's still in it's infancy but go check it out.
If you have any questions for me feel free to hit me up.
Jeff McDermott, about 10 years ago
Hey Jeff. Good read, exactly what I would like to do too. I'm brand new in this industry and researching a lot. Thinking about rental prop and notes, but notes seem really confusing to a non-business guy like myself. What is a good starting strategy (good markets, means of finance w/o much cash, etc)?
David Zachery, about 10 years ago