All Forum Posts by: Alfred Harding

Some of the best areas for vacation rentals are the ones that don't seem like they should be.  My rule of thumb is the nightly rate should 1,000 times the purchase price $100 per night $100,000 that way you make money at 50% vacancy.

@Alfred Harding I love Santa Fe, and recently spent a couple months down there getting licensed and looking at properties.  The advantages to shopping in that market are that properties don't move fast, and especially if you're willing to do some fix up you can get a reasonable deal.  Regular rental rates are low compared to property prices, vacation rental prices are higher but very seasonal.  What I found was that there is a need for furnished month or longer rentals. I had a very difficult time finding something that I was comfortable living in.  I think that model of rental would cash flow since you wouldn't be paying 30% to a vacation rental property manager. Find something with more than one unit such as a guest house etc and you'll do even better.  I know the market well and would be happy to be a second pair of eyes on anything you're considering.  If you need a good agent on the ground I can make some recommendations.

Hi @Alfred Harding, working with a property manager can be lucrative and less risky, although I'm not sure that there is demand for managing properties in Santa Fe (not as much rental income, as you mentioned). Have you considered investing in Texas or in California? 

Personally, I don't think the decision needs to be mutually exclusive between debt and debt free. There is quite a lot of difference being 100K in debt and 10m in debt. How the debt is structured, the terms etc makes a ton of difference. I know you're trying to find a simply answer, but I think that why this question of debt and no debt can never really be answered.

For myself, I started out with no debt, but found it a real slow way to make money, so I upped the ante to the point where I couldn't sleep at night anymore, then i know I had gone too far, and I scaled back. That's when I realized it's not only being comfortable or not with debt but also how much.

The other aspect of debt I've found over the years is that it's like a tool and like any tool, one must use it often in order to get comfortable with it. My first home loan took me months of agonizing, the subsequent ones, not so much as I became more adept to using debt, planning for it etc.  In summary, if you're trying to find an answer, it's hard if you've never taken on debt. I would say, try a small loan, see how you feel about it and slowly scale up till you reach the limit of your comfort, then decide if you like it or not.