All Forum Posts by: Jeff Graves

@John D. I believe most are not looking at single family properties as vacation rental (VR)...however, there is an obvious shift...just look at the battles Airbnb has had in San Francisco as the traditional rental market has tightened, rents are escalating, it gets even tighter as owners take their long term rentals out of the rental pool and shift it to short term rental use. 

In some areas VR may be short lived as laws will be set to restrict or limit use.  For example in Hawaii there is a permit process that an owner has to go through for a sfh to be "approved" and they do limit the number of permits available in some neighborhoods, (i.e. Maui Meadows, a small neighborhood, is allowed only 5 permits) - Kihei, Maui is allowing only 100 permits for vr of sfh.  The permit is issued to the owner so when the property sells the permit is NOT transferable.  

Now in Kihei we have more than 5,000 condos that are legal VR so most buyers looking to purchase on Maui are looking at a condo instead of a sfh for VR.  That might seem like a lot..however, in 2014 we had 2,410,214 visitors - nearly 200,000 visitors every month, which outnumbers the residents.

Aloha,

Jeff

@Daniel Galvan I wouldn't say you are wrong...as every investor has a different level of risk tolerance.  I do believe the real estate market is much more stable than the stock market however.

The advantages of course for getting a loan, as you mentioned, is leverage and you can minimize your risk through the research you do before making a purchase decision.  Frankly if you have extra money you can keep that in the bank as a safety net until you feel comfortable enough with the income from that rental to then buy a second property.

Most of my clients purchase with a loan but then as they generate income the revenue is put back into the property, through either improvements or paying down the mortgage. 

The idea most have when investing is to have someone else pay for the property.  If you pay all cash, you don't realize that benefit or the tax write-offs...but you will have added income you'll have to pay tax on.

Aloha,

Jeff

@Peter R.  I am frustrated by the stripping of the email and web links too.  I think even phone numbers are too so I type mine with a space between each digit.  

@Remo F.

I hope that helps.

Aloha,

Jeff

I agree...it all depends on Jeff's objective, real estate investment or Timeshare, they are not the same.

Aloha

I do own a vacation rental and from an investment perspective it's a much better deal than a Timeshare.  With a VR you can expect it to appreciate...most timeshares don't.  You get a much better tax write-off with a VR than a timeshare.  A timeshare won't make you money...a VR will.

I hope that helps.

Jeff...I would agree with Jay.  I own a timeshare at Daytona Beach in Florida...although we bought it about 14 years ago...$10,000 for 1 week...and it has been paid off for 4 years...we could probably sell it and break even.  

However, having the time share has worked out really well for us as we have traded it every year (never been back to Daytona) and continue to do so and stay at some great resorts.

Not an investment for monetary return...but it does get you to take a vacation every year...and not at the same location.

Annette in my opinion it boils down to security and risk and your comfort level in those two areas. 

• How secure you are with your current/future income, as a piano instructor,  and your ability to cover all your costs should the rental be vacant for an extended length of time, or if there is an unforeseen expense. 
• Will you need to find a place for yourself to own or rent, or will you need to cover the existing mortgage of your current home?
• Will your settlement cover all the costs associated with the rental so your existing income will be allocated only to your primary residence and personal expenses?

I always try to figure worse case scenario and see if the numbers still work.  Just a few things to think about.

Aloha,

Jeff

@Eric Schrader I agree with Keith.  One of the first things I discuss with my clients is who is going to be managing their property and how important is it for them to be generating income day 1 of ownership.  

I've found experience VR investors are find with purchasing a property that is professionally managed because they know they can get it up and running asap.  

The first time VR buyer prefers to have the built in income...so we'll focus on those that are not professionally managed.

As far as deposits...

That is probably dictated by your market to some degree.  For us here in Hawaii $200-$250 is appropriate for a property valued under $500,000, maybe a rule of thumb would be about .001% of the value.

Payments and Reservations...

There are independent companies that provide Payment and Reservations systems, however, the majority of self-managed VR owners will use VRBO or Airbnb system (or some other platform). They are easy to set up and easy to set use.

Hope that helps.

Aloha,

Jeff

The low tech route...

In Hawaii, where many of the condos have just the window ac units...some owners have installed a simple "turn the dial" timer so the ac shuts off automatically.  The timers installed are typically 2 or 4 hour timers. 

The only drawback I've heard of is when the ac shuts off around 2am during the summer months, the guest may need to get up to turn it back on.

I'm sure as more and more split ac systems are installed the owners-managers will be wanting to dial in the use to reduce the electric use.

@Sky Mikesell - I think it's important for me to learn what others are using and why they like it...even if feedback I get aligns with what I'm currently doing.  

I was also expecting I guess for people to mention specific features they may like about either of them.  Is there one particular feature you like about Airbnb?