All Forum Posts by: Jeff R.

 Hi Peter,

People on here have all great advice, but I will add one more thing:  Look at commercial financing.  At some point, you will run into the debt to income ratio issue, plus having too many properties under your personal name.  Last I checked, I believe it was something like 6-10 properties.  Granted, you'll need 25% down on a property, but they don't care about debt to income ratios like traditional financing.  They care if the property will reasonably generate cash.   I've got 7 properties currently, and they are all financed through commercial financing.  When I want to buy another one, I simply call my bank, pick a property and cut them a check.  

Hi Jeff,

There are a lot of good responses here, so I'll see if I can add any additional insight.

My wife and I live on an island in WA state and own 12 VR units, plus residential and commercial units as well. So I feel like we know a little bit about the industry. 

The first thing I'd caution is that VR is not the magic bullet many believe it to be. It's more a question of function.  Are you looking for a way to pay for a personal vacation home or are you looking for income generation?

Consider: VR income is federally taxed as ordinary income, including payment of self-employment tax.  Our municipality adds lodging tax on top of state sales tax. Plus annual business licenses and inspection fees...All these are additional expenses.

Then, you must furnish (re-furnish as well), pay for all utilities, TV, and internet.  Management fees (which you should calculate regardless of whether you self-manage it or not) of typical 35% vs. 10%, 3% to airbnb or some credit card processor and possibly the time and expense of a website.

Have I scared you off yet? Where I live, all my VR income must occur between mid-May and the end of Sept. which means you float it for the vacant months (I put in a month to month winter tenant if I can get one).

Nevertheless,  I own 12 of them so I must think it works! And it does, but zoning limits my competition and I am in a tourist destination (p.s. Marriott has not quit!).   Plus I was able to buy at such a bargain that the numbers were favorable.

If your goal is purely income-generation, or you're located in a convention city or a place where people vacation year-round, the numbers quite often favor residential rental.  It doesn't mean you don't want to own a get-away that pays for itself. Just be honest with yourself about your goals and desires and make it as owner-friendly (and inexpensive) as possible

We have begun investing in properties (SFR & land) in the the Waveland/Bay St. Louis, MS area. The deals are incredible and the number of out-of-area buys nearly as amazing. Has anyone else discovered this "gold mine"? Following the U.S. government debacle and ineptness in handling the post-Katrina disaster, virtually thousands of REI opportunities blossomed. The area is pregnant with deals. I would like to find other investors interested in the area's opportunities.

@Jeff R. I moved your post to the thread specifically for Short Term and Vacation Rentals. Vacation Rentals is one of the hottest trends in real estate right now. Hope you get even more responses. 

Hi Jeff,

I'd look into fixed rent vacation rental contracts; they may be another good option for your vacation rental if there are any professional managers in your area willing to make a competitive enough offer. Steve Bjerklie from the VRMA (Vacation Rental Managers Association) actually recently wrote the VRMA cover article on the topic, and they are a good way of generating guaranteed income and passing off the short-term risk to a manager.

Best of luck! :)