All Forum Posts by: Steve Dove

You can easily manage this property from a distance, yourself. My cleaners are my eyes and ears, and I pay them well. It takes time to develop relationships with people from a distance, but if you give them specific instructions on what to do, and what your expectations are, you should be fine. Chances are, that they know a maintenance guy if you need one. Otherwise, have them report damages to you and call the local plumber, electrician, etc. yourself. That's about the extent your PM firm is going to do for you. Most PM companies don't do much to earn the money they demand, in my opinion, and they'll never run it like you would. Don't let your fears prevent you from doing this yourself. It's not as hard as it sounds.

The downside to a ballon payment are the fees associated with refinancing, as well as being able to qualify with proper creditworthiness. There is risk associated with everything, but we felt that it is one that we could comfortably take. It also helped us to set a goal of paying the loan off in 5 years.

All of this sounds very unreasonable to me. What are terms of your agreement? What's stopping your from managing it yourself? I'd be happy to give you advice as I manage three of my own from four hours away. 

@Upen Patel - are you that lender? I haven't had any luck getting past the 4 loan limitation.

@Maura Paler - My wife and I ran into the same issue. We began collecting properties prior to the crash and marriage, so the limit for each of us was 10 at the time. After the crash it was reduced to 4. So, getting married hurt us as it pertains to borrowing. Fortunately for us, we were able to find a local bank that gave us a commercial loan. The rate was comparable, had the same 20% down requirement and it's 5 year balloon amortized over 15 years. Either we pay it off of re-fi at the end of 5 years. Commercial might be an option for you.

With no money to invest, yourself, you'll have difficulty. Plan on 20% down, the cost for furnishings, marketing, attorney, accountant, utilities, etc. You'll also need money to carry yourself through non-peak seasons when rent is not being collected and you've got utilities that are still running. 

I would recommend looking at vacation properties that are more reasonably priced as opposed to something in Breckenridge. Start small, learn the game and then move to resort properties. 

Congratulations. What advice are you seeking?

 They can definitely be profitable. I've been renting vacation homes in northern Michigan for 8 years with great success (compared to any long-term rental that I've ever owned). However, the first couple of years for each property, are not profitable, as there are several start-up costs to make up for over time.

  Each of my properties is different from the next. What I have found to be the most appealing to customers is a blend of aesthetics and amenities. For example, all of my places are lake front. However, I have a property that out performs the others because of it's new, but rustic (knotty pine) interior and furniture. In addition, it's beach and crystal clear water. I operate a second lake house, directly across the lake from it. It is more modern (drywalled), larger than my other homes, and it it only brings in about 75% of what my top performer does.

  I earn enough over a 3-month summer rental season (June-Aug) to cover all of my annual costs. Anything above and beyond is profit. I know what the annual sum of my debt service, utilities, maintenance, cleaning, etc is. I rent by the week during the peak season, so I divide those costs by 12 weeks, which determines my rent and cleaning fees to achieve my break-even point. Determine the length of your profitable rental period and do the same calcs. Every booking  beyond that season is your profit. If the rental fees don't comp to others nearby, move on to another location and property that does. Remember that dealing with expensive properties equals high carrying costs while they sit vacant.

For guest screening, most people have a digital profile these days. In addition, I Google them, looked them up on Facebook, LinkedIn, Twitter, etc. to attempt to see who they are. While this does not guarantee that you are going to have the perfect guest, or group of people staying at your rental, it does give you an idea as to who the person is and what activities they take part in. I do not permit anyone under the age of 25 to rent any of my homes. I've had plenty of ".edu" email addresses specified within the initial inquiries, which is a dead ringer for college kids. In addition, I communicate the information of irresponsible guests to others I know that have rentals on our lakes. They typically do the same. I would suggest that your friend make initial contact with other property owners to get the scoop on what issues they have encountered along the way. 

Steve

I use the VRBO calendar as my primary and they have a calendar widget that I've integrated into my personal rental site . Always screen your guests and use this one calendar. Letting people book a rental automatically through a site is not a good idea. its not a hotel and you need much more control over this type of business. Especially, if your friend doesn't want her places trashed.