After doing some research and listening to a great podcast from this site, I am thinking the vacation rental may be a good option for me.
Here is my situation, I am wondering if anyone has advise or thoughts on this.
- My wife and I are currently paying off student loans
- I live in Michigan at make about $90k a year
- We are owner-occupiers with a duplex (about $100k left to pay)
- I reached out to my mortgage guy for pre-financing
- What I'm looking at: A cottage on a lake, near a ski resort, and casino
Any advice is welcome... I am nervous about taking out a large loan to begin investing but I realize that there are no rewards without risk.
Welcome to BP! This is the best place on earth to find out everything you need to know about any type of real estate! We have people in every niche imaginable, including Vacation Rentals. In Fact, BP will be starting a new VR forum soon, as soon as @Scott Trench makes the determination that there's sufficient interest.
In the meantime, do a search for Vacation Rentals, and feel free to message some of the members or @mention them to get their feedback to your question. Good luck!
This podcast is for you!
Thank you, both!
I picked up a Vacation Rental on Lake Huron a couple years ago. We use the cottage and rent when we are not there. The VRBO website is an easy way to get it rented. We have had good results so far. Only one rental party that turned out to be a college frat reunion, but no real damage done.
Just make sure you add extra for your expenses when you are analyzing the numbers. Things ended up being more expensive in a vacation spot than it was at home, which is what we were basing our numbers on. Also good to find a local handy man early in the process.
@Scott Wilcox Who manages the property for you? I had looked into vacation rentals a while back, but the constant turnover of tenants requires you to be there weekly or even more often. I didn't look into a PM because I heard their fees on vacation rentals will eat up all your profit...
I manage the property through VRBO and have a handyman who is local if there is an emergency. The cleaners will let me know if there was any damage. They will get the place ready for the next guest so I am hands off in the process. It is expensive so the rents have to be good. We are in Lexington MI so there is a lot of demand and strong rental rates.
Vacation rentals with short seasons are not great money makers, especially if you plan to take a few weekends for yourself. A place that could be rented all year long would be a much better investment. Due to the fact that my family uses the cottage a few weeks out of the season, renting has become more of a way to defer the cost rather than make money. The season in MI is 3-4 months and we take up about 4 weeks of that.
@Bernie Tobin If you have the space in your house right now, it might be worthwhile to rent a guest room in your house on Airbnb. Even if you only do it for a few months, it will give you an idea of managing short term/vacation rentals. Since it is all in your home, you don't have the challenge of managing from a distance, and you can get an idea of how you want to manage a short term rental. Also, you'd generate some extra cash to get you to that vacation rental.
I'm currently doing this with a guest room in my house. We list on airbnb and have anywhere from 10-20 nights a month rented out. I've only been doing it a few months, but I've learned so much. We're strict about keeping everything (payments, communication, etc.) through the airbnb website, and haven't had any problems with guests so far.
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