Seeking advice about Short Term or Long

[Bobby Clifford]

Hello, this is my first post! I am seeking advice on which direction I should go. I am quitting my day job to stay home with our children and my wife is going to continue to work. She makes enough money to sustain us without feeling much loss without my income. We are planning on investing in real estate as my new profession and aren't sure which direction is the smarter choice. We have enough down payment for a 200k mortgage.

We want to have a beach house in the Charleston SC or Savannah GA area for short term rental and for vacations. We live about 4 hours away from there. My wife has a week of vacation every 6 weeks and it would be nice to get out of our primary residence during those weeks.

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Our local rental market is phenomenal. When we relocated to this area we were unable to find any nice rentals for less than 900 a month. We own our own property now. I believe between her contacts and mine we wouldn't have any issues finding respectable people to rent our properties. There are decent homes that need updating in the 80-125k range in our area for sale. 

My long term goal would be to have multiple homes paying each home off with the income of the others. Any advice would be appreciated! Thanks!

[Andrew Johnson]

Bobby Clifford A first step would be looking at property management fees for short term beach rentals (usually 20% -25% instead of 10%). That can massive a huge different in the top line. And being 4 hours away it's probably near impossible to self manage. If you find a beach rental listed that is professionally managed you can ask for a T12 to see occupancy rates. I've heard people talk about 90% occupancy but it can easily be far closer to 50% (think Friday - Monday vs. a full 7 days). You'll likely make a huge percentage of your gross rents during peak season and very little during off season (less occupancy and lower rates). Not to mention increased expenses with bed sheets, sea air chewing things up, etc. However, cautionary comments aside, I don't know your market. Get a couple of T12s from professionally managed beach homes for sale and see how they pencil out.