I am planining to invest in a tourist area, this is my first deal. I have been talking with some realtors who take will rent my appartment to tourist by days.
The reason is that the realtor will take care of everything cleaning, paying bills and changing towels and bed linens. and I will sign a one year contract with them.
Is there any disadvantages on this type of investment.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
15y
Hi, I'm very familiar with this type of arrangement. The Realtor may sub out maintenance and fix the smallest things, paint the place, etc. with another company and receive basically a commission from the service provider. It is possible to run management expenses up to the point that your anticipated profits are never met. Make sure you have full authority to approve all work and activities.
If you already own the property, renting might be OK, tourist areas can have very tricky economies if travel/vacations slow down. Some areas are very sensitive in down turns.
I suggest you contact other owners that have properties managed and see what they say. If the management company owns thier own rentals, you can expect yours to be leased last, as an overflow unit. Good luck..
I meant management company not realtor (english is not my main language).
So the management company will do daily/weekly rentals and they will take care of small repairs. and they call it the guarantee program which means that I will be guaranteed a monthly payment at the end of the month (no vacancies, no worries about late payment and so on...)
I have studied the area and it is active with tourists all year. this is the reason that the management company is accepting to make such deals.
The advantages that I see is that the I have an almost worry free investment.
The disadvantages that I heard from a realtor is that the furniture needs to be changed new every year. because of so many people coming in and out.(I don't believe him a lot)
I can't think of more disadvantages now.
To give you an idea about the calculation:
flat sale cost about: $60.000
Management company will rent it for $50-$60 a day.
I will get $500-$600 negotiable depends on furnitures & deco.