Short-Term Vacation Rentals under 100k?

11 Replies

I am looking to buy a vacation property, but I would like to start off small and get a place for less than 100k to start.  Oh yeah, I'd also like the property to throw off a little net cash per year, and be in an area where short-term rentals are not frowned upon.  I have been looking at a few markets across the US, and am beginning researching the Caribbean, and Central America.  Am I crazy?  

Should probably add a bit more info.  I think realistically I am looking for under 200k because I know 100k is going to be tight.  Some family is also looking up to 1M.  Ideally I'm looking to put 35-30% down.  I have a realtor friend who goes to Costa Rica frequently, and told me while a beachfront home can be 2.5M, a half back on the cliffs one can get a property for under 100k.  I have found that in some pockets of N America there are good little vacation submarkets with detached homes for under 100k that could rent well, albeit there are always some type of small to medium sized issue or another, from short term rental restrictions, to seasonality, to the macro economy.

I am also interested in the idea that in a short-term rental friendly community, it doesn't necessarily have to be in a vacation area, but many areas near a major metro or school will do well.

Basically I am looking for leads on where there are hot and/or up and coming markets, where the price to rent ratio is solid.  i thought I'd reach out to the investor community first, but so far it's been a tough slog.  I'll update on my progress.   

Hey @Brandt Tingen  

Too bad nobody has answered you here until now, however, this topic is my bread and butter and I would love to talk more about it.

Have you considered buying a short term vacation rental in the largest short term vacation rental economy in the world? Right here in the Disney area of Orlando, there are more here than anywhere else (per capita) that I know of. Normally you can buy turn-key, post it online, and have pretty stellar occupancy rates simply on demand. There aren't enough of them down here (despite the fact there are between 4,000-6,000 vacation homes within 12 miles of Disney World). 
More than 57 Million people visited Orlando in 2013, more than Chicago, NYC, or Las Vegas. Less than 1 tenth of 1% stayed in vacation homes. The number of people using popular websites (like airbnb, homeaway, vrbo, etc..) to book their vacations is skyrocketing, and builders are struggling to keep up with demand. With all the commercial investment into the area, the new builders for residential, and massive theme park expansions going on, I don't see anything slowing down anytime soon. Vacation rental homes are easy to maintain, and they sell easily also due to high demand. Our firm makes a living selling to out-of-town investors because demand for vacation homes is so high here. 

I plan on owning several before I leave before investing also in the Caribbean. This is risk-averse compared to foreign markets. Short term vacation rentals here are dependable and easy.
Let me know what you think. 

I have been to costa rica several times and am aware of several vacation rental areas which are mostly weekly in nature.

The biggest obstacle  I see is a property manager or service that handles the maintenance and the clean up from one weekender to the next.

The professional ones typically charge a pretty good percentage of rent. Private ones are hard to manage from afar. Whatever service you pick, have a backup plan ready to institute asap. Either way it is a big part of being profitable or loosing your shirt..

As far as getting clients- go to VBRO.com and check out the competition and their rates. I look at the weeks and view what they already have booked in a month and season to gage demand.

Also- down south their winter is our summer and there are distinct weather patterns -ie rainy season-hot humid months etc. to plan your pricing and busy times.

Anyway- its great to travel and write it off as a business expense!!!

I own two in the Disney area, and both perform VERY well for me.... that said, the first one i paid $225k, the second one I paid $140k.....the math is light years better on the $140k...less interest, less HOA, less taxes etc etc etc...I netted literally 4x as much last year on the cheaper property. If the first one wasn't "our" house, i'd sell it and use my equity to buy three more cheaper properties..... I intend to buy at least one a year down there.... IMO the vacation rental business is Disney specifically is recession and weather proof......people from all over the world come to the Disney area every year, in fact probably 50% of my renters are foreigners...so its not dependent on the US economy........ and its far enough inland that hurricanes and such really aren't a concern.........

I do all of my own bookings/property management from Buffalo!!  I have a husband/wife team that do my cleanings and maintenance for me...use VRBO for my bookings....and Ive got a lot of things automated, use templates, etc.....i spend maybe 30 mins a day on the whole business...maybe.....  

Im a huge fan of that market

We have a $95K vacation rental for sale on Lake Algonquin in the Adirondack Mountains. Available until May 1, then off the market until peak season rentals are over (mid October) then back on the market. 

Brings in $23K gross, minimum $15K net per year. Have not increased rates in long time. 

8 years of renting, all 5 star reviews. No regulations against weekly rentals here - we own 4, are working on purchasing our 5th. 

Turnkey (sold furnished) with housekeeping, plowing, mowing, maintenance people all in place. Will turn over rental site with reviews as well, which is a huge bonus - it's OK with Home Away (where we get most rentals), not sure about FlipKey yet. 

Great discussion!

@Shawn Pennington - If you're willing to share, I'd love to know how you've automated some of your rental business.  

Jeff

@Levi Bennett  Hi Levi, thanks for chiming in and creating an AVALANCH of great feedback... I was beginning to think for a while their that no one wants to buy vacation property on BP under 100-200k.. I thought maybe everyone was maybe way out of my league only buying places for over 1M!  Don't get me wring my ultimate goal is to own the 5-7 bedroom VRs in Breckenridge, Maui, etc., but one step at a time...  I'm definitely interested in Orlando, and have the ability to generate interest for multiple transactions if everything shakes out, I'll reach out to you today

@John Santero  John thanks for the feedback.  I think that is a great point that we may pay premium for PM services down there, and I have heard that in C. & S. America, there are different pricing schemes for locals vs. non-locals for everything.  I'd probably go the route of finding someone or some company that is loyal, professional, punctual, and delivers great customer service, then pay them slightly above the going rate and offer other incentives to keep them close.. but I agree it would be wise to have plan B & C in line just in case..

@Shawn Pennington  Hi Shawn thanks for the excellent breakdown on the economy and Orlando and your overview of your property performance, it is clear you have done your homework in the area and have experienced some success there.  I agree if I was experiencing fantastic performance, I would get on an acquisition schedule like you mentioned.  However, I also would like to diversify into warm weather US, warm weather Carribean, and cold weather US (I have heard many great things about CO VRs) eventually (I'm talking like having this level of diversification in 10 years).  It would be great if I could steal a few minutes of your time to get pointed in the right direction as I set out to purchase my 1st few VRs.

@Maura Paler  Hi Maura thanks for providing your insight into VRs.  I actually love the adirondacks, what a beautiful area for hiking, canoeing, camping, etc.  I would be very interested to speak about your rental for sale, that could play very well into my strategy for obtaining VRs in multiple peak seasons/climates/locations.  I am curious as to how you turn the property between tenants when you are not there, but I am sure there are probably some very established property managers in that area.  Please reach me on 703.674.6777 or my personal email, [email protected] to discuss further.  Anyone else on this thread is more than welcome to reach me there as well.  

Hi @Brandt Tingen  , I live in the Denver area and own a vacation rental in Kihei, Maui.  We bought our place there in 2012, so very cheap compared to what prices are at now on the island.  Many times we've thought about buying a place in Breckenridge/ Dillon/ Silverthorne areas but the prices are not that far off from what you would find in Maui.  Plus, although with pricing Maui does technically have a "high" and "regular" season, there really is no down season there, unlike that of places near the ski resorts here.

Although we don't own a place in Orlando, from what I've researched and others have mentioned in this post, that sounds like it can be a great place to invest.  Similar to Orlando, probably half of our guests are foreign, coming mostly from Canada, Japan, Australia and other parts of SE Asia.  Our western and central Canadian guests have mentioned to us many times that it's much cheaper for them to visit Maui than it is to fly down to Florida.  

Feel free to reach out and ask any questions about the Maui and Hawaii market if you are interested and I'll be happy to share our experiences and insight of the area there.

Jeremy Baker | [email protected]

@Jeff Morse ,

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Raymond

@Raymond B.  - I thought I didn't it correctly, but apparently not.  :)

Thanks,

Jeff

@Jeremy Baker  Hi Jeremy, Thanks for the info.  This is what I was thinking exactly, that a great first VR would be in an area with the highest potential occupancy %, which lends itself to a warm weather climate.  I'll reach out and hopefully we can connect to chat a bit more about HI rentals.  My fiance and I are planning a trip out there in the summer or fall.

@Raymond B.  Hi Raymond, Thanks for the technical assitance

@Jeff Morse  Hi Jeff, This isn't too scientific, but I just know I've done it right when I see the blue box pop up around the person's name.  For some reason this doesn't seem to happen reliably while I'm on my mobile gadget

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