Offer any incite into vacation rental investment through a resort

9 Replies

I am currently looking into stepping out and investing in a vacation rental in Myrtle Beach, SC but the townhouse is contracted through the Sands Resort.  What are the pros and cons of signing a rental agreement with a resort.  In reading their agreement, it seems you forfeit control of the unit but are fiscally liable for everything.  Any insight would be greatly appreciated.

Biggest pro is they handle everything. You may be financially liable but you are also hands off for the most part. What % are they charging?

Originally posted by @Nicole Bishop :

I am currently looking into stepping out and investing in a vacation rental in Myrtle Beach, SC but the townhouse is contracted through the Sands Resort.  What are the pros and cons of signing a rental agreement with a resort.  In reading their agreement, it seems you forfeit control of the unit but are fiscally liable for everything.  Any insight would be greatly appreciated.

 Pretty much. Do you want a passive investment or do you want control?

Caleb,

It would be a 70/30 split.

Jeffery,

This is my first type of investment in this area.  I would like to be involved and have some control to learn the ins and outs of this type of investment.  I guess I am just not sure if it is a good investment.

There are many people here qualified to give you a full analysis.  But insight requires information.  Purchase price, ongoing costs, projected rents, any info you have.

My guess is this isn't ocean front.  Ocean front properties are closer to 55 owner, 45 management company.
If 70 goes to you, and they are doing short term rentals then this doesn't seem like a bad deal.  Now if you are looking for a year round tenant than 30 to management company seems very high to me.

Hi Nicole,

My company manages vacation rentals in the Palm Springs area!  In regards to the percentage, 70/30 split seems reasonable.  We charge 25% in our area for full-service.

In regards to the management company having full control, this is going to be the typical scenario whenever you have a management company handling your rentals, vacation or otherwise mainly because you can only have 1 party in charge...either yourself or your manager.  

For instance, we need to be able to have full control over the calendar and the bookings so we can market and talk to potential guests with 100% confidence and make on the spot decisions and bookings.  

We need to be able to repair things as needed to provide good service (we do get authorization from the owner first on many things).  

In our case, we don't control the furnishings (but it would help greatly if we could) but I know in a lot of the resorts, that is the case so they can provide consistency of product and quality, which makes sense.  They also probably want to control the vendors so they can work with reliable companies they know will be responsive instead of allowing the owner to spend time shopping around for the lowest priced person causing delays in repairs and servicing for the guests. 

It also makes sense that you are fiscally responsible for everything because you are the owner, they control the day to days because they are the manager. 

My main concern would be getting an accurate evaluation of how much revenue would be generated on an annual basis based on their current portfolio and making sure your particular unit is in the best location possible to help differentiate it from other units during slower periods.

Hope this gives a little insight!!  Best of luck :-) 

XOXO

Chris and Mia,

Thanks for the insight based on your experiences, it really helped!

@nicole 

@Nicole Bishop Did you end up buying the condo? I’m close to doing the same.  Would love to hear about your experience.

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