I am new to BiggerPockets, and I am very interested in investing in real estate. I am currently assisting my father in research for the purchase of a resort. However, I don't know anything about buying or managing a resort, and I don't know what questions to ask, who I should be asking or how to handle making a deal. I need help to assist my father in making a informed decision. We've been looking on LoopNet for properties in Florida, Colorado, Tennessee and North/South Carolina.
Any advise you guys could give regarding best states/cities to invest in, best websites for finding resort properties, dangers of resort investing, questions I need to have answered before making a deal, financing options or any other questions I should be asking, I'd appreciate it! Any new insight I can bring to my father will be invaluable.
Welcome to the BP community! I can only speak for Colorado and not all of it for sure. I live in the resort town of Steamboat Springs, CO. Our industry is build on second/vacation homes. Some people believe that they can buy a condo for example, visit a few months out of the year and use the rest of the year to pay for it. Not a bad plan but our resort towns have fairly high expenses that if you don't run correct numbers can turn your vacation rental into a nightmare. For example most of the management companies charge 35%-50% off the top. That is before all other expanses, HOAs, and mortgage payments. Investors have use sites like AirBnB to cut down on these costs.
One question, that is important for any investing but specifically resort investing is the rental history. My town is notorious for future/speculative rental estimates given to the buyer not actual numbers and the seller expects buyers to buy the properties based on these numbers. "Just knock out that wall and add a bathroom to raise the rents..." as if it's that easy.
There are other "dangers" but to just give one piece of advice, really read up on your HOA documents. In this resort town they can be very different from building to building. I live in a townhome with an identical one next to us, we are allowed to have dogs but they are not. And that is just because the president of our small 8-plex has a dog and convinced our single building to change. It would suck to buy a place and have to leave Fluffy at home.
But if done right you can do well in a resort town. Good luck and welcome to the party!
Hi @Carl Sherrill , welcome to BP! I understand your post to be that your father wants to purchase a resort - an entire resort, not a unit in a resort property.
Given that you've stated you have no experience in this area, I have to ask - does your father have any experience? If not, why are you/he targeting this niche? This is a huge investment with a lot of moving parts and a lot of ways it can go wrong, especially without some experienced people on your side. And not to discount the knowledge that can be shared on this site, but asking the internet what to do in this scenario is a big red flag to me.
I submit that you need a partner in the venture who has significant experience in this industry. You'll want to rely on their knowledge and experience while you gain your own experience. Then if all goes well, perhaps you can take your experience into another deal without that partner.
Best of luck!
Thank you for the advise! I had not even considered AirBnB as a option. We noticed a lot of websites showing the revenues and cash flow from resort properties, but we weren't sure how reliable sellers generally are when reporting their earnings or what exactly made up the expenses eating away from the earnings. Thanks for sharing your personal experience in Colorado!
My father has a considerable amount of experience as a land lord and real estate investor in residential properties. He's been very successful over the years, and now he wants to retire. He wants to liquidate his real estate portfolio and invest in a single resort which he could expand on. He's doing the majority of the research; I am included in the effort as he mentors me in real estate investing before pursuing my real estate license after I graduate from college. Any new insight I can bring will increase my value to my father's endeavors and future partners I will work with in the future.
Thanks for the clarification, @Carl Sherrill ! That does help put things in the proper context, and what a great opportunity to learn from his experience.