Looking to Build Vacation Home Portfolio

5 Replies

I am new to BP. I've been lurking for the last 24 hours and attempting to gather as much information on similar scenarios as I can, but I think its time I started my own thread. I have no real estate background and know very little about the terms/abbreviations, so this post will probably be filled with ignorance - but any thoughts, comments or advice would be very much welcome.

My wife and I currently have approximately 150k tied up in non-real estate investments, and we are looking to make the transition into real estate. While we do not have prior real estate experience, we do have these things going for us:

- We both have steady jobs that support us, we do not need an immediate 'home run'. We are willing and able to put the time in and play patiently as our portfolio grows and matures for long term gain.

- We understand that 150k is significantly larger than the average starting amount for a first time investor. Our target property is around 100k and we would put between 30-50% down. We will learn the ropes on a smaller unit where the risk is not as large.

- We know what we want. I am very familiar with the area we will be investing in, it is a ski area that I have been going to my whole life. While I have not always been looking at it from a real estate perspective, I know the region and how to cater my properties to what the consumer is looking for.

- We have time on our side. At 26 and 24, we do not have to worry about making a number before an imminent retirement.

Our Goal: To support ourselves as full time investors

In the area we are looking, there are many townhome complexes that are currently available for 90-140k. These units rent for roughly 220-400$ per night. Ski season in this area is busy from early December through mid March.

Year 1: 1 unit

Year 2: 3 units

Year 3: 5 units

Given that we have 150k available to us and that we are targeting smaller units, we are hoping that by renting out all 5 units we will be able to own all 5 outright by year 7. At that time we would look to repeat the process, acquiring 1-2 properties per year with the goal of 10 properties by year 10.

My question to you, educated and experienced patrons of BP, does this tentative plan seem in any way feasible, or is it some childish dream of real estate wannabes?

I understand that the work involved in owning 10 properties is significant. Part of this plan involves me leaving my job after we have the first 5 properties and I would manage them full time. I have some web design background and would be responsible for the marketing. After 10, my wife would be looking to leave her job as well as we continue to expand.

I understand that there will be additional costs in taxes, cleaning fees, and advertising - but is there anything else significant that I am missing?

We are looking to monitor the ski area this winter. There are units for sale in various townhome complexes and other units in those buildings for rent. We will be doing our homework over the next ski season to find what we believe is the best purchase, and then we will be looking to pull the trigger in the spring.  

We both really appreciate the time you have taken to read this, and any feedback you wish to give.

Welcome Stephen,

I like your plan, I'm in the process (accepted offer), of my 1st vacation rental.

Here is a link to the forum for VR (vacation home rentals),

http://www.biggerpockets.com/forums/530-short-term...

You may find it full of useful info as well as reading/listening to anything from Heather Bayer (who has her own podcasts), & Matt Landau.

Check out VR listing sites like VRBO & airbnb, if you haven't already, you will see what your competition is doing and decide what amenities you will need, to be competitive (like perhaps a hot tub).  

Think of how you could get "low season" business which could help your bottom line immensely.  

Will you be buying an already up and running & furnished VR with a book of business (you may pay a premium for), or a property that you will need to furnish ( $10-$20000).  Taxes and cleaning are direct pass thru expenses to your guests.

Have a plan for when something doesn't work (furnace, guests can't get into property, water in basement, etc).

Keep us posted, it would be great for you to start a blog or diary here on BP for us to follow your progress!  It would help a lot for others thinking about the same thing.

Good luck,

Kelly

@Kelly B.

Thank you for the suggestions and the support. As the year progresses to ski season and I have some data to start working towards a decision, I will be starting a blog.

Obviously being seasonal, does the weather demand a higher rate? What type of occupancy are they getting annually? Is most of it at the higher rate or a different rate?

I love vacation rentals, I have a similar goal, but in the Disney area. As a realtor, I talk to investors every day who are trying to accomplish what you are doing, and these are questions that they end up having to sort out. 

I'd be curious to know!! Thanks!

@Levi Bennett

Its a great question Levi and one that I do not have a definite answer to at this point. One reason that I am leaning towards one area in particular is that it seems the ski area itself is looking to be a 12 month destination. They are trying to use the mountain in the off season for attractions like zip lining and mountain biking. That, along with some nice renovations to local golf courses could do a lot to help me fill some rooms in the non-ski months. 

I do not know a lot about real estate (as mentioned above) but I was in the outdoor recreation business at one point. While I am not practiced at picking out fortuitous real estate trends yet, I am able to track what attracts people to locations and hopefully that will help me get a foothold. 

The way I see it, as much as vacation properties struggle with seasonal business - local businesses do as well and are constantly trying to evolve to draw in revenue in off times. If I can track which regions are doing a better job of it than others, I may be on to something. 

This is all a theory at this point, but in my head it makes sense. I will be sure to post my findings when I have identified some trends in the area that help with off-season rentals, hopefully it will trigger some good conversation. 

Thank you for your time and thoughtful response to my post. 

Hey Stephen,

I think you've got a good background for this. To stand out from others VRs and book more business, it has been advised that one should have a blog on your own website describing adventures, activities, & happenings of the area.  If your ski mountain is in Connecticut, you might try to get couples for a romantic stay for the Autumn colors.  For  summer business, it should help if you had a place on a lake or river.  Perhaps for the spring, when rivers are in 'high water' mode, kayakers might be looking for some whitewater, etc.  You could put up a video of someone zip lining.

As I said before, get on the big listing sites or smaller property management sites and study what is already available in the area, check out there calendars every 2 weeks to see how busy they are, what their seasonal prices are, amenities, the look & feel of the place, etc.

Personally, I don't think you need to wait until after this ski season, I bet you could figure this out in 2 wks, it is the property hunting that took us the most time. Start looking at properties available now on Zillow or the MLS if you have access, & try to picture it as a VR, location, amenities, room enough for a family or 2?

Plug into Heather Bayer's podcasts & devour them, disclaimer, I am not Heather, don't play her on TV and do not receive $ for recommending her stuff, lol.

Happy hunting,

Kelly

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