Vacation Home Rental Ownership as a Retirement Strategy
Lately, I have been working on my retirement plan - where to live, multiple locations, one location, fractional ownership, rent vs buy ?? There are many options.
One scenario we would like to have is to live on/by the water (Gulf or ocean) 4 months out of the year, Colorado 2 months out of the year (Summer to escape the Texas heat), and "Home" in Texas the other 6 months, less any destination vacation trips we take...
Looking at the Ritz Carlton Bachelor Gulch, or similar level, for the Colorado piece - 1 BR Suite with full kitchen, turnkey, etc. for $700K. There is a hefty HOA fee, and the Ritz gets 50% of your rental pool income! In spite of that, if I got 45% occupancy in the rental pool, capitalizing on the peak seasons in Beaver Creek, I can buy the property, service the debt, live there 8 weeks per year during July and August, at an out of pocket cost estimated at about $400/month. Of course airfare, car, etc. are additional, but also a write-off against the rental income...
The second part of the strategy would be to buy a beach house or condo for around $500K, and get 35% rental pool occupancy during the year, and live there December through March. This scenario yields about a +$5000 per year surplus, so overall, these two retirement properties that I would own 100% (not fractional/timeshare) creates a breakeven financial result, and they are appreciating assets (hopefully).
Because of the peak patterns and the overlap of the schedules, cash flow remains positive in every month of the year, so I don't have to float any expenses.
Seems too good to be true...What am I missing? The cash outlay to buy the properties would be covered by my equity in the 2 rental properties I own currently...
All comments welcome!