First Time Investor Needs Advice on Vacation Rental

6 Replies

Hi All,

I'm looking at a Single Family Home in a beach vacation destination and trying to run the numbers. It's a bank-owned property and it looks well discounted for the area (65% ARV). I'm interested in Buy and Hold and would rent this out to vacationers on a daily/weekly basis. Any suggestions on where to get information to help estimate average annual occupancy? Any other advice on investing in vacation rentals?

Thanks!

@John McNesby Welcome to BP. It's the best place around to find out information about all things real estate. We have a forum dedicated to Short Term and Vacation Rentals. I will move this over to that thread. 

Also, I'd like to encourage you to search the Biggerpockets Blog for posts on Vacation Rentals (you can actually do a search - top right of page, then click to the left side where it shows Blogs, Podcasts, etc.) Also, look at the list of Podcasts

You might want to upload your pic to your profile, gives it more professional appearance, and character. If you don't want your pic online, you can use another pic of a local landmark, property, or ? as long as it's not copyrighted. 

The very first thing you need to do is read the rules and regs that govern vacation,  resort and college rental zones in the area where you're planning to invest in. Many, especially in our beach community in Leudadia, CA, are starting to really tighten up and/or crack down depending on your perspective while other City, County or State entities are vying for their fair share of your daily rack rate, (aka TOT) as well. 

Here's a link you may find useful. 

http://www.foxbusiness.com/personal-finance/2013/08/07/tax-rules-on-renting-your-vacation-home/

A word to the wise, however, vacation rentals or "Air B&B's", the new trendy cliche of the day, are not always the most desirable investment for the unseasoned investor. Someone needs to be available 24/7 for repairs, disturbances, continual damage and maintenance, and theft, etc. 

The reality is you better live close by, know the cops in the area (LOL!! Wait...........I do) or hire a good dependable management company who can rise to any occasion at anytime or both. Not trying to talk you out of it because it can be rewarding most of the time. But you do have to go into it with both eyes wide open. 

Originally posted by @John Arendsen :

The very first thing you need to do is read the rules and regs that govern vacation,  resort and college rental zones in the area where you're planning to invest in. Many, especially in our beach community in Leudadia, CA, are starting to really tighten up and/or crack down depending on your perspective while other City, County or State entities are vying for their fair share of your daily rack rate, (aka TOT) as well. 

Here's a link you may find useful. 

http://www.foxbusiness.com/personal-finance/2013/08/07/tax-rules-on-renting-your-vacation-home/

A word to the wise, however, vacation rentals or "Air B&B's", the new trendy cliche of the day, are not always the most desirable investment for the unseasoned investor. Someone needs to be available 24/7 for repairs, disturbances, continual damage and maintenance, and theft, etc. 

The reality is you better live close by, know the cops in the area (LOL!! Wait...........I do) or hire a good dependable management company who can rise to any occasion at anytime or both. Not trying to talk you out of it because it can be rewarding most of the time. But you do have to go into it with both eyes wide open. 

 Very informative article. Thanks for posting that link. 

Any idea how I find out more about the state and occupancy taxes? How much to be charged and how they are remitted? 

You would have to go to the city, county, state and sometimes even federal regulatory agencies that govern and regulate the particular property you are interested in. In our area we need to deal with multiple entities at some or all levels depending on the circumstances.

I think to estimate annual occupancy you have to look at how active you are in monitoring the prices of properties around your rental. If your property is sitting on the higher end of the range of prices you will have low occupancy for any specific set of dates unless your property is significantly  nicer than the competition. 

SFR at 65% of ARV in a beach vacation destination? Buy it! Worst case by definition makes a great flip.