I posted this on another thread, but it's applicable here, so I'm reposting.
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I have been renting out my vacation home in Panama City, FL (not on the beach but 3 blocks from a cool marina in town) for about 15 months and have figured everything out as I went. I made $15K my first year in gross income, renting it out only 11 months of the year, using it myself for 20 nights, and letting friends and family stay for just the cleaning fee about another 25 nights. My expenses, including ALL utilities, taxes, insurance, etc. are about $1,000 a month, so I'm more than covering my note even renting it (effectively) about 9 months a year. I only list it on Airbnb (where I get about 85% of my business) and VRBO/HomeAway and have been happy with both.
I'm so thrilled with my success, that in about 3 months, I'm moving to the town where my rental is (from Houston to FL), buying a primary residence there (already under contract), and buying more rental property to build my portfolio since I can afford to do it in FL but not in TX. I have found it relatively easy to manage, and I do about 80% of the management work myself, remotely. (I do have friends and family in the area who can check on things for me if I need it and a GREAT housekeeper, which is KEY.)
HomeAway has a great conference each year in several cities, and I highly recommend attending to network with other owners and get the scoop on tools to make it easy for you.
Happy to talk more about it if you'd like.
They have been a hit here where I am- just listed my first and it's been great so far!
Hello BP Family,
What are your thoughts and/or experiences with rental vacation property?
My wife and I are working on buying a few vacation rentals in Myrtle beach , SC.
One I know the numbers ,and they make sense. Same time I want to spend 4 to 6 weeks at the beach each year. So I have two reasons to invest in these type of properties.
Alex
They have been a hit here where I am- just listed my first and it's been great so far!
Thanks for the feedback. Is it hard getting enough clients to make the numbers work?
Hello BP Family,
What are your thoughts and/or experiences with rental vacation property?
My wife and I are working on buying a few vacation rentals in Myrtle beach , SC.
One I know the numbers ,and they make sense. Same time I want to spend 4 to 6 weeks at the beach each year. So I have two reasons to invest in these type of properties.
Alex
That sounds nice Alex. I would love to have dual purpose rental property in the future as well.
The dual property option is very popular here in Myrtle Beach. Black out off-season weeks for personal use. The busiest week by far is the Fourth of July. The whole Grand Strand becomes a battlefield of municipalities and locals vying for the most spectacular fireworks displays on the beach! But that's when you can charge the highest rates and make the most money. The rest of July and August are the best money-making weeks.
Off-season doesn't necessarily mean the dead of winter. We have very mild weather in spring, beginning March. Today (February 24th) it is 70 degrees. In the fall the mild weather often extends into December!
So the "Dual-Use" option can work really well here.
A couple other issues to watch, HOA fees and Management fees. HOA fees can vary quite a bit and can be a pretty good deal depending on what you get for the money. Management fees also vary considerably. Shop around.
The dual property option is very popular here in Myrtle Beach. Black out off-season weeks for personal use. The busiest week by far is the Fourth of July. The whole Grand Strand becomes a battlefield of municipalities and locals vying for the most spectacular fireworks displays on the beach! But that's when you can charge the highest rates and make the most money. The rest of July and August are the best money-making weeks.
Off-season doesn't necessarily mean the dead of winter. We have very mild weather in spring, beginning March. Today (February 24th) it is 70 degrees. In the fall the mild weather often extends into December!
So the "Dual-Use" option can work really well here.
A couple other issues to watch, HOA fees and Management fees. HOA fees can vary quite a bit and can be a pretty good deal depending on what you get for the money. Management fees also vary considerably. Shop around.
Michael do you have any "normal rentals"? If so, do you prefer one over the other?
The dual property option is very popular here in Myrtle Beach. Black out off-season weeks for personal use. The busiest week by far is the Fourth of July. The whole Grand Strand becomes a battlefield of municipalities and locals vying for the most spectacular fireworks displays on the beach! But that's when you can charge the highest rates and make the most money. The rest of July and August are the best money-making weeks.
Off-season doesn't necessarily mean the dead of winter. We have very mild weather in spring, beginning March. Today (February 24th) it is 70 degrees. In the fall the mild weather often extends into December!
So the "Dual-Use" option can work really well here.
A couple other issues to watch, HOA fees and Management fees. HOA fees can vary quite a bit and can be a pretty good deal depending on what you get for the money. Management fees also vary considerably. Shop around.
Michael
Trust me in know the Schedule well. I bartended when I was 20 yes was not old enough at players sports lounge. Bar backed at the after deck eventually worked at Hard Rock when they opened.
I used to love Biker week would roller blade up down the strip. I was showed up 18 years old in 92 ready to take over the world. LOL But man what a ride spent s few years their.
I told my family, the units will be rented from May through Sept. I always enjoyed Oct quite time and fishing off the piers. Arcadian pier was my favorite, as I always rented in that area. HOA are killer in the radison almost $900 month but the gym is one of the best. I still have a few friends down their for Managment that can be reasonable.
Alex
My focus is on long-term rental as far as my own investments go. I like the consistency. However, being a realtor I stay up-to-date on vacation rentals so I can service my clients as efficiently as possible.
My personal favorite type of rental property is townhouses. They offer relatively consistent rent but their equity gain is based on the housing market. We could sell it to a potential homeowner at a price significantly higher than we paid for it thereby giving us a good exit strategy. On the other hand we have an 8-unit apartment building which yields good cash flow, but if we were to sell it we would be hard-pressed to get much more than we paid for it. That's not always the case, apartments gain value based on ROI, rather than home values, so if we can increase the rent enough with expenses remaining where they are we can sell it at a higher price. With this particular property we would have to make some significant (and costly) improvements and hope the owners of the neighboring properties do the same.
Micheal,
I'm glad you're taking a bigger look in the vacation rental market. I fully believe that if done correctly, the VR industry can provide substantially higher income that traditional long term rentals, with the added benefit of being dual use for personal reasons.
The trick is building a highly competitive listing that will rival the best listings in town. This includes pro pictures, good copy, and authentic owner bios.
There are many tools out there that can automate many of the management intensive areas of vacation rentals such as pricing, guest management, and cleaning.
Hi Jeff,
I'd look into fixed rent vacation rental contracts; they may be another good option for your vacation rental if there are any professional managers in your area willing to make a competitive enough offer. Steve Bjerklie from the VRMA (Vacation Rental Managers Association) actually recently wrote the VRMA cover article on the topic, and they are a good way of generating guaranteed income and passing off the short-term risk to a manager.
Best of luck! :)
@Jeff R. I moved your post to the thread specifically for Short Term and Vacation Rentals. Vacation Rentals is one of the hottest trends in real estate right now. Hope you get even more responses.
Hi Jeff,
I'd look into fixed rent vacation rental contracts; they may be another good option for your vacation rental if there are any professional managers in your area willing to make a competitive enough offer. Steve Bjerklie from the VRMA (Vacation Rental Managers Association) actually recently wrote the VRMA cover article on the topic, and they are a good way of generating guaranteed income and passing off the short-term risk to a manager.
Best of luck! :)
Thanks for the advice!
@Jeff R. I moved your post to the thread specifically for Short Term and Vacation Rentals. Vacation Rentals is one of the hottest trends in real estate right now. Hope you get even more responses.
Thank you!
This is something I am actively considering. I have been looking up and down the coast from NC through the Gulf to Panama City Beach. I live North of Atlanta and want something within 6 hours as we are used to going to Folly Beach every year.
I actually made an offer on a long shot (that fell through) on Alligator Point, FL. Was a very interesting opportunity and I learned a ton about erosion and permitting through the experience.
Anyone have any ideas of tricks for finding a ridiculous deal on a beachfront somewhere? Since I am looking in so many different areas all I can do is use Zillow and it's map feature to move up and down the coast looking for ocean front deals (i want ocean front).
Craig
You can get a good deal on beach fronts in Panama city, Panama
Panama City is totally within 6 hours of Atlanta! I used to go to PCB for dive weekends and could make it in 5 from Decatur, easy. Great for diving and families with little children, no surf. I'd rent it out 100% of the time and use the $$ to go to the Atlantic where there are actual waves ;-)
I have looked into this market and may acquire one in the future, though I have not yet ... I am by no means an expert here, but below are a few concerns and considerations I've had:
1) Regulation: Some cities embrace vacation rentals while others reject them. For example, near me in Anaheim, Disneyland pretty much owns the city, and they don't much like competition for their hotels. As result, the city is seriously cracking down on VRs. A couple hours further up the mountain is Big Bear. This town's economy is based on tourism and there are VRs everywhere with no big player to push for heavy regulation. If Big Bear prohibited VRs the RE market would implode, so they embrace them. So need to be aware of regulatory risk and pick a market where it is minimized.
2)Volatility: Seems like some VR markets may be volatile. This not only applies to seasonality (people go to the beach in summer and skiing in the winter, but not visa versa), but also may cycle with the economy (people go on vacation less when there is a recession). So, my personal plan is to pick a market where people vacation year round, close enough for me to manage & enjoy for personal use, and wait for a recession to buy, when volatility is my friend, prices are lower, and only if the numbers would also work as a long term rental.
3)Vacancy: I have a difficult time estimating what a decent vacancy rate would be. It seems to vary a lot property to property and would seem to be highly dependent on management efficiency to book & turn. It seems to be difficult to predict ahead of time (before buying) ... I don't have a good answer for this one other than to estimate conservatively.
@Anna Watkins He said Panama City PAMANA! haha
@Craig H. -- oops, you are correct. No wonder the deals are good. I have absolutely NO experience in driving to Panama City, Panama (and it's not even on my bucket list).
I posted this on another thread, but it's applicable here, so I'm reposting.
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I have been renting out my vacation home in Panama City, FL (not on the beach but 3 blocks from a cool marina in town) for about 15 months and have figured everything out as I went. I made $15K my first year in gross income, renting it out only 11 months of the year, using it myself for 20 nights, and letting friends and family stay for just the cleaning fee about another 25 nights. My expenses, including ALL utilities, taxes, insurance, etc. are about $1,000 a month, so I'm more than covering my note even renting it (effectively) about 9 months a year. I only list it on Airbnb (where I get about 85% of my business) and VRBO/HomeAway and have been happy with both.
I'm so thrilled with my success, that in about 3 months, I'm moving to the town where my rental is (from Houston to FL), buying a primary residence there (already under contract), and buying more rental property to build my portfolio since I can afford to do it in FL but not in TX. I have found it relatively easy to manage, and I do about 80% of the management work myself, remotely. (I do have friends and family in the area who can check on things for me if I need it and a GREAT housekeeper, which is KEY.)
HomeAway has a great conference each year in several cities, and I highly recommend attending to network with other owners and get the scoop on tools to make it easy for you.
Happy to talk more about it if you'd like.
That is very encouraging! My wife and I are trying to find a vacation rental for about 10 days starting at the end of this week. We plan to try to visit somewhere we THINK we might buy a rental. Pondering FL but love SC/NC too. So we shall see!
If we end up looking in the Panama City area I may have to get the house keeper reference from you! ;-)
Craig
As the owner of Casanosa in Spain, i think it is really important to get all the information that you can before booking it in order to avoid any surprises at your arrival. Serious owners of vacation rental houses usually appear in related websites as homeaway, airbnb or tripadvisor.
My recommendation is to read all the reviews about the house and ask as many questions as you need to get a full picture of the place your going to pass your vacations at, after all, vacations are to not worry about anything. Serious owners usually reply in less than an hour.
Hi Jeff,
There are a lot of good responses here, so I'll see if I can add any additional insight.
My wife and I live on an island in WA state and own 12 VR units, plus residential and commercial units as well. So I feel like we know a little bit about the industry.
The first thing I'd caution is that VR is not the magic bullet many believe it to be. It's more a question of function. Are you looking for a way to pay for a personal vacation home or are you looking for income generation?
Consider: VR income is federally taxed as ordinary income, including payment of self-employment tax. Our municipality adds lodging tax on top of state sales tax. Plus annual business licenses and inspection fees...All these are additional expenses.
Then, you must furnish (re-furnish as well), pay for all utilities, TV, and internet. Management fees (which you should calculate regardless of whether you self-manage it or not) of typical 35% vs. 10%, 3% to airbnb or some credit card processor and possibly the time and expense of a website.
Have I scared you off yet? Where I live, all my VR income must occur between mid-May and the end of Sept. which means you float it for the vacant months (I put in a month to month winter tenant if I can get one).
Nevertheless, I own 12 of them so I must think it works! And it does, but zoning limits my competition and I am in a tourist destination (p.s. Marriott has not quit!). Plus I was able to buy at such a bargain that the numbers were favorable.
If your goal is purely income-generation, or you're located in a convention city or a place where people vacation year-round, the numbers quite often favor residential rental. It doesn't mean you don't want to own a get-away that pays for itself. Just be honest with yourself about your goals and desires and make it as owner-friendly (and inexpensive) as possible