Investor · Reading, MA · Member since 2016 · 16 posts · 4 votes
Hi everyone, my wife and I are looking to get our first investment property and have a down payment for a budget from around 450K, our first thought was to get a buy and hold in the Malden, Melrose, Woburn area which I am finding to be really tough in the current market at that number. We also love going to Falmouth during the summer for vacation and would love to own a vacation home in that area. I always assumed that the smart money would be buying in the Boston area and renting long term but lately I am starting to question if getting a vacation home in Falmouth for 100-150K cheaper and fixing it up would be more profitable as well as a better move for us as a family. If I could get some 30 day rentals during the winter months on top of the week to week rentals during peak season the income could be comparable to a long term buy and hold and we would be able to take a couple weeks each year for a vacation. Does this make sense. I've been reading a lot of investing and property management books but haven't really read up on the short term vacation rental market yet. Any insight would be greatly appreciated.
Northborough, MA · Member since 2015 · 57 posts · 10 votes
10y
That seems like an exciting strategy. It will probably be tough to get a winter renter in those areas. I suggest being careful and keep up your tenant standards. I would hate to have a professional tenant move in for the winter, then refuse to move out during the in-season and take big hit on your yearly income on the property.
Northborough, MA · Member since 2015 · 57 posts · 10 votes
10y
That seems like an exciting strategy. It will probably be tough to get a winter renter in those areas. I suggest being careful and keep up your tenant standards. I would hate to have a professional tenant move in for the winter, then refuse to move out during the in-season and take big hit on your yearly income on the property.
Investor · Reading, MA · Member since 2016 · 16 posts · 4 votes
10y
thanks for your reply. I know, I'd have to be really carful with an off season tenant as to not mess up my peak season income. I actually came to this strategy idea from the guy that I'm renting a place from this summer. While I had him on the phone to take care of the business of renting the place I started to kind of shift the conversation into a general real estate conversation where I was picking his brain about how he does it. He was pretty open to talking and I feel like I got some good ideas from him that I never thought of before. The thought of trying a vacation rental is much more exciting to me than just a standard buy and hold.
Rental Property Investor · Chatham, MA · Member since 2015 · 75 posts · 65 votes
10y
Hi Ken, I would'nt count on much short term rental income in the winter. However, I have found with my property, that the fall and spring seasons can be more productive than I initially anticipated. I market peak summer season through VRBO.com and swith gears to mostly airbnb bookings in the shoulder season. January, February and March are dead but the remaining months
For the Boston property - it's my only one and I don't see getting another anytime soon. It's also my best performing but we bought it a long time ago.
For the Cape property - it's actually a mix. 2 units, one year round, one seasonal. The seasonal has worked out well. As @William Leahy pointed out, I also see some good activity in what used to be shoulder seasons. My last rental last year was October, first this year was April.
That said, I am at my limit for the year rounder and am really thinking of turning it seasonal. I'm hinging on my second eviction for non payment in less than a year. I'd be very hesitant to mix my seasonal with a long term off season renter. I have heard there are a lot of off season workers that this arrangement could work for but I'm not there yet.
Investor · Reading, MA · Member since 2016 · 16 posts · 4 votes
10y
Kris thanks so much for your feedback. I'm very familiar with Falmouth where I'm looking as my parts live there and I retry much grew up there is the summers as a kid. I know that the long term clientele can be hard to sort through as far as finding good tenants. If I could extend me short term tenants past the peak 10 week season and get spring and fall weekends like you have done then I would feel much better about having vacancy over the winter. I just want to maximize the rental income but also don't want to bring on headaches by getting in over my head with nightmare tenants over the off season. I do know that there are a lot of marine biology students from the oceanographic institute in woods hole that need housing over the winter and rent houses in Falmouth during the offseason. If I could do something like that I would feel much more comfortable with that. Can I ask what part of the cape your in? The more I research the vacation rental option the more I like it. My situation has given me the opportunity to get in now and the market where I live near Boston isn't right for me to buy now but he vacation rental market on the cape is. I feel like that's my best option and also something I'm more excited about.
Investor · Walpole, MA · Member since 2011 · 136 posts · 20 votes
10y
Hi Kenneth Silva
Mine are out in Dennis Port. Really too far for anything like Cape Cod Community students but you might be onto something good with Woods Hole. You could have parents co-sign the lease for a little added security.
I'm in Dennis Port for the same reason, I spent a lot my childhood summers there. The way I chose my markets is familiarity and some sort of local connection.
Today I get to go wait for a water heater install at my Boston property. I'd rather be heading to the cape!
Professional · Brewster, MA · Member since 2016 · 18 posts · 14 votes
10y
Hi Kenneth,
We are new to BiggerPockets, so I just found your post regarding the idea to invest in a summer rental property in Falmouth. Our business has been promoting vacation rentals on the Cape and Islands since 1997. We provide tons of support to our homeowners regarding marketing and managing their rental property. Our recently written free eBook may be helpful to you as it outlines many of the investment questions we have been asked over the years in terms of buying a vacation rental.
I am evaluating the purchase of a property in South Chatham, Massachusetts. The property is a single-family, 4 bed / 3 bath (sleeps 12), ~2400 sq ft, and is in excellent condition. The closest beach is a 5 minute drive. In taking a conservative look at VRBO, this place appears to be in the $250-400 per day range for the prime summer weeks (July/Aug).
I'm interested to hear how many weeks you are able to get "max" rent and how your rental rates and length of stay changes during the shoulder and off-season.
Any input is greatly appreciated!! My experience to this point has only been in the Boston area where the assumption is that rental income will be received in the form of fixed monthly rental payments.
Professional · Brewster, MA · Member since 2016 · 18 posts · 14 votes
9y
Hello Eric,
I recommend visiting our site as well to run a search for 4 BR homes in Chatham. Most homeowners do not offer nightly prices in the summer, as all our bookings are by the week. $2800/week sounds about right. Other factors to consider in price comparison are the amenities offered (high-speed, linens, air/conditioning). We consider "walk to beach" to be within 1/2 mile to beach. The high season is from the last week in June (starting 6/24) to the last week in August (ending 8/25). Most homeowners tier their pricing for shoulder season weeks. Many homeowners lower their minimum stay to 3 nights in spring and fall and then set up a nightly price.
Hope that helps! Chatham is a very popular place to vacation!
In looking at your site, $2500 seems like a fair, conservative ballpark price for the high season. The property is 1.1 miles from Forest Beach and 1.5 miles to Ridgevale Beach. It has A/C, WiFi, a large deck, patio, grill, enclosed outdoor shower, waterfall, and fire pit.
For a property that rents for $2500 during high season, do the below expectations look somewhat reasonable? Am I too optimistic / not optimistic enough in some months?
Professional · Brewster, MA · Member since 2016 · 18 posts · 14 votes
9y
I think your winter pricing is too low. People who are renting in the winter are either wanting to spend a holiday there (short-term) or wanting to rent as a professional for several months at a time. Otherwise, I think you have tiered the pricing well.
My seasonal cottage seems to rent out mid June to end of August with maybe a week or short stretch of days vacant. This year I have had another April rental and inquiries well into September. I currently have close to 10 weeks booked.
My rates and season run something like this: April to end of May on a shoulder season rate, in season rate will go from June until August with a higher peak rate around July 4th week, then it drops back to a shoulder seasonal rate from September to October. The minimum stay also gets adjusted. I had started with a 2 night min, last year went 3 night min, this year is 4 night min and next year will be weekly only. For the shoulder season I will drop to a 3 night min because I have more demand for a long weekend.
I drop by 50/night. Vacancy is pretty high but I don't really market for it either. My plan is to rent out the main season as much as possible, once I do more upgrades I will go after the shoulder seasons more.