My wife and I are considering making a 3-BR, single-family home in Lower Vermont our first real estate venture. Currently renting in CT, we are considering doing this as a long-term investment that we could stay in a once or twice a year. Looking to be roughly 15-20 min. in between some of the more popular mountains. I've been running numbers, checking AirBnB, VRBO for rental prices, digging on Trulia for as much info as possible, but still trying to answer these questions:
- Has anyone had any success or failure stories with a similar asset?
- For investment purposes, is renting in this area considered more volatile or safe compared to other vacation areas?
- Is there a typical vacancy rate for a property in this area (i.e. only rents 60% of days per year)
- What are some general pitfalls to watch out for in this area?
- Are there any considerations to appreciation/depreciation for properties in the area?
- What would the average time on the market be if I decide to sell it?
- For people who are doing this: How much time do you spend scheduling and securing renters?
- Have any alternative suggestions for investing?
Yes, we understand this is a huge risk, but still vetting the options if it would be a profitable investment short and long-term. If anyone has done this with single or multi-family, any insight would be great. Thanks for reading, and I look forward to the responses!
I'll take a stab.
Plan for no short term rental bookings for the first month.
If you go the STR route, stop thinking about vacancies from a traditional landlord perspective. Start asking " how long will it take to net the same amount I would if I operated as a traditional landlord".
Regarding appreciation/depreciation anywhere: just plan on loan pay down if you're the buy and hold type. If you're speculating, then you must do your own homework for yourself. No short cuts.
Regarding success stories: I have been successful operating monthly rentals using Airbnb/vrbo to fill it. And I those I teach have been successful with STR in rural, urban, and touristy locations no matter if faced with unfriendly city ordinances or not. It does take a good strategy to operate without a lot of hassle.
Thanks Al! That is a good perspective to think about while looking at properties. Are any of your properties in Tahoe? To put it in perspective, CT to VT, is roughly like going from Sacto to Lake Tahoe, distance wise.
My wife and I, also from CT (Shelton), bought our first 2nd home/vacation rental back in May in Gatlinburg, TN. I cannot go on enough at how happy and successful we have been! Obviously the markets are very different but I believe what is uniform to each and every vacation rental is a set of important aspects you need to establish and have in mind. Assuming your goal is to rent as frequently as possible, you're going to have to establish your "team" in the area. What I mean by that is most importantly a cleaning crew that is used to the volume of check in/outs with vacation rental. You're going to have to make sure its cost effective and this will be a very clear cut fee you pass on to your guests when they book. Aside from cleaning you're going to need a general handyman that can be available at a moments notice. Ideally you again look for someone who is familiar with vacation rentals. Further you will need landscaping addressed if your not in an association with HOA fees, heat/AC service, snow removal.
We have had unspeakable success with Airbnb. They have a very user friendly website and their app is tremendous! I virtually run my business off my phone! We have additionally had success with TripAdvisor/Flipkey. This has taken longer to establish but you are exposed to a greater number of people including international listing sites and being in New England you might have success with marketing to Europeans who travel here. Both charge extremely reasonable fees to you and generally reasonable fees to the guest (6-13%).
A final thought would be the seasonality aspect of VT. Would it make sense for you to try to appeal to summertime vacationers by seeking out a property near a lake with water sports?
Hope that helps and good luck!!!
Great thought Jeff! Thanks for all your insights. Hope all is going well with your new 2nd home. Do you find yourself doing much work on the property, or was it move-in ready? Do you find that you are turning profit on your vacation home, or is it more for personal use? Are there any things bumps that you may have encountered from running the property from so far away?
I've been speaking with a friend who owns property in the area, and he mentioned having a trusted property manager has been one of the best things to making his vacation home run smoothly. He did mention how cleaning, trash, snow removal, landscaping were all factors I should be aware of, and to plan for. We are definitely planning on renting out year round, that lake idea is something we should consider!
The cabin was generally move in ready. We spent some money on an outdoor structural repair and next spring we're going to have to stain the cabin. As long as you have your own "team" we see no reason to sacrifice 30-40% of our gross to a property manager. No doubt a property manager is what's best for some but we have done fine without.
I have not had time to look over our profits for the portion of the year we've been running the business. We were told by a property manager an approx gross we could expect in the first year and we are on pace to knock that number out if the park on our own. Put it this way, the gross we've already gotten on our own is already more than if we hit that predicted max gross and had the 30-40% property management taken out.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing