My brother and his friends are purchasing a lake house in a very desirable location of La.
It is a beautiful home, right on the water, with a boat launch and slips. There are massive fishing tournaments on the lake hosted at a marina next door. The home is an off market deal with a purchase price nearly $100k below market value.
Here is the issue: They plan to use the home as a vacation home and short term rent it when not being used. There are three families pooling together to purchase the home. They are all friends and will likely use the home together many times.
I told him that there needs to be clear lines of uses before they close. My concern is if one family cant use the home due to their work schedule, and another uses it often - there is an offset in rental income and use.
Does anyone have any experience with sharing a vacation home and ways to spread the calendar fairly so that one family does not over use the home, taking away from rental income of others.
@Ramsey Blankenship I think you are giving your brother and the friends good advice on creating clear understandings of how this partnership could work. I have always been very hesitant to do business with friends, when things are going well - it's great, but when things are not so good, it can be challenging to say the least. I would create a written agreement between them all so when a disagreement occurs they can refer back to the document. Although I am opposed to hiring property management companies, I would really consider it in this case. Another option is if they choose to self manage, I would create a various "positions" where one person might be responsible for managing the schedule, guests, cleanings, etc... to avoid confusion and conflict bookings; another may be responsible for maintenance; another responsible for financial tracking, etc.... These are big responsibilities and time consuming, so they may consider a weighted compensation from the rentals for compensation of these positions. Honestly, it makes me uneasy trying to formulate all that might be required.
I thought about doing with a buddy in Lake Tahoe.
Never really put the plan on paper, but i would almost treat it like a time share.
For the sake of brevity and simplicity, I am going to use a 100K purchase as an example.
Separate the year into weekly rentals. 52 rentals. Disperse the rental weeks according to ownership share. If I am 25% owner, I get 13 weeks. If I am 50% owner, I get 26 weeks. You can do what you want with those weeks. Use them yourself, sell them on AirBnB, give them to friends, etc. At the beginning of the "year", whatever that might be, go round-robin with the ownership group and pick the weeks you want, one at a time.
Not sure how I would do the financial accounting on it all though.. and what would happen if a party defaults.
@Ramsey Blankenship Another thing they would need to consider is whether or not they need the rental income. Is it just to help offset the costs? Are they looking to break even? Are they looking to profit?
My boyfriend and a friend own a home together that they rent out as a vacation rental. It works well for them because they rarely use it and we only use it in between bookings they already have. Its main purpose is an income property.
They need to decide what the property's main purpose is. Vacation home or income property?