Looking at property in the New Buffalo, MI area (beach town, 1.5hrs to Chicago). I live in Chicago and was looking primarily for use for me and my wife, but with the thought that we could get a little extra income renting it out while we're not there. So it's not strictly an investment property I guess - in that I bet it will not be positive cash flow. I think I read that if I use it more than 14 days, it won't qualify for most of the good tax deductions. How do they know how much I do or don't use the property? There are tons of local management companies that could handle everything if I wanted to, or could try to do a lot remote since it isn't that far away and I do have a friend on the ground I may be able to get to be my guy on the ground. Anyone doing something similar or other words of wisdom?
Thanks in advance!
If you can pay the monthly mortgage or the monthly utilities with the monthly rent you collect, I think you'll be doing good. Don't count on being able to pay both, but if you can that's great. I try to have my houses pay for themselves with 6 months of rent. Unfortunately it may take 7-12 months to collect 6 months of rent.
Thanks for the input! From what I've seen, there is sort of a year round market - I think stronger in summer but still some winter potential. And great points about it being more like a second home that sometimes gets rented. A friend just introduced us to another friend who VRBOs their cottage in the area, they purchased in spring, used it all summer, then rented a bit in fall/winter - enough to cover some of the expenses for the season (but not paying the mortgage.) I am torn because obviously it'd be great to not have wear and tear of renters and to be able to leave my stuff out, but then obviously it also would be great to recoup some of that money.
We purchased our first vacation rental cabin in the smoky mountains (Gatlinburg Pigeon Forge) with the idea that we would use it and enjoy it quite often. It was so successful so quickly that we bought 5 more. Now we have the option of staying in any of them but often times when we come to the area it’s last minute and we’re all booked so we stay in a hotel.
We’re out here right now staying in one that had a last minute cancelation. The renter didn’t even ask for their money back so I didn’t offer. (Strict cancelation policy but we’re flexible if someone asks). So we’re staying in our own house on someone else’s dime.
There’s not much relaxing happening though. The second I walk in to one of them I make a list of all the things I want to fix or upgrade and spend the whole trip either hiking or at the hardware store. It works perfect for me though I don’t know how to relax. Running my 21st full marathon in 3 weeks.
Good luck! Dive in!
Join the Largest Real Estate Investing Community
Basic membership is free, forever.