Higher priced BRRRR or lower priced vacation rental

44 Replies

@Julie McCoy Thanks for taking a bullet for the team.  I tell that to the first person who draws a beer from my kegorator.  It's always foamy.  The rest pour out clear.

Just some things to consider with a vacation rental is the cost of and hassle of cleaning after each guest (in my area hiring someone to clean can cost in the ballpark of $35 depending on unit size). Also be sure to check the laws, for example here where I live airbnb's are illegal in Provo UT (unfortunately) but legal in the sister city Orem, UT. Also in an economic downturn or recession when money is tight vacationing is the first thing to go so while a often a VRBO can have great cash flow it may not withstand an economic downturn as well as a regular in town rental. Julie was exactly right in suggesting its a small business and check the vacation home comps in the area (make sure they are booked out or at least booked out enough to justify owning one). What I've seen in my area is that VRBO's are booked out throughout the summer but sometimes struggle to stay full throughout winter, unless you are located near a ski resort or other winter attraction. 

@Paul Sandhu @Lucas Carl

Alright guys, I get it, I’m an idiot. Clearly I don’t understand what I’m getting into. I’m just trying to do the best I can with what I’ve got. If you have suggestions on what I can do better, I’d really appreciate it.

I have found small lakefront properties in need of rehabilitation for under 60k. I thought that fixing one up and avoiding a loan would be a good strategy. Mia culpa.

I’m just trying to get my head around some of these things. This is my first time even trying to buy an investment. I see that you are all VERY successful, so again, I’d value constructive input. And Lucas, dude, you’re right, I don’t have the knowledge. What I should have said was, I want it bad, and I’m learning all that I can so that I don’t go in blind. I thought the point of a forum was to gather and share ideas.

The post was meant to ask if you have found LTRs or VRs more or less appealing and if having debt vs not having debt on a property was more advisable.

I’ll come back when I’ve gathered more knowledge.

@Lucas Carl and myself seem to get singled out.  We're only trying to help, but sometimes the message comes out the wrong way or gets interpreted the wrong way.  I've rented out to over 1400 people, only 5 of them were on vacation.  Their daughter was on the college basketball team.  She had practice all Thanksgiving week.  Her family came here for Thanksgiving.  The other 1395+ people were all refinery contractors.  Big burly guys driving jacked up 4x4s, chew tobacco, smell like diesel and have neck tats.  Not your normal crowd.

@Paul Sandhu yeah, I’ve seen your posts around. You’ve definitely found your niche demographic. And you definitely have a way of getting your point across. Less offended, more embarrassed. Especially since now this post is trending 🤦🏽‍♂️

Let’s face it uncle @Paul Sandhu it’s because our jokes don’t always translate on the internet. Hell mine don’t even translate in real life LOL. 

@Travis Ward-Osborne schedule a call with me in my profile I’ll teach you everything I know. 

Don’t discount the cost of furnishing a vacation rental. That can be a HUGE expense and very time consuming. Run the numbers with that included and it might make things a little more clear. Also, that vacation rental is going to be a part time job... so figure out if you want to be a part of that, too.

@Travis Ward-Osborne I’d keep in mind the regulatory piece of the Airbnb model. If it gets outlawed are you screwed? Also, we’ve yet to see how Airbnb performs in a recession. If your rent pool drys up are you screwed also?

@Travis Ward-Osborne vacation rental can generate 6-10 times more a month than LTR.

If you have the option, go with STR.

If you want to send me the city it will be located I can check for you what is the predicated income of it.

@Travis Ward-Osborne

I have both. Bought my first investment property as a STR. It does well about 8 months out of the year. Makes decent $. However my LTRs do well each month 12 months a year, and I'm not worried how a recession will affect my LTRs. However, my STR will take a serious hit when the economy cools a bit. I would start with SFRs and enjoy the passive income first.

“Don’t let the bastards grind you down”. Everyone is trying to help you out. Some people’s comments just come off a little more harsh or blunt than others. But there is something to take away from all of them.

As far as a STR in a recession... look at the area you're in. I live in Southern California and am currently considering a STR in big bear. A downturn might see a decrease, however, people from San Diego, Orange County and LA county all go to big bear and a lot of them tend to be upper middle class. If times are tight, they might not be going overseas this year but they're still gonna splurge for the big bear trip at a muuuuuch lower price point. Obviously, this isn't true in every market. But definitely something to consider.

Bottom line is Vacation STRs are riskier and more work but the pay off could be much greater. Plus you can get a lake house a few months or weeks outta the year. I’d say go for it. Buy it. Fix it. Market it. Use it. Make some money. Be able to come out of pocket if/when necessary.

As far as numbers... I am going looking at STRs as full year performance rather than the usual monthly used for LTRs. If my numbers are right we can cover 80% + of ALL expenses for the entire year from the busy season (3-4 months) alone.

@Travis Ward-Osborne I apologize for the way some people have come across. As you can see, everyone has an opinion and everyone has their own way of doing things.

Take the two properties out of the mix and go to the techniques you mentioned (cash purchase vs. BRRRR). I am always a fan of BRRRR. The reason is because you get to keep recycling your money. With the cash purchase you have just that one property and have to wait to have the cash to buy another one. You can't scale.

I leave you with that thought. I know Astoria Queens well. You are going to have to get out of the NYC area and try to do something remotely.

@Travis Ward-Osborne nothing in this thread implies you are clearly an idiot, or an idiot in any form.  Why not pop these two potential purchases into a spreadsheet, make some best-guess estimates, and share that with the group for feedback?  If you don't have a spreadsheet template you are used to using, there are a number avail on BP.

@Travis Ward-Osborne , one thing to keep in mind, is that it is possible for the numbers to work for both a VR and a LTR.  So if you take a hard run ant VR and it doesn't pan out, perhaps you could turn it into a LTR and still cash flow.  It something to look at and a plan B for the VR.