Taking Over Family's 6 Cabin Resort - Harder Than It Sounds

7 Replies

Hi BP community,

This has weighed on me for quite some time.  I grew up on this 6 cabin property in northern WI that my parents own.  This includes a larger house they live in 50 yards behind the cabins, behind a road.  They've tried selling it in the past for around $400k-600k as well as selling individual cabins; however, there were never qualified buyers.

My parents are nearing retirement and the burden of this property is eating into the years they'd like to go elsewhere and enjoy.  They hire high school cleaners with a couple adults at $14-$22 per hour - so they're not doing everything.  In fact, in many ways they act as property managers themselves.

For the longest time, the property broke-even or lost a little money (in part to help with student aid for myself and siblings go through college).  However, since I've helped them integrate online bookings the property is turning a modest profit.

My career and home is now 3 hours away where managing the 6 cabin property would seem impossible.  My job requires visiting people in-person in my local area.

Instead of selling the property off, or having my parents forced to live out their days chained to this property, I'd like to see if anyone has any suggestions on ways to keep the property in the family without having to shell out huge sums of money to buy the existing mortgage ($300k).

The big roadblock is managing the property effectively from a distance and quality control of cabin maintenance and guest experience.

If the mortgage was paid off, the profit would be fairly significant (it's all relative I suppose).

I know this post is sort of a tangent but figured I'd put this out there in case someone has experienced this / seen this before with retiring parents / owners.

@Ben Ertl You should be able to manage that cabin from 3 hours away.  You need some automation and some tools in place.  You need to hire a dedicated cleaner and have a local handyman you can trust.  Also good to have a backup cleaner and backup handyman or 2.  The cleaner should be your eyes and ears on the property not your parents.  We manage 3 cabins and under construction on #4 and they are 3.5 hours away from us.  My buddy lives in Seattle and manages a 6 bedroom cabin in the smokies and that's a lot more than 3 hours away.  Again key things are cleaners and handymen.  If you can get those two items taken care of, then you should rarely have to visit the property.  At that point you are simply handling customer inquiries, and responding to minor issues.. i.e. you talk to guest and then call cleaner or handyman to take care of it if needed.  This should absolutely be do-able.  With a cleaner, you want to set a fixed fee - not by the hour.  You include that cleaning fee in your listing so it is merely passed through from the guests to the cleaner.  That way you always know your costs.  Let's say it takes them 4 hours to clean on average.  Sometimes the place wont need a lot of cleaning and they are out in 3 hours and sometimes it needs more cleaning and it takes them 5 hours.  It will all work out.  Now occasionally, it might be trashed and takes a lot longer.  In that instance I tell my cleaners bill me extra for it.  I want them to be happy too.

What if you refinanced the property at historic low interest rates to get the mortgage payment lowered and help it be profitable. 

At the end of the day if this property is a burden that barely pays for itself, it may make more since to try and sell the property again.

@Ben Ertl

I manage 8 STR from a distance and I'll gross well over 100k next month. In one month. It's totally doable. Albeit not for everyone.

You’re in the eight place. Read through this forum and it’ll be a tremendous help.

Originally posted by @Ben Ertl :

@Luke Carl This place only does $80,000 in revenue in a given year. Closed during winter months due to heating cost. Near 100% booked June through August. 30-50% booked May & October.

 Get rid of it 

Originally posted by @Ben Ertl :

@Luke Carl This place only does $80,000 in revenue in a given year. Closed during winter months due to heating cost. Near 100% booked June through August. 30-50% booked May & October.

So based on those revenue numbers you need figure out your operating costs with your mortgage and see what is left over.  Then you have to decide is the time investment on this family property worth the income it produces for you.  If you decide it is worth it, then by all means it is do-able.  

Can you refi to a lower rate?  What keeps them chained to the property?  Can they pick up income elsewhere to make up the difference?  Can they add buildings / facilities to the property that income generating?