Cabin Rental vs Single Family?

5 Replies

My wife and I are looking for our first investment and are kind of all over the place. There's next to nothing for multi-family units in our area so instead we had been looking for an affordable single family home to live in while we renovate it for rental.  Anyway, after talking with a family member about renting their cabin (at a steal of $650 a week), we thought maybe that would be another route to take. After pessimistically crunching the numbers we found that in the twenty weeks we would set aside for rental is about equal to what we'd make in a year of renting out a SFU in our price range, less the headache of managing a property year round, hoping the furnace doesn't kick the can during the winter months.

Any thoughts on this?

Primarily we've been looking around Ottertail, DL and Battle Lake. 

That being said, do you know if when the economic downtown of 2008 happened did vacation properties drop as low as the housing market? 

@Jack Boyd This is a route I have been thinking about too as VRBO units are usually scarce in the summer months. I would imagine if you could add some winter fun (ice fishing, snowmobiling, etc, you might see some upside in the winter too. But, it is intimidating looking at properties 2-3x SFH prices in the twin cities.

@Jack Boyd - I would make sure you have a couple of different exit strategies/options. Don't count on just vacation rentals, what happens if it's not a desirable area? What happens if vacation rentals become illegal? You'll want to make sure you're not trapped with no other options.

@Jack Boyd  

Exactly what @Armin Nazarinia said. I wouldn't buy a cabin for a ST rental if the numbers wouldn't work for a long term.  It's really hard to predict the political risk. Plus, as @Jason Underdahl mentioned, cabin prices are pretty high now. When a recession hits vacation properties get hit pretty hard.  It might be nice to pick one up at a good price if the market tanks for awhile.

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