Vacation rental

[Lynn Maher]

Hello! My name is Lynn and I am new to Bigger Pockets. I'm in the midst of educating myself on real estate investing and my goal is to pursue rentals and flips close to my home in the Chicago suburbs. I figured in a few months I'd be ready to start. But, while scoping out real estate I came across a place in Wisconsin that seems to be perfect as a vacation rental. Which is something else I've been interested in.  The sellers are motivated as they are moving and have dropped the price considerably in the last month. It's turnkey and it would give me a place to put my boat as an added rental incentive. I'm driving up to see it day after tomorrow and want to be prepared. I've researched VRBO, etc on current rates and am guesstimating on how many days I'd be able to rent it. It has the possibility of year round rental as there are things to do for all seasons. Does anyone have advice on "crunching numbers" for a vacation property? Thanks so much!! And thanks to BP for the forums, podcasts and the UBG!

[J. Martin]

Originally posted by @Kevin Tran:

Vacation rental should be treated the same as a regular rental since in a sense they both are considered investments. Look at the local market and determine your minimum and maximum rent (be realistic). Figure out how many months out of the year you can rent out this place, which you have mentioned year round minus 10% for vacancy to account for worse situation. As long as you calculate your cost (PITI, cap ex, management, misc.) correctly and make sure it will cash flow positive, you're a winner. When I lease a place, I normally advertise with max rent and gradually lower it to find the sweet spot. But when I do my calculation, I normally use the minimum rent number because I know if needs be I can always lower my rent and still make money. There are a few good calculators at Fileplace that you can use if you don't have one already. Good luck

Man! It took me 10 mins to reply and there already two other posts.  Guess I need to type faster:-(.  Sorry, if some of the answers seem redundant.

WHAT YOU REALLY WANT TO KNOW IS AVERAGE NIGHTS OCCUPIED OVER THE YEAR, AVERAGE RATE, AND EXPENSES (CLEANING, PROP MGMT, REPLACING LINENS, NORMAL MAINT, ETC..)

Do NOT use 10% vacancy as a worst-case scenario for vacation rental after figuring out which months can be rented. 90% is a very high occupancy rate, even if you're just talking about a 1 or 2 day gap between rentals due to timing of coming-going.. I'm 100% booked for the next 30 days on my AirB&B rental during peak, but that is at a low rate, and there is usually at least some gap. The vacancy will all depend on your rate and the seasonality though..

Call a local property manager who does vacation rentals. Call local hotels and ask them about their occupancy rates. Look at prices & availability on-line, etc to get a better feel.. Good luck!