Door County vacation rental condos -- why so cheap?

Question

Having just spent a lovely weekend in Door County, Wisconsin and coming from the (comparatively -- okay, absolutely) pricier vacation spot of Telluride, CO, I'm wondering why such a charming set of waterside villages within driving distance of Chicago, Milwaukee, etc., should be so inexpensive! 2 bed/2 ba condos, well-maintained with apparently good rental histories, are going for $75-125k! (Add a zero or two for Telluride.)

Mindy Jensen · Answer

Door county is absolutely stunning. But it really isn't driving distance from Chicago. Milwaukee yes, but if you are in Chicago, it will take you at least 4 hours to get there - and that is only if you don't hit any traffic.

Like @Derek Dombeck said, the rental season is extremely short. Taxes are really high. Coming from Telluride, it may seem like a great deal, but unless you have experienced a Wisconsin winter, you have no idea just how cold the earth's surface can get - you will wonder if the sun went out... For about 7 months of every year.

Brandon Stevens · Answer

So much negativity about condos thats simply not warranted. Some of our  best cash flow properties are condos. While i dont know much about that particular area, when it comes to condos it still just comes down to the numbers and tour investment goals. If the numbers work i wouldnt let someone talk you out of one.

Derek Dombeck · Answer

The season is relatively short for rental income.  Although he summer months bring in a premium, the winter months result in higher vacancies and less $ per night. Real estate taxes are also quite high here too.

Happy Investing

Derek Dombeck

Account Closed · Answer

@Kelly B. I ran the numbers for renting it year round. I had the monthly rental income for the last 3 years and took an average of those when figuring out the cash flow. The problem is the winter months just don't bring in any money. From November to March/April it was an average of around $100-150 a month, which basically meant it was rented for 1 weekend a month during that time. Between the slow winter months, high HOA fees and special assessments it just didn't come out as I would have liked.

Also I should add that the places I looked at the units were part of the rental program, which I liked, however the resort/lodge took 45-50% of the income. If it weren't for that it would have had a nice cashflow. I've looked on VRBO and there are a number of units in the places I was looking that seem to be booking guests quite well. However, all of those owners are locals.

I'm not a skier, but I've always been intrigued by the ski resort properties. Good luck with your purchase

Account Closed · Answer

@TD Smith My wife and I looked at places up there earlier this year. What we found was that at almost every place we looked the "special" assessments were quite high. In excess of $1000-1500 a year. In every case what wiped out what little cash flow there was to begin with.

I still tried to convince her that even if the place costs us $1000 or so a year that would still be cheaper than owning and maintaining a cabin while giving us a place to go on the weekends a few times a year. She wanted the same kind of returns our other real estate investments are producing and at the end of the day the numbers weren't there to get her on board.

Definitely a beautiful place to visit with lots to do in the summer. Just not the best return on investment compared to other real estate (multi family, commercial, etc)

Kelly B. · Answer

So Garrett, did you run the #s as a vacation rental?  I would think it should work out with just summer business @ $75k because I'm buying one (sfh) over here in Wausau for over twice that amount, on the Wisconsin River, but expect winter business too, due to skiers coming to Granite Peak.  I'll have to check out what's available on VRBO over there.

Mark Shaffar · Answer

I would definitely agree with you there.

Trevor Ewen · Answer

@Mark Shaffar

Fair point man. My advice should be taken with a pretty large grain of Kosher salt, as I have not been there for 10 years. Nonetheless, I do think they tend to get less east coast tourism then Colorado.

Mark Shaffar · Answer

@Mindy Jensenyou sound like someone who experienced that polar vortex thing a couple winters back:)

Mark Shaffar · Answer

Hi Trevor I feel like I can pick on you because we know each other:) I was in Door county last weekend and there are tons of cars on the road there with IL plates. Kind of unique in that it seems to be a blend of "up north" woodsiness, cutsie cottageness, and waterfront recreation. That's of course no helpful info on the cash flow potential of rentals there but Wisconsin has generally pretty low home prices and is fairly popular with Illinois tourists. There are tons of rehabbed 50 and 60k houses available in good neighborhoods renting for $850-$1100 range in Milwaukee.

Door County vacation rental condos -- why so cheap?

Most Popular Reply