Door County vacation rental condos -- why so cheap?

14 Replies

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.)

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

That is interesting. I wonder why. Anyone have experience with rentals in Door County, WI? I wonder if there's' opportunity there. I think it's definitely a beautiful place to visit.

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.

@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)

Great info and perspectives, all, thanks! While I got the impression that Door County has activities year-round, I take it that it's not like Telluride [alert: commercial beginning!), where we not only have festivals and outdoor activities, but lots of people attending them! Blue skies and mountain-dry air make long, cold winters much more attractive, I guess.  (Plus world-class skiing.) 

FYI, it's a six hour-plus from the Denver Airport to Telluride, but that doesn't discourage our investors. But the scale of the West is different. Anyway, I think the idea of an inexpensive place on the water is still attractive, for ourselves -- but I get it -- not for the ROI.

@TD Smith

I think a lot of great perspectives have been covered so far. Condo investing is often a miss, and there are very few people on the forum who will recommend it.

I grew up in the Chicago suburbs (Evanston) occasionally going to Door County for vacation, and certainly always loved it. In addition to the short season mentioned by @Derek Dombeck , it's also less of destination than many places out west. By destination, I mean that the tourism is largely local, and is unlikely to attract people from the coasts and certainly international tourism. Just another consideration for the price disparity.

Allot of people do not know that Chicago has an awful lot of condos. Million dollar condos and the lower end condos do not sell because people just cannot afford the HOA fees. That is why you find so many condos so cheap. Allot of low to middle wage earners to not even know what an HOA is or why you need to pay HOA fees. They only look at the purchase price and think its a good deal. Your mortgage payment may be $600.00/mo but your HOA fees may be an additional $400.00. After 18 months of paying your HOA fees you will not think you got such a good bargain after all.

Originally posted by @Trevor Ewen :

@TD Smith

I think a lot of great perspectives have been covered so far. Condo investing is often a miss, and there are very few people on the forum who will recommend it.

I grew up in the Chicago suburbs (Evanston) occasionally going to Door County for vacation, and certainly always loved it. In addition to the short season mentioned by @Derek Dombeck , it's also less of destination than many places out west. By destination, I mean that the tourism is largely local, and is unlikely to attract people from the coasts and certainly international tourism. Just another consideration for the price disparity.

 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.

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

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.

@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.

Originally posted by @Trevor Ewen :

@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.

 I would definitely agree with you there. 

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.

@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

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