How do you monetize a Mansion on the bayou?

Question

I came across an interesting deal. It's a beautiful very large home on the bayou with 3.6 acres. Very Louisiana. It's well below market, mostly because there isn't much of a market for bayou mansions around here.  The boathouse has a 1 bdrm above it, and there's a 3bd/1bath cabana house, with two large party rooms. The main house has 3 bd/2.5 baths, but tons of other rooms, a huge office, sun room, crazy kitchen, pool. There's also a 2700 sqft mechanics garage, with lift, office, and everything.

For me to even consider it, it would need to completely cash flow. I figure I can rent the 1bdrm and cabana house. Use the party rooms for wedding and event venues. But what do I do with the main house? I can't imagine there's much of a rental market for mansions, and we don't have enough visitors for Airbnb. And that mechanic garage?

What creative things could I do to this property to make it generate revenues?

Andrew Johnson · Answer

@Sean Morrison I think you're likely going about this backwards.  You should look at the purchase price of the home and back into how much you'd have to rent it for monthly to be able to be cash-flow positive.  I'll be overly general but if there isn't market demand for bayou mansions you'll have to plan on significant periods of vacancy.  You'll also have to think through what it will cost to maintain the property (even just landscaping) during that vacancy.

I don't know if that means you have to rent it for $3,000 per month or $10,000 per month.

That said, when someone says 3 bd/2.5 baths I don't really think "mansion".  You may just have a "normal" house with a giant boathouse attached to it.  If that's the case you're probably sunk.  I don't think any rental populace will reliably pay a lot more for party rooms in a large boathouse.  I could be wrong but I'm guessing I'm not.

By the way, if you rent to people that want to throw parties in the boathouse, whew...wear and tear will be through the roof.

As for the mechanic's garage, that's got "boat storage" written all over it.  I don't know what boat storage costs where you are but in many markets it's not cheap.  Having a home with a covered/dry area where they can store a boat can have value.  But (again) that narrows your rental population even further.

Now you need someone who will rent (but not buy) a mansion who also can afford a boat that's nice enough where they need/want (can pay a premium) to keep it garaged.

Others have already hit on the challenges with "running a business" vs. buying real estate...

Matt K. · Answer

It sounds more like it's part rei and all business. I don't think anyone is going to be able to give you much help on such a unique property. The fact that it's heavily discounted from what you think the value should be probably a good indication that it'll be a huge pain in the butt. Not to mention upkeep going to be huge expense. If it was truly a good value it'd be easier to sell or never even hit mls

Thomas S. · Answer

Bulldoze the house to reduce the taxes. Advertise it for sale, $1, must be moved.

Sounds like this should probably just be allowed to sink into the Bayou. Not every property has value, some are worth less than nothing.

Sean Morrison · Answer

@Matt Katsaris You're right that's it may be part business. I'd much rather it be REI if I could simply rent out the main house. To be honest, I'm not interested in starting a wedding venue business at all. At best, I would rent it out to someone who was. Has anyone successfully rented out a house on this kind of scale?

Maybe a better way of putting it is that I do not want to start a business on this property. I'm more interested in creative ideas of who to rent to.

Matt K. · Answer

This sounds like a business idea vs REI....

From the sounds of it you'd have something like this since you mentioned weddings/events (there are tons of mansions that do weddings/hotel)

http://grandislandmansion.com/