All Forum Posts by: Paul C.

Any of the big national banks should easily beat 5.3%. Are you dead set on a 30-year? With a 7/1 ARM, you could probably get something in the high 3% range.

@William S. I agree with your conclusion, "...you have to cut out the PM and/or payoff the mortgage to get a decent income out of it."

A simple way to look at it is this.  Let's say the unlevered return on a property is 6%.  In your scenario where you get $499 / month of income before financing and $100,000 purchase price, that's pretty close.

If you're financing 75% of it, then you can only expect to make 6% on your down payment and collect the spread of 6% (asset return) - 4.25% (mortgage rate) = 1.75% on the remaining 75% of the asset value.

So basically, 6% x 25,000 + 1.75% x 75,000 = $1,500 + $1,312.50 = $2,812.50.

This isn't anything you didn't already know, but is just an alternative way of looking at it to understand why a little better.

That being said, there are not too many assets today where you can reliably make 6% on an unlevered basis with minimal volatility.  It's just a question of how to get the required capital so you don't need to finance so much of it, or getting a better financing rate.  Otherwise, the lender benefits more than you do.

Thanks @Keith Courtney.  Pro forma statements and brochures would be great.  I will PM you.  Thank you.

Great advice @Chad McMahan.  I will send you a PM.  Thank you

That's awesome @John Underwood!  Going to add Lake Tahoe to my list of places to evaluate.  Thanks for the idea.

@James Palassis good question. I have a property manager who takes care of the turnover, cleaning, maintenance, marketing, etc.

Finding a competent property manager was the first thing I did when I started considering buying a property.  I wanted to get comfortable with understanding how a potential property would perform and figured the best way was to go with someone who had been managing many similar properties for years.  I have not been disappointed, he gave me very realistic assumptions for revenue, expenses, etc.  And given his significant experience, he has a great team and systems in place to make everything run smoothly.

@Jon Latorre ... completely agree with everything you said.  Our property in Vegas is 6 bedrooms with views of the mountains and the Strip, private pool, tennis court, etc.  Demand has been high and we've been able to command a premium rate.

Do you invest in vacation rentals and if so where?

Thanks @Andrew Johnson.  I have not looked close to NC yet, but someone else on this forum mentioned having a good experience in Sapphire, NC so I may look there.  I'm wide open in terms of location as I don't plan on NC being our home long term.

Agree about picking 2-3 markets that are great ... this discussion was to help me compile that list.

Thanks for your input!

Like others here, I've recently gotten into vacation rentals with my first property in Vegas after having focused only on long-term rentals for the past 5 years.  While it's still early, the performance of the vacation rental has far surpassed my expectations and blows away the returns I'm getting on my long term portfolio.

I'd like to add more vacation properties soon, but am reluctant to do it in Vegas because the regulatory environment is not friendly for vacation rentals.

Any suggestions for where to look?  I'd love to hear your best ideas for:

1.  Location

2. Ideal type of property and price point (SFH or condo, # beds/baths, amenities like pools, etc.)

3.  Rough numbers (gross revenue, expenses, net income)

Thanks!