All Forum Posts by: Keith Schulz

@Colin Wyatt Welcome to Madison and the BP forums. As John mentioned, turnover and vacancy really depends on the area. I've had several duplexes and single family rentals in the suburbs of Madison and may vacancy rate has been under 3% with the average tenant stay 3.5 years. Downtown in the student housing areas vacancy rates are still low, but you'll likely have more turnover. Madison has been a great market for long term slow and steady appreciation, but finding  a deal can be a challenge. There is a lot of competition among buyers right now, and a lot of investors seem to be overpaying (at least in my opinion). So, finding great cashflow is tricky without a significant down payment. Great deals can be found, just not abundant. 

I recently bought a house between Tomahawk and Minocqua as a vacation rental. It is fully booked from June to the second week of September (only one week reserved for myself), and I will easily turn a solid profit in my first year. 

I'm hearing from others inquiring about the property that they can't find available rentals in northern Wisconsin. I think part of this is people are wanting to do driving isolated vacations rather than flying to busy destinations. Based on this I think the next 1-2 years is probably going to be strong for vacation markets like this.

Your best source of analysis is looking at the other VRBO and Airbnb rates and availability calenders in your area.

@Mike V. Thanks for the ideas. I've considered requesting the bookings stay in his name, that could be an option. However, I've heard VRBO will take down his listing and cancel his reservations once my listing goes active. Does anybody have experience with this? Is there an overlap time-frame that they allow? I like the escrow idea. I don't think #2 will work, VRBO won't transfer (they will transfer the property but not the reservations), and this owner has several other vacation rentals, so he can't transfer his whole account. 

@Ken Boone Thanks so much for that response! Very helpful. The current owner is definitely willing to work with me. In the offer contract we have it written that he will agree to help with the transfer, he will continue to advertise for future bookings, and allow me to begin advertising for future bookings. 

Of course, I'll be working to generate my new rentals and business, but why would I not want to capitalize on $30k+ that can be handed to me. I can start generating income in month one this way rather than have a 3 month delay. June thru August are the peak rental months here, and it's a $500/per night type of property. So results for my first year will be significant different if I work with the current owner to transition vs just starting over. His reviews on VRBO are currently 4.9, so well worth the transfer in my opinion. 

@Luke Carl, I'm curious what your experience was with this that makes you say his bookings aren't worth it? At this point he's got over $30,000 worth of bookings lined up. I'd like to retain at least the big dollar bookings. 

Hello All,

I see a discussion from about 3 years ago on this topic, but VRBO keeps changing things and regulations keep changing, so I thought I'd start a new discussion.

I have a vacation rental property under contract in northern Wisconsin, closing May 28. I've got experience in long term rentals and flips, but the vacation rental thing is new to me (because what else do you do during a pandemic but start a new business). The current owner has several bookings lined up for the summer, but has canceled March and April and May due to our "Safer at Home" orders. All of his bookings are thru VRBO.com. VRBO tells us they can't transfer bookings from one owner to another. It sounds like books need to be canceled under the current owner and re-booked under the new owner. So what is the best way to seamlessly do this? 

I'm planning to start advertising thru social media to try to line up more renters for the coming months. I think people will be ready to go somewhere as soon as the stay at home orders are lifted. Should I just have the current owner block out the times that new renters would like to stay? Do I start a new VRBO listing now, or wait until it's officially closed? What other places should I advertise?

Can any vacation home owners enlighten me on how sales tax is done? I believe I need to get a permit to collect sales tax?

What are your thoughts on entity structure. The financing will be in my personal name (it was the cheapest easiest way). However I do have 3 entities currently setup. One is for my long term rentals, one is for my real estate brokerage, and one is for our sales as agents. I was thinking about lumping this one in with the long term rentals or just leaving it as a sole proprietorship until we get things rolling and figure out the best path. 

Thanks,
Keith

@Micah Nicholes,

Thanks for organizing. I'm going to try to make it. I've actually been thinking about organizing something in Verona or on the west side since most of the meetups seem to be on the east side. So I'm glad you beat me to it! Do you mind if I invite a couple others investor friends who aren't as active on Bigger Pockets? 

@Jack Medford Great stats! I've tracked some stats in the Madison area as well. Although, yours are more detailed and I love the overlay of statistics on your charts. I tend to agree with you, I don't see the local market making a quick shift. There is still too little inventory, especially in the first time home buyer price range. I don't think we'll see the 6-9% price increases over the next year or two. I think it's calming to a more normal 3-5% annual price increase. This spring was nuts with competition among buyers, but it has already calmed significantly by July (as it did last year). In any case, thanks again for sharing your stats and your opinion!

@Brian Koz Yes, my purchases over the past few years have all been cash deals with no contingencies. It's by far the best way to make someone not want to hassle with putting their home on the market. 

I don't love Stoughton but it will certainly cashflow better than many other areas. 

Shoot me a PM with what you are looking for, and I'll see if I can help.

@Brian Koz it depends on what your goal is. I agree Madison (and the surrounding area) is a tough market to find rentals that meet many of the rules of thumb for investing. If you are after cashflow a lot of the properties on the MLS in Madison and the first layer of suburbs would be negative cashflow without a very significant down payment. However a few layers out, such as Evansville, Deforest, Stoughton, etc the cashflow numbers can look a little better. However, the further out you go, the worse appreciation is. I own a duplex in Arena that has provided good cashflow over the years, but has probably only appreciated 20-25% in 20 years.

There are deals out there if you are willing to do some marketing for off market properties, but there's not much on the MLS in this area that seems like a deal (by most Bigger Pockets standards). I bought an off market duplex in Verona last year by calling a for rent sign. This came close to the 1% rule (.9%) . Also did a flip in Belleville and a flip in Verona that were not on the market. The bottom line is figure out your goals, network, and let people know what your after.