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Anybody own vacation rentals?

Old 07-04-2013, 02:04 PM
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Default Anybody own vacation rentals?

For a while now, I’ve been toying with the idea of buying a vacation rental property somewhere along coastal South Carolina. It wouldn’t be anything too crazy, but just a nice 3-4 bedroom house that’s within walking distance to the beach, likely $350-500K. I was hoping to get some advice/insight from others who currently own or have previously owned vacation rentals and see what they have learned from the process. Anything from tips for keeping it rented, unexpected carrying costs, long term rentals for winter months, etc? Can you ever expect to make any money or are you just looking to subsidize the cost of ownership and enjoy spending some time there when you can?

Thanks!
Old 07-04-2013, 02:24 PM
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i might suggest sloan realty to handle your rental-- we use them at oib- very professional
Old 07-05-2013, 03:28 AM
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I do not own any rental property, but would think that you would have the same headaches as a monthly rental/leased property only multiplied significantly due to high weekly turnover.
Old 07-05-2013, 04:43 AM
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I own rental properties on the gulf coast and great lakes. I am not sure upon reflection, that I would go down that route again given the issues that long distance landlords face. It really all depends on how good of a local manager you can find. If you use a rental management company expect a big chunk of the rental rate to go to them. Then another big chunk goes to tax payments as a non primary residence you are the tax mans favorite. These management firms focus on turning over the unit so when maintenance issues arise, and thy will, they generally go fast and dirty. This catches up with you in no time. If you rent the property do not get emotionally attached to anything in the place as most of it will get used up or broken down in no time.
On the plus side, it is a way to help offset the purchase costs and some income tax issues. Run the numbers to see what kind of rental income you need to make the acquisition pay and compare those numbers to rental rates in the area you are considering. Also factor in the seasonality of the rental markets when calculating rental income. Good Luck.
Old 07-05-2013, 05:06 AM
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I have a home on a lake I rent out for June July and august and it pays about 75% of the mortgage payment on it. I could get 100% of the mortgage if I rented it out from mid may to early spetember however I like to enjoy it too. 1. I don't know your financial standing but if your buying this and are banking on renting it to make the payments DONT BUY IT. If there's a hurricane ur screwed ect. Stuff happends 2. If you do buy it, do yourself a huge favor and have it cleaned professionally because you won't want to do it unless you LOVE cleaning. 3. If possible be a hands on landlord take a security deposit and do the checks on the house yourself to help protect your investment. If done right after about 15-20 years you have a house everyone else paid for.
Old 07-05-2013, 08:09 AM
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Originally Posted by SouthernAccent View Post
For a while now, I’ve been toying with the idea of buying a vacation rental property somewhere along coastal South Carolina. It wouldn’t be anything too crazy, but just a nice 3-4 bedroom house that’s within walking distance to the beach, likely $350-500K. I was hoping to get some advice/insight from others who currently own or have previously owned vacation rentals and see what they have learned from the process. Anything from tips for keeping it rented, unexpected carrying costs, long term rentals for winter months, etc? Can you ever expect to make any money or are you just looking to subsidize the cost of ownership and enjoy spending some time there when you can?

Thanks!

BOY I CAN HELP YOU


We have a house at IOP(Isle of Palms SC out of Charleston)

It is a buyers market right now but it depends on where you are looking

Little quick history or ours, My parents bought this house back in early 1980's and also owned another at the time. Years ago you could rent it for enough to take care of EVERYTHING but getting harder and harder to come out ahead. At this point we ( My Sister and I now own the house) just like to break even

Our house, rebuilt in 1990 after Hugo wiped out original house) is a typical 3 bdrm ranch style house w 2 full baths. It is also built up off the ground about 10'(codes now to deal with storm surge) and we actually have a pull under garage and downstairs porch along with another full bath and laundry room and storage downstairs

Now the expenses, our house is 3rd row of houses back from beach from houses(one road separates us from the beach which is about a 200-300 yard walk

House is valued at somewhere around $750K +/-

Property taxes run us right at $7K per year and homeowners insurance along with wind/storm(named storms) and flood/flood content runs another $4500 or so each year . Then you have accommodations and hospitality tax on your rental income (runs about 13% of rental income but we pass that on to renters but still included in rent )

For MANY years we had the same people renting the same weeks each year but as people get older and change jobs and such you do not get as much repeat business

Pretty much we do ok from Memorial Day through end of July mid August, you are looking at about 8-10 weeks rental at BEST due to the fact My sister and I each take one week a summer there.

You also need to understand that more than 15 days personal use during the year (make sure talk with your tax preparer for full details or pm me(this is what I do for a living))

Our house does not take in enough to cover taxes, insurance, utilities and any repairs. Keep in mind there will be a lot of maintenance due to the salt air environment , like one guy told me years ago only TWO THINGS the saltwater will NOT F' UP and that is the Saltwater and THE FISH

We have just recently listed our house on VRBO to see if that will help with some of the offseason rentals, we kind of miss the boat on this. In all honesty if you are looking for something that makes money it WILL NOT. If you have the cash to tie up in a vacation home and are looking for a long term appreciation of property values and somewhere down the road make a profit when you sell it then that may be possible. My parents may have $100K total tied up in this place so they have done well but then again not sure what all they spent out of their pockets over the years to keep it going but not a bad deal

The one mistake I think the made was about 10 years ago they turned down $1.3 million for the house and I told them at the time to SELL but they had their reasons and I understood. But when the market crashed in 08 these houses popped up every where for sell and there are still a lot out there and a cash buyer can be very picky and a hard negotiator

If you are looking to finance a deal like this then NO WAY I WOULD TOUCH IT, loosing $$$$ from the start but if you have deep enough pockets it is ok

Let me know what other information you need and I think you are very wise to ask prior to looking

Last edited by tprice; 07-05-2013 at 07:25 PM.
Old 07-05-2013, 09:54 AM
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tprice is spot on. One other huge problem is property insurance not only is it continually going up but the number of carriers are going away. Also the state is always meddling in the high tide line and beach erosion. I would guess there are worse places to tie up a large bundle of cash or not?
Old 07-05-2013, 10:26 AM
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My small advice is that you might want to first look at yourselves in the mirror and be honest about how you'll feel if you show up at YOUR house, for YOUR vacation, and find a big red spot in the carpet where Little Renter spilled his juice, or maybe see a nice fist-sized hole in the drywall.

It's probably just anal me but I have a very hard time separating myself personally from our place. We bought it for us, not as an investment, and were/are able to afford it without renting. This year tho we're renting very limitedly and it's bothering me some- worrying about the place and that my guests are pleased with it.

If I go and find things messed-up we'll be out of the rental biz fast. Good luck.
Old 07-05-2013, 01:38 PM
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I have owned a vacation property for almost 10 years in North Carolina. Its in a great location on a national scenic river. The good thing is that my taxes and insurance only run about $1700/year. For the first 5 years I rented it as a vacation rental mostly weekly and sometimes for as little as 3 days. I had it advertised on vacation rental sites and kept it rented prettly solid from June thru August and sporadically the other times throught the year. I saved a ton of money managing it on my own with a neighbor would clean it. When the economy went down and the weekly rentals decreased I went long term and never looked back. It was just easier and I'm getting lazier. At the end of the day it brings in the same amount of income with less work. Every once and a while theirs an issue to deal with but the income offsets the aggrevation. I would say if I took all the money I've brought in over 10 years its paid off 60%-70% of the initial investment, plus I bought the buildible lot next door which I can sell at 250% of the original price. So its worked good for me, but I think the key is buying a place with low expenses. Buy the way I'm writing this post at the vacation home. I generally offer 10-11 month rentals so I can free it up in the summertime for my family.
Old 07-05-2013, 02:06 PM
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We own in Orange Beach.......condo.
My wife manages it through VRBO......we have had if for going on three years now.......70% of our renters are now repeat customers and almost all are at least refferals.

We only one snow bird complain about rust on a spatula......people take them spatulas seriously......
It cash flows itself and we use it 7-8 times a year, but only short stips and we use in once a year for ten days......headed over in the morning.

It's been a solid investment for us
Old 07-05-2013, 05:43 PM
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I built one 12 years ago on Dauphin Island. A few years later we started renting it through the local real estate companies. Unhappy with that we went with VRBO and never looked back. Four properties on the Island now and solid booked through the Summer. It has worked for us.

I've found the vacation renter to be a cut above our long term renters.
Old 07-05-2013, 06:20 PM
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I have two properties that I manage as vacation rentals. Both have been moderately successful, but I could not buy either property from the rent. At most you are usually talking about just subsidizing the cost of ownership., ie, utilities, taxes, etc.

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