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Buying a vacation home as an investment property?


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Been thinking about this for a while, but starting to get much more serious. Looking at a place at the beach (bayside, not ocean-front). The main reason I feel like it makes so much sense for me is that I'm in a somewhat unique situation where I'd mainly want to be there during the off-season (spring and fall) and would be happy renting it out during the peak season (Memorial Day to Labor Day). Our primary house is paid off and we have no car payments, so the added mortgage doesn't scare me, but I honestly feel (hope?) that we'd basically be able to cover the mortgage by renting it out during peak season. Is this realistic? In my mind, if we could rent it out most of the summer, it would basically be a free place to stay April/May and September/November and we would then own it after 20 years. I realize there is risk involved with renting and there will be additional unplanned expenses along the way.

I know there are many cons to owning a rental property (maintenance, repairs from renters, unexpected expenses, property management fees, marketing and booking, etc). I am not as familiar with all the possible pros such as tax benefits / write-offs, etc.

Any FBG's offer any personal opinions or advise on the topic? Looking for any feedback. Both good and bad.

:popcorn:

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We have a place in Ocean City Maryland. I live in NY. We love it AND I dont have my home nortgage paid off yet like you do.  We do not rent it out through a service though. However, we will rent

We own a second home in Prescott AZ, about an hour and a half from where we live in Phoenix. We do not rent it out because we treat it like a true second home. We don’t want anyone staying there. Heck

I'd say this about covers it all. Decision = NO. Have a good day folks. 

1 minute ago, E-Z Glider said:

Been thinking about this for a while, but starting to get much more serious. Looking at a place at the beach (bayside, not ocean-front). The main reason I feel like it makes so much sense for me is that I'm in a somewhat unique situation where I'd mainly want to be there during the off-season (spring and fall) and would be happy renting it out during the peak season (Memorial Day to Labor Day). Our primary house is paid off and we have no car payments, so the added mortgage doesn't scare me, but I honestly feel (hope?) that we'd basically be able to cover the mortgage by renting it out during peak season. Is this realistic? In my mind, if we could rent it out most of the summer, it would basically be a free place to stay April/May and September/November and we would then own it after 20 years. I realize there is risk involved with renting and there will be additional unplanned expenses along the way.

I know there are many cons to owning a rental property (maintenance, repairs from renters, unexpected expenses, property management fees, marketing and booking, etc). I am not as familiar with all the possible pros such as tax benefits / write-offs, etc.

Any FBG's offer any personal opinions or advise on the topic? Looking for any feedback. Both good and bad.

:popcorn:

Just sold mine. Worst investment ever for me.  I guess it’s ok if t you like spending your time off doing maintenance so your extended family can have a free place to hang out  Every time I went I found more damage the PM company missed  Most companies are using damage waivers they sell so the renters abuse the place knowing they are liable for accidental damage 

 

the tax benefits are nice on the front end but you do have to pay back the depreciation when you sell. 

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We have a place in Ocean City Maryland. I live in NY. We love it AND I dont have my home nortgage paid off yet like you do. 

We do not rent it out through a service though. However, we will rent it to people we know for $900 a week. The mortgage is around 1,000. So if I were to rent it out every week in the summer, I would definitely be able to not pay a dime out of pocket. the $900 we charge is low compared to what we could get. 

We love going there and are very happy we did it. This is our 8th year owning it. 

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6 minutes ago, AcerFC said:

We have a place in Ocean City Maryland. I live in NY. We love it AND I dont have my home nortgage paid off yet like you do. 

We do not rent it out through a service though. However, we will rent it to people we know for $900 a week. The mortgage is around 1,000. So if I were to rent it out every week in the summer, I would definitely be able to not pay a dime out of pocket. the $900 we charge is low compared to what we could get. 

We love going there and are very happy we did it. This is our 8th year owning it. 

What percentage occupancy tax do you have to charge in Maryland?  Do you have to pay both state and county?

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11 minutes ago, BassNBrew said:

Just sold mine. Worst investment ever for me.  I guess it’s ok if t you like spending your time off doing maintenance so your extended family can have a free place to hang out  Every time I went I found more damage the PM company missed  Most companies are using damage waivers they sell so the renters abuse the place knowing they are liable for accidental damage 

 

the tax benefits are nice on the front end but you do have to pay back the depreciation when you sell. 

I'm the worst handyman ever, so hopefully this doesnt happen. Was it a bad investment financially? How much of the season did you rent it out?

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13 minutes ago, AcerFC said:

We do not rent it out through a service though. However, we will rent it to people we know

This would be nice, but I'll be looking to maximize profits. I expect it to be booked all season long. I don't envision any friends or family ever staying there (unless they're down with us during the off-season).

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49 minutes ago, E-Z Glider said:

Been thinking about this for a while, but starting to get much more serious. Looking at a place at the beach (bayside, not ocean-front). The main reason I feel like it makes so much sense for me is that I'm in a somewhat unique situation where I'd mainly want to be there during the off-season (spring and fall) and would be happy renting it out during the peak season (Memorial Day to Labor Day). Our primary house is paid off and we have no car payments, so the added mortgage doesn't scare me, but I honestly feel (hope?) that we'd basically be able to cover the mortgage by renting it out during peak season. Is this realistic? In my mind, if we could rent it out most of the summer, it would basically be a free place to stay April/May and September/November and we would then own it after 20 years. I realize there is risk involved with renting and there will be additional unplanned expenses along the way.

I know there are many cons to owning a rental property (maintenance, repairs from renters, unexpected expenses, property management fees, marketing and booking, etc). I am not as familiar with all the possible pros such as tax benefits / write-offs, etc.

Any FBG's offer any personal opinions or advise on the topic? Looking for any feedback. Both good and bad.

:popcorn:

No advice here but we've been discussing the same thing. 

I'm fairly sure we've decided to just own the primary home and take a month or two at different spots, rent instead of buy, for a decade or two. Maybe in our late 60s we'll decide to buy a place on the beach during our slow-go years. 

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8 minutes ago, E-Z Glider said:

I'm the worst handyman ever, so hopefully this doesnt happen. Was it a bad investment financially? How much of the season did you rent it out?

It ended up being a breakeven proposition.  Mountain place so between ski season and summer it was then.  Probably book 40% of the available nights.

Beach homes are going to take a beating from the elements.  All your chores you do (or pay for on your current home) are going to be doubled.  Ultimately I ended up just driving 2 hours to fix crap or check on the place for missed damages and then get to pay the mgmt company a fee for a check behind me to make sure it was "clean enough".  The cleaning fee you are expecting to cover the cleaning is only basic cleaning.  Plan a "deep cleaning" expenses 2-3 times a year.  Also keep in mind that if you use the home personally for say 60 days a year, you loses 1/6 of your write-offs.

The other downside is that you will feel compelled to only travel there as you are paying for this place and it hurts paying for a vacation home and then paying for a place somewhere else at the same time.  Lastly, I hold you or your wife don't mind sleeping in other peoples spluge because those comforters aren't getting cleaned after each stay.

 

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11 minutes ago, -OZ- said:

No advice here but we've been discussing the same thing. 

I'm fairly sure we've decided to just own the primary home and take a month or two at different spots, rent instead of buy, for a decade or two. Maybe in our late 60s we'll decide to buy a place on the beach during our slow-go years. 

:thumbup: 

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24 minutes ago, E-Z Glider said:

This would be nice, but I'll be looking to maximize profits. I expect it to be booked all season long. I don't envision any friends or family ever staying there (unless they're down with us during the off-season).

I forgot to add that we rent it 2-3 weeks only. So, I’m probably not the best to answer the question

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4 minutes ago, BassNBrew said:

It ended up being a breakeven proposition.  Mountain place so between ski season and summer it was then.  Probably book 40% of the available nights.

Breakeven meaning you're income was about equal to the mortgage?

Are you saying 40% of 365 days? Or 40% of the "peak season"? Or 40% of the "available time" (any time you werent using it)?  

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1 minute ago, E-Z Glider said:

 

Breakeven meaning you're income was about equal to the mortgage?

Are you saying 40% of 365 days? Or 40% of the "peak season"? Or 40% of the "available time" (any time you werent using it)?  

Breakeven: Income plus tax deductions (depreciation) = mortgage, taxes, insurance, repairs, furnishings, cleaning, snow removal/lawn maintenance

40% of 365.  The market I was in was more of a long weekend market other that some weekly summer rentals.  

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12 minutes ago, AcerFC said:

 

47 minutes ago, BassNBrew said:

What percentage occupancy tax do you have to charge in Maryland?  Do you have to pay both state and county?

I don’t know what this means

 

In my state any time you lease a home for less than 3 months, you have to collect the same tax the hotels charge.  There's a state component and a county component.  You have to file monthly with both entities if you have no activity the quarterly is fine.  AirBnB and I assume VRBO can do this for you.  Your PM company will do this also.  It's a straight uncharge to your guests.  My town had some type of audit program to look for tax evasion.  I doubt anyone went to prison unless they were collecting the taxes and not turning them in, but the penalties and interest would not be pretty.

Also letting someone use the home for less than fair market value also has tax implications.  I believe the IRS legally lets you lease up to 2 weeks each year and not report a dime.  Not sure how the state feels about this relative to their sales tax.

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I had a place in Maui that I ran myself. In hindsight, my cheap ###, should have had a PM. 

Other than that, make sure your HOA, if you have one, is well funded. My place in Hi tripled, when the housing crisis hit. Avoid an HOA if possible. 

I’m considering a place in the mountains. Without an HOA. 

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How accessible to you does it need to be for keeping an eye on it? My wife and I have briefly thought of buying a vacation house somewhere, but anywhere that you can get a nice cheap vacation house somewhere on the beach or a lake is a few hour flight away minimum. I assume both the hassle of getting to it and keeping an eye on it for repairs would put it below the threshold where it is worth doing.

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7 hours ago, BassNBrew said:

It ended up being a breakeven proposition.  Mountain place so between ski season and summer it was then.  Probably book 40% of the available nights.

Beach homes are going to take a beating from the elements.  All your chores you do (or pay for on your current home) are going to be doubled.  Ultimately I ended up just driving 2 hours to fix crap or check on the place for missed damages and then get to pay the mgmt company a fee for a check behind me to make sure it was "clean enough".  The cleaning fee you are expecting to cover the cleaning is only basic cleaning.  Plan a "deep cleaning" expenses 2-3 times a year.  Also keep in mind that if you use the home personally for say 60 days a year, you loses 1/6 of your write-offs.

The other downside is that you will feel compelled to only travel there as you are paying for this place and it hurts paying for a vacation home and then paying for a place somewhere else at the same time.  Lastly, I hold you or your wife don't mind sleeping in other peoples spluge because those comforters aren't getting cleaned after each stay.

 

Woah man, chill with the hard sell!

Seriously though, we're just going to put $150k into a vacation fund, and whatever annual gain is our vacation budget for the next year (we'll add for inflation as we go)

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6 minutes ago, -OZ- said:

Woah man, chill with the hard sell!

Seriously though, we're just going to put $150k into a vacation fund, and whatever annual gain is our vacation budget for the next year (we'll add for inflation as we go)

Very smart move.

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9 hours ago, E-Z Glider said:

Been thinking about this for a while, but starting to get much more serious. Looking at a place at the beach (bayside, not ocean-front). The main reason I feel like it makes so much sense for me is that I'm in a somewhat unique situation where I'd mainly want to be there during the off-season (spring and fall) and would be happy renting it out during the peak season (Memorial Day to Labor Day). Our primary house is paid off and we have no car payments, so the added mortgage doesn't scare me, but I honestly feel (hope?) that we'd basically be able to cover the mortgage by renting it out during peak season. Is this realistic? In my mind, if we could rent it out most of the summer, it would basically be a free place to stay April/May and September/November and we would then own it after 20 years. I realize there is risk involved with renting and there will be additional unplanned expenses along the way.

I know there are many cons to owning a rental property (maintenance, repairs from renters, unexpected expenses, property management fees, marketing and booking, etc). I am not as familiar with all the possible pros such as tax benefits / write-offs, etc.

Any FBG's offer any personal opinions or advise on the topic? Looking for any feedback. Both good and bad.

:popcorn:

Where?

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12 hours ago, huthut said:

How accessible to you does it need to be for keeping an eye on it? My wife and I have briefly thought of buying a vacation house somewhere, but anywhere that you can get a nice cheap vacation house somewhere on the beach or a lake is a few hour flight away minimum. I assume both the hassle of getting to it and keeping an eye on it for repairs would put it below the threshold where it is worth doing.

3-4 hour drive. Would definitely hire a local property management company to handle routine repairs/cleanings/requests from renters, etc. 

 

9 hours ago, Shutout said:

Been there, done that.   Don't do it.   

Care to unpack? Id love to hear why it didnt work for you.

 

9 hours ago, TLEF316 said:

yeah, this just sounds like WAY more trouble than its worth . Gotta be easier/much lower touch ways to make your money grow.

Not looking at it as strictly a monetary investment. The payoff is having a free place to stay in the Spring and Fall and owning it at the end of the mortgage. 

 

9 hours ago, Drunken Cowboy said:

Where?

Currently considering Chincoteague, VA or Delaware (Dewey/Bethany). 

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6 minutes ago, E-Z Glider said:

3-4 hour drive. Would definitely hire a local property management company to handle routine repairs/cleanings/requests from renters, etc. 

 

Care to unpack? Id love to hear why it didnt work for you.

 

Not looking at it as strictly a monetary investment. The payoff is having a free place to stay in the Spring and Fall and owning it at the end of the mortgage. 

 

Currently considering Chincoteague, VA or Delaware (Dewey/Bethany). 

I have more advice if you come farther down the coast to NC. It does give you a longer beach season. 

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17 minutes ago, Drunken Cowboy said:

I have more advice if you come farther down the coast to NC. It does give you a longer beach season. 

Id love to, but that would be like an 8-9 hour drive (mostly on I95 :thumbdown:) for me. Not bad for extended stays, but too much for a long-weekend or an emergency trip here and there.

Do you own a place there? 

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I've owned short term and long term rentals in a very popular vacation area (Destin, FL). I also sold quite a few to investors when I was a working realtor.

The happiest day of my life was when I sold the last one off. What a royal pain in the butt. Do yourself a favor and just rent on your vacation.

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6 minutes ago, Joe Mammy said:

I've owned short term and long term rentals in a very popular vacation area (Destin, FL). I also sold quite a few to investors when I was a working realtor.

The happiest day of my life was when I sold the last one off. What a royal pain in the butt. Do yourself a favor and just rent on your vacation.

I sold mine this year and it was one of the happiest days of my life.  

It's really cool the first few years saying I'm going to my vacation home and hosting your friends and family.  That thrill wears off when you are chewing up your vacation days painting (yes you will need to paint every year of two because the people think your place is an indoor soccer arena) or rebuilding the beds frames that didn't cut it as a trampoline.  Regarding the later, one group used cinder blocks to fixed the broken supports and the PM company cleaners never caught it.  Sorry Joe, $10 an hour doesn't buy my undivided attention https://www.youtube.com/watch?v=cpJDvAjM0R8  At least you will be able to enjoy your home in the evening after working.  After you spend 2 hours hooking back up the router and TVs the way they are supposed to be, you can hop on social media and read about your friends and family vacationing in exotic places and then flip on the travel channel.

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I know VRBO has a "rate your renter" feature. Can you screen the potential renters and only accept those with good reviews? 

Would that even help?

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6 minutes ago, -OZ- said:

I know VRBO has a "rate your renter" feature. Can you screen the potential renters and only accept those with good reviews? 

Would that even help?

Unless you are managing it yourself, you really can't rate your renters.  Also if you flame them, they'll post a review in trip advisor that your home is invested with roaches.

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18 minutes ago, Joe Mammy said:

I've owned short term and long term rentals in a very popular vacation area (Destin, FL). I also sold quite a few to investors when I was a working realtor.

The happiest day of my life was when I sold the last one off. What a royal pain in the butt. Do yourself a favor and just rent on your vacation.

Similar complaints as BNB?

Appreciate the replies. Disrespectful renters and finding a good (not expecting great) PM are probably my biggest concern in this whole thing.  

 

3 minutes ago, Witz said:

Your primary house is paid off. If you’re able to swing it buy a vacation place and just don’t rent it out. Use it for you and your family. 

I'm approaching this as more of a business decision. Letting my money work for me.

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5 minutes ago, E-Z Glider said:

Similar complaints as BNB?

Appreciate the replies. Disrespectful renters and finding a good (not expecting great) PM are probably my biggest concern in this whole thing.  

 

I'm approaching this as more of a business decision. Letting my money work for me.

Will you be getting a mortgage for this property?  If so, I have other thoughts to share.

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I'll offer a different perspective.  My parents own a 3/2 condo on the water in Cocoa Beach.  They rent it through VRBO throughout the year and do quite well with it.  They net around ~$30k-$40k per year as it is paid for.  Paid $110k for it in 1999 and it is worth about 4 times that now.

You should be able to break even depending how often you want to rent it out.  Important questions are the monthly HOA (what is included?  Cable/internet/water/other utilities), expected taxes, and minimum rental requirements as many condo associations try to keep the renters out with 1-3 month minimums.  Although with more lengthy rentals they tend to take care of your place better, and you would also weed out the people who just want to party, which is what @BassNBrew   probably had to deal with. 

We go as a family all the time when it isn't rented.  I personally think it's a great investment.

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I'll add that my Dad is a retired contractor and I'm able to help him with the maintenance.  Kitchen and bath remodels.  New floors.  We enjoy that type of work though.  I imagine many people don't. 

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11 minutes ago, E-Z Glider said:

Yes

The banks have tighten up the debt to income ratios.  You mentioned you have your primary paid off so this may apply to others more than you.  The new mortgages will count in the debt column.  Your rental income to offset this will have to come from tax returns and they may require 2 years before giving you any credit.  If you are optimizing your write offs as you should (meals, travel, expenses, etc) you are likely looking at a tax loss.  This can impact you if you sell your primary and need to get another mortgage.  I've run into problems with rental property when I've sold one and not been "qualified" to buy another another.  With long term rental property where you have a standard lease, it's a lot easier to get credit for the income than a vacation rental.

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6 minutes ago, Grahamburn said:

I'll offer a different perspective.  My parents own a 3/2 condo on the water in Cocoa Beach.  They rent it through VRBO throughout the year and do quite well with it.  They net around ~$30k-$40k per year as it is paid for.  Paid $110k for it in 1999 and it is worth about 4 times that now.

You should be able to break even depending how often you want to rent it out.  Important questions are the monthly HOA (what is included?  Cable/internet/water/other utilities), expected taxes, and minimum rental requirements as many condo associations try to keep the renters out with 1-3 month minimums.  Although with more lengthy rentals they tend to take care of your place better, and you would also weed out the people who just want to party, which is what @BassNBrew   probably had to deal with. 

We go as a family all the time when it isn't rented.  I personally think it's a great investment.

 

3 minutes ago, Grahamburn said:

I'll add that my Dad is a retired contractor and I'm able to help him with the maintenance.  Kitchen and bath remodels.  New floors.  We enjoy that type of work though.  I imagine many people don't. 

Great retirement gig.  I could see doing this with something local if I wasn't working.

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49 minutes ago, BassNBrew said:

Unless you are managing it yourself, you really can't rate your renters.  Also if you flame them, they'll post a review in trip advisor that your home is invested with roaches.

I meant more along the lines of checking them before you rent to them, but that's probably also only for DIY and difficult to do when your main concern is renting the place out.

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19 hours ago, BassNBrew said:

In my state any time you lease a home for less than 3 months, you have to collect the same tax the hotels charge.  There's a state component and a county component.  You have to file monthly with both entities if you have no activity the quarterly is fine.  AirBnB and I assume VRBO can do this for you.  Your PM company will do this also.  It's a straight uncharge to your guests.  My town had some type of audit program to look for tax evasion.  I doubt anyone went to prison unless they were collecting the taxes and not turning them in, but the penalties and interest would not be pretty.

Also letting someone use the home for less than fair market value also has tax implications.  I believe the IRS legally lets you lease up to 2 weeks each year and not report a dime.  Not sure how the state feels about this relative to their sales tax.

VRBO and ABB both collect and pay for you.

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11 hours ago, E-Z Glider said:

 

 

Care to unpack? Id love to hear why it didnt work for you.

 

 

Sure thing.

This type of thing is going to depend so much on your personal situation but here's what I experienced and I think from what I've discussed with other people, its pretty typical for the most part.

-When you buy a place like this, usually it is going to be in a place that isn't right down the street. If you live in a city neighborhood, most people are looking to buy beach homes, cabins, country, etc, for example.  So that brings up the issue of convenience in getting to the place to do the work and oversight it needs, worrying about not having a set of eyeballs on it, etc. If you buy a beach house, for example, believe me, you will become very familiar with every storm blowing near your beach and you will either A) worry too much about it, B)spend too much time correcting things going on with it, C)paying someone too much to do these things, or D)all of the above. 

-A lot of people (I was one of them but I realize you may not be) buy places like these and they have this very exciting idea and visualization of what this dream place that you've wanted for so long should be.  But then you are faced with the reality that its not easy to do these things when they are far away, financial issues are involved, and definitely (definitely) when you rent it out because no matter how you set it up, other people will simply NOT look after your place the way you will and it will bother you.

-Which leads right into the next layer of the rolling snowball. IF you are married or partnered with someone who loves the idea of this place like you do but who is also a person who has high standards, it becomes miserable.  My wife is organized and thinks people should be respectful of others' property. She has high standards for cleaning her home. So when people rent out a place like this, its a frustrating and disappointing prospect when we would travel there because it was never maintained well enough.  There was always something not cleaned, always a new ding or scratch or tear in something. It just wasn't fun to spend half your time doing stuff to get it to where you would enjoy it. I know not everyone is like that but if you or your partner (or both) are then you will end up instead of having that visualization of what this place was going to be and you being able to comfortably slide in with a few bags packed and just enjoy yourself on that comfy cabin couch to....buying cheap furniture you don't care if get destroyed because nobody will take care of it and you end up feeling like you are settling for much less.  I hope that example makes some kind of sense. 

-There are a LOT of "not easy to see" costs associated with owning places like these and even if you are on top of things in trying to make it work out a little better at tax time, it just becomes a lot of work.

Its just lots of little things like that and they go on and on and pop up all the time and you just don't have enough control over the situation to reasonably plan it out. I have been a landlord (local and not) and this was more frustrating than that.  In the end, we wound up just buying a couple of weeks timeshare for the beach experience.  The weather and maintenance of ocean property is grinding. And we did end up with a cabin in the middle of nowhere in the woods but we NEVER rent it out and we found that to be a much better option for us.  Everyone has different levels of tolerance for these things but like I said I have found that my list of "gripes" seems to be fairly common with a lot of people and we seem to have a common denominator that we kinda thought about them beforehand but it wasn't the same after we experienced them for ourselves. 

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52 minutes ago, Shutout said:

Sure thing.

This type of thing is going to depend so much on your personal situation but here's what I experienced and I think from what I've discussed with other people, its pretty typical for the most part.

-When you buy a place like this, usually it is going to be in a place that isn't right down the street. If you live in a city neighborhood, most people are looking to buy beach homes, cabins, country, etc, for example.  So that brings up the issue of convenience in getting to the place to do the work and oversight it needs, worrying about not having a set of eyeballs on it, etc. If you buy a beach house, for example, believe me, you will become very familiar with every storm blowing near your beach and you will either A) worry too much about it, B)spend too much time correcting things going on with it, C)paying someone too much to do these things, or D)all of the above. 

-A lot of people (I was one of them but I realize you may not be) buy places like these and they have this very exciting idea and visualization of what this dream place that you've wanted for so long should be.  But then you are faced with the reality that its not easy to do these things when they are far away, financial issues are involved, and definitely (definitely) when you rent it out because no matter how you set it up, other people will simply NOT look after your place the way you will and it will bother you.

-Which leads right into the next layer of the rolling snowball. IF you are married or partnered with someone who loves the idea of this place like you do but who is also a person who has high standards, it becomes miserable.  My wife is organized and thinks people should be respectful of others' property. She has high standards for cleaning her home. So when people rent out a place like this, its a frustrating and disappointing prospect when we would travel there because it was never maintained well enough.  There was always something not cleaned, always a new ding or scratch or tear in something. It just wasn't fun to spend half your time doing stuff to get it to where you would enjoy it. I know not everyone is like that but if you or your partner (or both) are then you will end up instead of having that visualization of what this place was going to be and you being able to comfortably slide in with a few bags packed and just enjoy yourself on that comfy cabin couch to....buying cheap furniture you don't care if get destroyed because nobody will take care of it and you end up feeling like you are settling for much less.  I hope that example makes some kind of sense. 

-There are a LOT of "not easy to see" costs associated with owning places like these and even if you are on top of things in trying to make it work out a little better at tax time, it just becomes a lot of work.

Its just lots of little things like that and they go on and on and pop up all the time and you just don't have enough control over the situation to reasonably plan it out. I have been a landlord (local and not) and this was more frustrating than that.  In the end, we wound up just buying a couple of weeks timeshare for the beach experience.  The weather and maintenance of ocean property is grinding. And we did end up with a cabin in the middle of nowhere in the woods but we NEVER rent it out and we found that to be a much better option for us.  Everyone has different levels of tolerance for these things but like I said I have found that my list of "gripes" seems to be fairly common with a lot of people and we seem to have a common denominator that we kinda thought about them beforehand but it wasn't the same after we experienced them for ourselves. 

Great posting. 

Every trip my partner and me to an extent would be fuming about the damaged furniture and general neglect. Eventually it would boil to a point I would schedule a come to Jesus meeting with the pm company. They would blow smoke up my ### about how they have a new manager or this and supervisor of that to correct these issues. A year later we would be at the same place. 

Did I mention that strangers will be spluging all over your stuff?

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7 minutes ago, BassNBrew said:

Great posting. 

Every trip my partner and me to an extent would be fuming about the damaged furniture and general neglect. Eventually it would boil to a point I would schedule a come to Jesus meeting with the pm company. They would blow smoke up my ### about how they have a new manager or this and supervisor of that to correct these issues. A year later we would be at the same place. 

Did I mention that strangers will be spluging all over your stuff?

Yeah, if you use a PM company, 80% of your frustration is the middle men you are paying to avoid the issue in the first place.  You feel dumb for paying people good money to take care of things that they don't and when you attempt to address it, they make you out to be unreasonable (and you're exactly right about the turnover...they chew them up and spit them out and that's probably a bad indicator).  So, you are stuck, wasting money to get marginal results and frustrated because you are trying to protect your investment and (in your mind) being reasonable in asking this company to take care of something as you would want your own things taken care of. But I have never found a company that can live up to it...ever. 

I guess the best example I could give the OP to try to relate the "feel" of it, its like this-

You buy your place and its not a light decision. You have likely thought (and dreamed) of this place for years....decades, maybe.  You can see in your mind what you want it to be, how you want it to feel when you are there, what you want it to mean to you and your family. You probably have the idea that your kids and grandkids will be enjoying it, etc. 

For me, as a silly example, One of the things I wanted for my cabin was to have a really nice leather couch, positioned facing the windows, overlooking the view of the mountains and the lake below.  I could visualize/feel how it would be to have a lazy Sunday afternoon nap on that couch.  My Father-in-law talked all the time about how nice it would be to have a small fishing boat on that lake.  All these things just grabbed me and dug in.  Sound silly (it might)? Or can you see what I'm saying?  

For me, the awesome, great difference is when we went from griping about renters and worrying about that stuff to having a place that we didn't rent and one of the best feelings EVER was getting off work on a friday, driving to the cabin, walking in the door with a small travel bag, and sitting down on that couch and picking up my reading glasses...right where I left them when I was last there. 

 

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A friend does this and his advice is don’t do it as an investment — only do it if you’ll enjoy the place, and the rental income can just be gravy on top.  Lots of work and headache to rent.

We’re about to sign a contract on a place in the mountains.  (Still have a significant mortgage on our first home).  We don’t ski, but we love it up there in the Fall, and will install a pool and spend some time up there over the summer as well.  Like you, we may consider renting it out over peak season (winter, for all the ski nerds), but I’m not totally sold on it — don’t like the idea of strangers constantly trashing the place, don’t like the idea of the headaches that come with renters, and don’t like the idea of sleeping in other peoples’ filth in our nice house.  That said, we’d be passing up a nice rental income when we won’t be using it, and that income over the winter could probably pay 75% or more of the yearly carrying costs. So we may end up caving and renting (if so, only with a management company and someone to deal with all the headaches for us, even if it eats into the profit some).  We’ll see.

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3 minutes ago, Shutout said:

Yeah, if you use a PM company, 80% of your frustration is the middle men you are paying to avoid the issue in the first place.  You feel dumb for paying people good money to take care of things that they don't and when you attempt to address it, they make you out to be unreasonable (and you're exactly right about the turnover...they chew them up and spit them out and that's probably a bad indicator).  So, you are stuck, wasting money to get marginal results and frustrated because you are trying to protect your investment and (in your mind) being reasonable in asking this company to take care of something as you would want your own things taken care of. But I have never found a company that can live up to it...ever. 

I guess the best example I could give the OP to try to relate the "feel" of it, its like this-

You buy your place and its not a light decision. You have likely thought (and dreamed) of this place for years....decades, maybe.  You can see in your mind what you want it to be, how you want it to feel when you are there, what you want it to mean to you and your family. You probably have the idea that your kids and grandkids will be enjoying it, etc. 

For me, as a silly example, One of the things I wanted for my cabin was to have a really nice leather couch, positioned facing the windows, overlooking the view of the mountains and the lake below.  I could visualize/feel how it would be to have a lazy Sunday afternoon nap on that couch.  My Father-in-law talked all the time about how nice it would be to have a small fishing boat on that lake.  All these things just grabbed me and dug in.  Sound silly (it might)? Or can you see what I'm saying?  

For me, the awesome, great difference is when we went from griping about renters and worrying about that stuff to having a place that we didn't rent and one of the best feelings EVER was getting off work on a friday, driving to the cabin, walking in the door with a small travel bag, and sitting down on that couch and picking up my reading glasses...right where I left them when I was last there. 

 

I'm actually a PM for long term rentals.  Every PM company I know except mine uplifts repairs by 10%.  I still can't wrap my head around your PM have an incentive to do repairs.  Working with vendors over the years there's another dirty hidden secret.  Many of these PM companies have negotiated to only pay their vendors 80% of the invoiced amount.  That should be criminal, but it's not.  In other words, your have a $1000 HVAC repair.  The OM company charges you $1100 per your contract and pays the vendor 80% of the face amount or $800, thereby pocketing $300.

 

Oh year, I relate to the making you out to be unreasonable.  #### happens was their motto, you should expect some wear and tear.  Funny thing is that when I personally managed and cleaned it for two years, I had exactly one glass broken.  Hot tub dumps in my two years occurred once, it was 3 out of four weeks when managed.  Handling it myself was working great.  Getting up at 6 am to drive 2.5 hours to spending 10 hours cleaning and turning over 6 sets of sheets to drive 2.5 hours back that night was the suck.

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4 minutes ago, Otis said:

A friend does this and his advice is don’t do it as an investment — only do it if you’ll enjoy the place, and the rental income can just be gravy on top.  Lots of work and headache to rent.

We’re about to sign a contract on a place in the mountains.  (Still have a significant mortgage on our first home).  We don’t ski, but we love it up there in the Fall, and will install a pool and spend some time up there over the summer as well.  Like you, we may consider renting it out over peak season (winter, for all the ski nerds), but I’m not totally sold on it — don’t like the idea of strangers constantly trashing the place, don’t like the idea of the headaches that come with renters, and don’t like the idea of sleeping in other peoples’ filth in our nice house.  That said, we’d be passing up a nice rental income when we won’t be using it, and that income over the winter could probably pay 75% or more of the yearly carrying costs. So we may end up caving and renting (if so, only with a management company and someone to deal with all the headaches for us, even if it eats into the profit some).  We’ll see.

By some if you mean 40-50% and then another x% on top of that to cover replacing all the damaged crap then you are right on.

Also as mentioned above, there's a huge benefit to having your own readers laying on the table and not having to pack half of your refrigerator so your kids have ketchup for their fries.  Seriously Oats, you will get more enjoyment and save time if you work two extra weekends a year and bill out 40 hours and still be in the same place financially.

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3 minutes ago, BassNBrew said:

I'm actually a PM for long term rentals.  Every PM company I know except mine uplifts repairs by 10%.  I still can't wrap my head around your PM have an incentive to do repairs.  Working with vendors over the years there's another dirty hidden secret.  Many of these PM companies have negotiated to only pay their vendors 80% of the invoiced amount.  That should be criminal, but it's not.  In other words, your have a $1000 HVAC repair.  The OM company charges you $1100 per your contract and pays the vendor 80% of the face amount or $800, thereby pocketing $300.

 

Oh year, I relate to the making you out to be unreasonable.  #### happens was their motto, you should expect some wear and tear.  Funny thing is that when I personally managed and cleaned it for two years, I had exactly one glass broken.  Hot tub dumps in my two years occurred once, it was 3 out of four weeks when managed.  Handling it myself was working great.  Getting up at 6 am to drive 2.5 hours to spending 10 hours cleaning and turning over 6 sets of sheets to drive 2.5 hours back that night was the suck.

Example from our experience with a PM company-

Our agreement included we were to be paid on the 8th of the month and if they did a repair (stove goes out and they fix it), our agreement was they took care of anything under $500 and then took it out of the collected rent and then sent us the difference along with a receipt of the repair to explain the difference. In theory it makes sense, it's why you do this. You don't want to be 300 miles away and get a saturday night call about a leak in the sink.  they fix it, it happens.

Three months in a row we got reduced payments for several hundred dollars for the same exact part on a heat pump.  Cost was $300+ and after it repeated, we were like "hey, we just replaced this part a month ago...it should have a warranty or something. I shouldn't be paying to replace the exact same part two months in a row." The 3rd month, it was the same part "plus another part" and the cost actually went over the $500 and they should have contacted us prior.  But they didn't and we had to fight tooth and nail to get our money back on that and, in the end, we found out because we bulldogged them to get the paperwork, that it was  situation like you say.  We were charged $300+ but it turned out the actual receipt on the part was like $50 and the labor was $125 but the rest was a phantom charge that somebody pocketed.  

It was shady. 

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8 minutes ago, BassNBrew said:

By some if you mean 40-50% and then another x% on top of that to cover replacing all the damaged crap then you are right on.

Also as mentioned above, there's a huge benefit to having your own readers laying on the table and not having to pack half of your refrigerator so your kids have ketchup for their fries.  Seriously Oats, you will get more enjoyment and save time if you work two extra weekends a year and bill out 40 hours and still be in the same place financially.

Yeah. In the end I have a feeling this is where we end up, assuming our financial situation remains stable. But nice to know if the crap hits the fan we can rent to get us some help with the carrying cost. 

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