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Considering purchasing a Vacation Rental

rockit11

New Contributor
I've Read UNSCRIPTED
Nov 18, 2015
10
14
22
30
Langley AFB, Virginia
Hey All,

I've been looking at beach houses in Outer Banks, NC and have found properties around $500k that say they gross approx $70k/yr. My rough math said that translates to about $30k/yr in cashflow (paying a manager).

I've got about $120k in equity tied up in a house in UT that could serve as the 20% down for that (UT house is rented and cash flows about $600/mo).

Does that sound realistic? Are there other locations I should be looking at for vacation rentals? Any feedback is appreciated!
 

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James90

New Contributor
FASTLANE INSIDER
Jul 2, 2019
17
16
17
Hey All,

I've been looking at beach houses in Outer Banks, NC and have found properties around $500k that say they gross approx $70k/yr. My rough math said that translates to about $30k/yr in cashflow (paying a manager).

I've got about $120k in equity tied up in a house in UT that could serve as the 20% down for that (UT house is rented and cash flows about $600/mo).

Does that sound realistic? Are there other locations I should be looking at for vacation rentals? Any feedback is appreciated!

Not sure what platform you'll be on, but I've own and managed multiple Airbnb vacation rentals for 3 years in Hawaii with over 500 transactions. I set up a system to automate it to allow myself to spend about 3-4 hours a week on it doing account management, pricing, scheduling, minor repairs/maintenance.

I was able to be away for extended amounts of time, and still have it running. But, it helped ALOT to have a reliable cleaning crew to assist not only with cleaning but tiny errands. Ex. If guests lost their keys, don't check out on time, replacing room supplies, etc... And I couldn't always count on my cleaning crew to be on-call, so it also helped tremendously that I lived 10 minutes away.

Tips:
Double-check/ triple check local zoning laws for vacation rental. And even then you'll still run the risk of it changing. (look at San Francisco, Amsterdam, New York)

Calculate your expenses with some tolerance, and anticipate more things to wear down because of high guest turn over rates. Also, they'll be repairs where you'll have to hire someone to perform since your not present. I was away one time, and the guests were complaining the appliances weren't working. I had no chance but to pay someone to look at it, and they charged me $100 just to reset some breakers:mad:

I would first look at somewhere in your area first because I go out-of-state. Develop a system, and sharpen it to where it'll save you time, headache, and money.

Some questions you may want to ask yourself...

1. Since your out of state, I'm assuming it will be a local property manager... How much leg-work is he/she willing to perform if unexpected events arise?

2. If local law changes their stance on vacation rentals, will you be able to still cashflow with long-term tenants?


Let me know if you have any more questions. That's all I got for now.
 
OP
OP
rockit11

rockit11

New Contributor
I've Read UNSCRIPTED
Nov 18, 2015
10
14
22
30
Langley AFB, Virginia
Not sure what platform you'll be on, but I've own and managed multiple Airbnb vacation rentals for 3 years in Hawaii with over 500 transactions. I set up a system to automate it to allow myself to spend about 3-4 hours a week on it doing account management, pricing, scheduling, minor repairs/maintenance.

I was able to be away for extended amounts of time, and still have it running. But, it helped ALOT to have a reliable cleaning crew to assist not only with cleaning but tiny errands. Ex. If guests lost their keys, don't check out on time, replacing room supplies, etc... And I couldn't always count on my cleaning crew to be on-call, so it also helped tremendously that I lived 10 minutes away.

Tips:
Double-check/ triple check local zoning laws for vacation rental. And even then you'll still run the risk of it changing. (look at San Francisco, Amsterdam, New York)

Calculate your expenses with some tolerance, and anticipate more things to wear down because of high guest turn over rates. Also, they'll be repairs where you'll have to hire someone to perform since your not present. I was away one time, and the guests were complaining the appliances weren't working. I had no chance but to pay someone to look at it, and they charged me $100 just to reset some breakers:mad:

I would first look at somewhere in your area first because I go out-of-state. Develop a system, and sharpen it to where it'll save you time, headache, and money.

Some questions you may want to ask yourself...

1. Since your out of state, I'm assuming it will be a local property manager... How much leg-work is he/she willing to perform if unexpected events arise?

2. If local law changes their stance on vacation rentals, will you be able to still cashflow with long-term tenants?


Let me know if you have any more questions. That's all I got for now.
Thanks James, good thoughts! Air BnB is definitely pretty management intensive if you're doing short term rentals. My place in VA has a cottage on it that I put on BnB. I'm finding month to month rentals are a better return on your time for that specific case.

Places like OBX and FL are just attractive because they're more in-demand vacation spots (read higher margin). OBX is about 3hrs from me, but I would pay a manager in that scenario.
 

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