any absentee home owners?

Discussion in 'The Lounge' started by jacksonpt, Jan 17, 2008.

  1. jacksonpt

    jacksonpt Turbo Monkey

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    In my never ending quest to find a million dollar idea, I'm now kicking around the idea of buying a vacation rental property. The initial investment is a lot more than I was initially thinking, but the rates these kinds of places charge during peak vacation time is astronomical.

    The problem is that the property would be ~5 hours away, so I couldn't exactly run over after work some night to fix a leaky faucet.

    Anyone rent out property, especially in another state/area? Care to share your experience?
     

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  2. N8 v2.0

    N8 v2.0 Not the sharpest tool in the shed

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    i noes some absinthe homeowners
     
  3. dan-o

    dan-o Turbo Monkey

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    You could always pay a property management company to handle the rental/upkeep for you. Cuts into the profit but it would allow you to offer a better product and probably have better occupancy rates which would offset the cost. Ask BrianHCM how he handles his tahoe rental, too.
     
  4. jonKranked

    jonKranked Press Button, Receive Stupid

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    this was going to be my comment.


    If you have the capital to invest, real estate is one of THE best things to invest in. Especially now with house prices on the decline.
     
  5. jacksonpt

    jacksonpt Turbo Monkey

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    Yea, it's not really a question of whether or not it's a good investment, it's a question of what's required to keep the property up and how does that relate to me being 5 hours away.
     
  6. Heidi

    Heidi Der hund ist laut und braun

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    I am - we have a property management company take care of everything.
     
  7. Westy

    Westy the teste

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    What do they charge? Flat rate or a percentage?
     
  8. Heidi

    Heidi Der hund ist laut und braun

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    Percentage of rent...so a flat rate. It's worth it because it's so far away.
     
  9. jacksonpt

    jacksonpt Turbo Monkey

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    Are there things that "take care of everything" entails that you didn't think about at first? I'm considering a beach house, so it will have to be opened in the spring, closed in the fall, then general maintenance/upkeep. Is cleaning between rentals an issue? I'm just wondering what sorts of things I'm not thinking about.
     
  10. Heidi

    Heidi Der hund ist laut und braun

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    So far, no, they have been great and we're going on two years. If you're going this avenue, I'd research companies in the area and maybe get some referrals from realtors or other absentee owners. We have had the same renter in one of them for 2 years now and the other one has had one turnover and they arranged for the cleaning.
     
  11. ito

    ito Mr. Schwinn Effing Armstrong

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    I have a friend living/working in the Bay Area who is renting out property in Spokane, WA. From what he was telling me shopping for someone to manage his property was kind of like looking for a good landlord. Took a while, but totally worth it.

    He says he feels a little disconnected from it all, but it keeps the whole thing from being a headache. He doesn't have to worry about confrontations with his renter's, the property manager is responsible for that, and I believe should anything happen to the property the PM can be held liable. From the sound of it he was quite happy with his situation.
     
  12. Barbaton

    Barbaton Turbo Monkey

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    We have a second home. First renter was a disaster. Con artist who took locals for about $120K to write a play. Didn't pay the rent either. We found out when there was a lean put on the house.

    Rental agent ate it since we'd explicitly asked not to put that person in our house since we were suspicious.

    Now, we just let a local teacher friend of ours house-sit it when we're not there.

    Sounds like a great idea but a very hard way to make money and not worth the hassle. The only reason to have a second home is if you like the area and plan on using it yourself for vacations.
     
  13. brungeman

    brungeman I give a shirt

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    I have land at the beach... when we bought it, we had all intentions of building on it. After a long look at the amount of money put in to the amount of money taken out per year, you will most likely loose money every year. (this is taking into account taxes, mortgage, insurance, rental management company and yearly upkeep.)

    in most cases, (dealing with real estate,) the money is not in rentals... the money is in equity and resale. :thumb:
     
  14. dante

    dante Unabomber

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    the only thing I've thought about was buying property at a decent DH mtn - rent it in the wintertime (when you actually make money off of skiers), and then stay in it in the summertime when there's nobody there so you can DH all day, all weekend. think that buying a place and using it during the "in-demand" season would negate any savings/income you'd be looking for (instead of paying $1200/week for a place, you're staying at your own home and *losing* $1200 b/c you're not renting it out then...).
     
  15. jacksonpt

    jacksonpt Turbo Monkey

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    I'm not sure if this is assumed from my initial post but the rest of you aren't in this position, or if it was not understood, but my rental will be by the week. It's intended to be a vacation home that people rent for a week or two when they go on vacation.

    Not sure if that changes the conversation at all, but...
     
  16. Barbaton

    Barbaton Turbo Monkey

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    You'll definitely need to hire an agent, then, to keep it up between rentals, change the sheets, clean up, etc.

    If, by the time you've paid property taxes, upkeep, rental agent fees, etc, and you're willing to assume whatever liabilities you have to assume, you think you can still make back your initial investment and then make money, then go for it.:monkeydance:
     
  17. brungeman

    brungeman I give a shirt

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    as I stated... we intended on building a beach house for rental purposes! even with the popularity of the location... the season is short, and you will always be paying more out than you take in in rental revenue! If you are thinking that the rentals will be where you make your money DON'T DO IT!... buy the property with the intent of having it for a few years, building equity in it then selling at a proffit etc. In most cases you will not make money from just renting it!
     
  18. Westy

    Westy the teste

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    Is this in the North? What would you do for the 9 months outside the beach vacation season?
     
  19. narlus

    narlus Eastcoast Softcore
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  20. NuMexJoe

    NuMexJoe Monkey

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    The two differences that come to mind regarding vacation rentals vs. a long-term rental are 1) Property Mgt. firms generally get a much larger take from the former, for dealing w/ cleaning, key pick-up, etc.; and 2) you need to be aware of the tax implications of how often you use the property. Above a certain threshold (2 weeks/year?), it just becomes a vacation home and you can't take advantage of depreciation schedules, etc. (going from memory here). I'll also repeat the advice others have already offered; invest a good amount of time in finding the right property manager, and don't just go on someone's recommendation. Check the references. My $.02. Good luck!
    - Joe

     
  21. Serial Midget

    Serial Midget Al Bundy

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    Not your situation but... in the 90s I was able to buy 2 houses at extremely cheap prices. One for $26,500 and another for $13,000 - both where extreme fixer-uppers that no bank would touch. I purchased them outright and invested another $20,000.00 between the 2 of them. I considered renting them but didn't want the headaches that I know would have come from renters who seek this sort of low cost housing. It took me 1 year to sell the first house for 72,000.00 and 9 months to sell the second home for $56,000 - I carried 15 year contracts for both and experienced ZERO issues. The first house was paid off early last year and the second house will be paid off in June or July of this year. In addition to the capital gains on the homes, I also collected 15 years worth of interest - this income helped me get through my bum years of 2000 - 2005.

    So... not what you expressed interest in but - people do this sort of thing all the time. After the initial investment and labor you become a banker while the new homeowner assumes liability for your investment. Good times. :)

    EDIT: Holy Jeebus - I sound Republican!
     
  22. Brian HCM#1

    Brian HCM#1 MMMMMMMMM BEER!!!!!!!!!!

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    I definitely isn't a "Get Rich" kinda deal. It's more like a boat anchor;) We are most of the time at a negative (tax write off). On a good year for winter it rents mostly weekends occasional full weeks. Summer (for us up until the last 2 summer have been great) They tend to rent for weeks at a time because the kids are out of school. Dead time is about 6 months out of the year. Labor Day until Thanksgiving/Xmasish and mid April-mid June very dead, full mortgage and bills, no income at all. We have a property management take care of the repairs, unless I'll be up there to fix it. Most of the time it doesn't pay for me to drive there and back for a $100-$250 repair. Our management company charges 25%, that includes cleaning and making sure everything is locked up and in good working condition. We also handle rentals on our own, but to only friends and people who we work with, otherwise we'll have them used the property management as they have to give them a Credit Card, that covers any potential damage they may cause by parties getting out of hand.