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Official forum SIG Pro enthusiast |
My first experience being a landlord was quite painful and educational. I swore I would never again consider something so stress inducing. That being said I find myself curious about the prospect of buying a vacation rental beach house somewhere along coastal North Carolina. In the next year or two I should have paid off all of my student loans. Hopefully around then interest rates will be more attractive and will be able to comfortably afford a second mortgage so the idea of a vacation rental and second income stream is attractive. To our fellow forum members who had or currently have vacation rental houses how has your experience been? I’ve come up with a quick pros and cons list. What am I missing? Reasons to get a vacation rental beach house: - second income stream - having a place to say 2 weeks with no worry about booking or availability - renters help pay mortgage Reasons not to get a vacation rental beach house: - hurricanes - damage from renters - maintaining a 2nd house in a salty, hostile environment (especially hostile towards AC units) - managing the property/ renters or having to pay someone to deal with that crap Thanks!!! ~~~~~~~~~~~~~~~~~~~ The price of liberty and even of common humanity is eternal vigilance | ||
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Member |
A family member has a condo they rent in Myrtle Beach. I dont know all the in and outs but some of the things I have heard: 1) Rental company/ management company takes a pretty fair cut. 2) Rental income usually does not even cover monthly expenses. 3) Unexpected expenses. HOA required $6,000 per unit for new siding after storm damage. 4) You do not have complete control of when you can use your own property when controlled by a prop management company. You still have to schedule your own vacations. | |||
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Optimistic Cynic |
Investigate how much a rental agency will charge to "manage" a property. Realize that what they make off of you is unlikely to be a lot more than it would cost you to do it yourself. In my experience, having been a beach property renter every year for over 30 years, is that very very few owners choose to manage their own rental properties, the hassle factor, and trashy renters who are unwilling or unable to pay the rent are just too burdensome. The conventional wisdom is that a beach house or condo is a long-term capital investment, the income will barely, if at all, pay the carrying costs. You make your money on the back end when you sell it at a vastly inflated price over what you paid. Very tempting idea to have a beach house of your very own at your disposal, but it is a non-trivial expense. A lot depends on how afr away you are from your proposed property. You will get a call in the middle of the night, "the toilet is overflowing, and the rental agent isn't answering their phone! My baby is sick! If you aren't here in half an hour we are calling the health department." | |||
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Get my pies outta the oven! |
Unless you have multiple units and you’re retired and that’s all you do is manage them or pay a healthy amount of $$$ to a management company, I don’t know if it’s really worth all the effort and hassle. I owned a condo and ended up renting it out for 8 years after getting married and frankly was relived when I was able to finally sell it. | |||
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Lawyers, Guns and Money |
That's right. You make your money by buying right, and selling right. You don't make your money on property management. There are exceptions, of course. 30 years ago we started renting a house at Santa Rosa Beach on 30A. It was very peaceful then, between Destin and Panama City. We rented from a very nice lady in St. Louis. Her husband was a doctor here. The house was their hobby and their renters were always repeat customers. She was able to keep it rented without a management company and her rental prices reflected that. She went there frequently and they did a lot of the maintenance themselves. It was a good deal for everyone and she made out like a bandit when she eventually (recently) sold. "Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." -- Justice Janice Rogers Brown "The United States government is the largest criminal enterprise on earth." -rduckwor | |||
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Member |
My folks bought a beach house in NJ in 1998 and rented it out for most of the summer each year until they retired and moved there full time around 2006. They easily charged enough rent in the summer to cover the mortgage for the whole year. Sure, they did a lot of repairs and upgrades, but that was all part of the tax plan to offset rental income. They had realtors help out when they couldn't find their own renters or get down there for the changeovers. But decent beach houses there still start at $5k per WEEK in the high season. And you can probably rent it out once in a while in the offseason. IIRC, my folks paid $389k for that house and it would sell for $2 million tomorrow. | |||
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Thank you Very little |
Owned a condo in Daytona, it did well enough to just cover the expenses post fees, they had a management group in the building we used, this was before VBRO. Fees were too high but there were not a lot of alternatives and they did book a lot of stays, we never got damage lucky enough, it was a higher cost location, and we blocked it out during certain times of the year to keep the spring break kid out of the condo. Damage risk at those times wasn't worth the money. If I were doing it a good local management company may be worth it if you don't have time to go down and keep up on it, inspect, have people on contract to do repairs etc, if you do then maybe VBRO is the way to go.. | |||
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The success of a solution usually depends upon your point of view |
My friend has a beach house on the gulf coast in MS they rent out through VRBO. It has gone very well for them due to a couple of factors. -they live local and can manage it themselves. -it is a single family home so no condo fees and there is not an HOA. -it is a high end rental that brings in top dollar for the market. The location has nothing between the house and the gulf except hwy 90. Miles of beaches right acoss the road. -location, location, location! There is something for everyone nearby, casinos, shopping, fishing, great restaurants. It doesn’t depend on a niche market. IIRC, the first full year of renting it and an occupancy rate in the upper 70% range. -he bought the property and built the house. It is what he does. Because of that he was able to get the house appraised for a little over 3 times what it cost him for the lot and the build. He spent a lot of time and enery looking for the right lot. He found/created the perfect storm. Without all those factors falling in to place I think it would be a different story. “We truly live in a wondrous age of stupid.” - 83v45magna "I think it's important that people understand free speech doesn't mean free from consequences societally or politically or culturally." -Pranjit Kalita, founder and CIO of Birkoa Capital Management | |||
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The Ice Cream Man |
AFAIK, if you buy it right, and can afford single-family ocean front/first row, and it is actually zoned for short-term rentals, you can do quite well. You will have to build your own cleaning/management and repair team. | |||
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Green grass and high tides |
Not no, but hell no. Now if you want a beach house that is another story. And if that is the case. Maybe trying to work something out where family and friends can rent at a family and friends rate kind of a deal. That "might" be something worth considering. I would never do such as what you said in the op myself. "Practice like you want to play in the game" | |||
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Not really from Vienna |
Never had any on the beach but have had a couple in Colorado. I got tired of spending my 2 weeks per year there doing maintenance and repairs. It was difficult to find any workers who were willing (and available) to do the work for us. And this was before covid was invented, changing the work ethic for the worse. We sold both of them. I suggest paying down your current mortgage at a more rapid pace before signing up for an additional one. | |||
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Member |
We go to the Outer Banks several times a year. Typically, we rent a condo on the beach at Nags Head. This year we are going in September to save a bit on the rental price. For one week in a 3 BR 3 Bath condo we will pay $4200. In the past we considered buying a property there since we enjoy it so much, but never pulled the trigger. Had we done so at the time we would have had no problem covering the mortgage, property management and maintenance costs, especially in light of how rental prices have increased. I suspect nowadays property prices reflect the current rental rates and I have no idea if one could cover expenses with the size of the mortgage that would be necessary. Like most things in real estate, it boils down to location and timing. "The world is too dangerous to live in-not because of the people who do evil, but because of the people who sit and let it happen." (Albert Einstein) | |||
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Don't Panic |
I've owned a rental home in Kill Devil Hills for 10 years or so. I don't live locally so the option of self-managing was never on the table. I have contracted with one of the leading property managers there who lists the house, has a website to take bookings, bills and collects payments, cleans between guests (leases are one-week) and manages guest complaints/maintenance requests. It's been profitable and (mostly) fun. The thing is, it's a beach house. Meaning that the draw (sun, salt, water, sand) is also the drawback - lots of wear and tear by the weather. Then, factor in that it is full of guests for 6 months, who pay a pretty penny but who have no personal consequence to wear and tear. So the off-season means a lot of maintenance/repair/upgrade work. You have to pay to play - the guests expect everything to look nice and to work. That's on you, as the owner. And keeping on top of stuff is really not optional - the property managers pay attention and won't deal with houses in poor shape. So the cash flow is positive during the season (yay!) but really negative on the off season (no guests but lots of contractor invoices. ) | |||
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thin skin can't win |
Let's just start with if you view this as an "or" decision you're setting yourself up for financial and emotional frustration. There is no way I'm going to try to manage and maintain a property that's not next door to my home, and everyone I know who has lived to regret it. You only have integrity once. - imprezaguy02 | |||
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Official forum SIG Pro enthusiast |
If you understood the experience of managing my rental and the unfathomable cluster that was you would be shocked I even made this post. I had the best tenant you could ever hope to have followed by one that caused in excess of $15,000 in damages and repairs by the time I sold the house. ~~~~~~~~~~~~~~~~~~~ The price of liberty and even of common humanity is eternal vigilance | |||
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Ammoholic |
I had an interesting conversation with a fellow who had been buying rental properties for years. His take was that you had to buy it such that it made financial sense with a property management company managing it for you (and taking their 10% or whatever the going rate is in your area). His assertion was that if you have to deal with the day to day hassles you won’t be in the rental business for long. I also have a long time friend who has owned and managed her own rental properties for years, but she is both one of the most stubborn and one of the toughest people I’ve ever met, so maybe she’s just the exception that proves the rule. | |||
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As Extraordinary as Everyone Else |
Stickman I’ve had a few drinks tonight so I’ll wait until tomorrow evening to answer in detail. We owned a rental home on Hatteras Island for 14 years and have a few stories to tell! Tomorrow… ------------------ Eddie Our Founding Fathers were men who understood that the right thing is not necessarily the written thing. -kkina | |||
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Member |
Something tells me I'd like to put a few beers on the table with you and stickman, and then sit back and listen to all the stories! God bless America. | |||
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More persistent than capable |
I would price insurance, if you can get it for beachfront, first. Favorite rental story: Fire Dept. calls and needs me right now. The resort rented a room to two males, there were eleven people in the unit when the FD arrived. Renters were roasting a pig in the bathtub, it was not cast iron and tile but fiberglass. I don’t think the pig was edible…… Lick the lollipop of mediocrity once and you suck forever. | |||
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Seeker of Clarity |
As a renter of such a property, let me tell you that what I appreciate most about the house we rent, is that my eyes don't glom onto everything that needs done. If I owned it, they would. I need to get this done, I need to get that done. My Debbie Downer advice: steer that extra loot from your student loans to your kiddos 529s. That way, they won't have student loans! The max deductible contribution is something like $16k/year/child. | |||
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