Money Matters
bmo88
member
Dear Community,
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Buying a rental/vacation property
Hello MMers!
Just curious about other's experiences with buying and owning rental properties. DH and I are considering buying a mountain property that is about 2 hours from our current home. The main reason would be to have a place to go, especially once we have a family and spend time throughout the year. We are also planning on buying in close proximity (within 20 minutes) of a ski resort so that we could potentially rent out the property throughout the year. This would not be the main purpose of the property, but it would be a nice bonus. We are planning to spend $160,000 or less and probably buy a fixer upper to invest some time/money in over the years. So the mortgage would not be a concern to pay with our budget.
Our dream property would end up looking like this...http://jeffreal.idxbroker.com/idx/photogallery/a084/S393077
So, who has experience owning a rental property or vacation home? What has your experience been like?
Re: Buying a rental/vacation property
Don't get me wrong, I love the idea, but we only get so much vacation time and I want to see the world. Not feel like I have to go to the beach/lake/ski house.
Just a thought though.....it might be worth looking into a condo or something similar just because then you wouldn't have to worry about the exterior maintainence.
Since it sounds like you all want to own this long term, I'd definitely check out how well this area appreciates over time.
Analyze how much you will use the house (vacation savings) vs. the monthly cost to maintain it (ie insurance, property taxes, mortgage). You'll also want to take a hard look at how much you will use it, since you plan to use it as a rental the rest of the time. Obviously, rental income will defray some of your costs but then, the more you use it for your family (the primary purpose) the less rental income you will have.
Rental income: really analyze how much rental income you can expect and be conservative in your analysis. For example, since it is near a ski resort, there might be great rental income in the winter, but minimal to no rental income during warmer parts of the year. Check sites like AirBnB and VRBO for other vacation rental homes in the area. It should give you a good look at both pricing and vacancy rates for the area.
You're far enough away you'll need a good relationship with a property manager and a house cleaner and/or house cleaning service. You might also look at hiring an independent contractor via Craigs List (or something like that) who would both manage the property and/or clean it. Obviously vet them and meet them in person. I saw a part-time ad on CL about a year ago where someone was looking for a person who would just meet guests coming in to rent the owner's French Quarter vacation rental condo, give them the lay down of the place, and give them the keys. I still kick myself I didn't apply!
But, keep these kind of costs in mind also. For permanent renters, the place only needs to be cleaned between tenants. For vacation rentals, the place needs to be cleaned between each stay. Though, often, you can charge a cleaning fee. Something else to check out when you are reviewing what other vacation rentals, rent out for.
For a loan on a non-owner occupied property, you will need at least a 20-30% down payment. You can save a substantial amount on insurance if you opt to not have the contents insured...or minimal contents insurance. Because, think about it, your whole life (contents wise) will not be in this vacation home. It will be furniture, appliances, and that's about it.
For insurance, and I live in an area that has insanely high rates, I've found my insurance rate is lower for my non-owner occupied house than for my personal home, because there is no contents insurance needed. However, since it is not continually occupied by somebody (yourself or a tenant), that could raise the rate. For example, while I've been doing the rehab work on my rental duplex, my insurance is about $156/month because it isn't occupied. However, once I have permanent tenants living there, it will drop down to $134/month. So it's still not a huge difference, relatively speaking.
Contrary to popular belief, vacation renters tend to be much easier on homes than permanent renters. At least that is the gist I get from my real estate investing forum and from my own (albeit very limited) experience. Which is not to say there aren't bad apples out there, but your average vacation renter is going to be more affluent and with a more responsible personality, as compared to the general population.