Should I buy a condo in Incline Village, NV?

[LightStache]

After a year-long travel sabbatical, I'm back to corporate drone life in Southern California and not liking it. I'm making $200K and only saving 25%. Ideally I'd like to be an independent consultant working six months a year, traveling the other six months, but I haven't felt like I'm in a strong enough financial position to withstand a long dry spell.

My NW is $750K with $220K in taxable, $515K in retirement, $105K in real estate, and $100K in strategic (3.75%) debt.

While I have W2 income, I'm considering buying a condo in Incline Village, NV. I'd use a VA loan with 0% down and plan to officially move there in February 2025 when my currently lease expires. Sooner if I get fired from my job and can break my lease.

I'm looking at a 3 br for around $700K, so ~$5K/mo at current rates. I'd plan to put it on the short term rental market and figure out somewhere else to crash while it's rented. I'm single with no pets. I figure if the STR doesn't work out I can get a couple roommates for $1K/mo each. That would still have me on the hook for $3K/mo plus utilities.

My biggest worries are 1) losing my income, 2) short term rental restrictions, and 3) insurance cost. I feel like I should strike while the iron's hot, but I've owned rental property before and know what an obligation this will be. Is this a good idea or do I need to be more patient?

[Villanelle]

Generally, a VA loan requires you to move in within 60 days. 

[LightStache]

Generally, a VA loan requires you to move in within 60 days. 

Yes that's true. You can go up to 12 months if the veteran certifies that they will occupy the home and there's a particular future event that will make it possible for the veteran to personally occupy the property.

Any other thoughts on the personal financial or location-related risks?

[FINate]

VA loan questions aside, of which I know nothing...

My main concern is your "iron's hot" thinking. How can you be sure? I don't know the real estate market in that area, so maybe it's different as a winter/summer vacation destination, but in most locations the seasonal trend is for higher prices in spring with deals to be had in fall as owners contemplate 6+ months of carrying costs until the next selling season.

Personally, I would not be excited about buying a property and getting it furnished/prepped for use as a short-term rental for a few months. My main concerns with this would be: cost to furnish, risk, insurance, mortgage terms (in addition to VA specific issues), higher mortgage rates (for vacation rental vs. owner occupied), and tax complications. It just doesn't seem worth the risk and hassle to buy right now. I would rather wait until Oct-Nov to see if I can negotiate a great deal on something, and if that didn't work be more aggressive on making strong offers in Jan-Feb.

To be clear I'm not telling you what to do, please don't blame me if you wait and prices go nuts in the next year :) I just think it's entirely unpredictable.

[clarkfan1979]

After a year-long travel sabbatical, I'm back to corporate drone life in Southern California and not liking it. I'm making $200K and only saving 25%. Ideally I'd like to be an independent consultant working six months a year, traveling the other six months, but I haven't felt like I'm in a strong enough financial position to withstand a long dry spell.

My NW is $750K with $220K in taxable, $515K in retirement, $105K in real estate, and $100K in strategic (3.75%) debt.

While I have W2 income, I'm considering buying a condo in Incline Village, NV. I'd use a VA loan with 0% down and plan to officially move there in February 2025 when my currently lease expires. Sooner if I get fired from my job and can break my lease.

I'm looking at a 3 br for around $700K, so ~$5K/mo at current rates. I'd plan to put it on the short term rental market and figure out somewhere else to crash while it's rented. I'm single with no pets. I figure if the STR doesn't work out I can get a couple roommates for $1K/mo each. That would still have me on the hook for $3K/mo plus utilities.

My biggest worries are 1) losing my income, 2) short term rental restrictions, and 3) insurance cost. I feel like I should strike while the iron's hot, but I've owned rental property before and know what an obligation this will be. Is this a good idea or do I need to be more patient?

The biggest risk is making a mistake with understanding the STR rules and not being able to rent it out short-term to make your mortgage payment. You would need to make sure you know the STR rules very well to reduce your risk. Everything else is pretty much personal opinion.

I have a mid-term rental in Koloa, HI with 2 units (upper & lower). I live in southern Colorado and I've been self-managing for 5 years. If I posted a question on this forum asking if it would be a good idea to keep the rental and self-manage from 3,400 miles away about 90% of the people on this forum would tell me not to do it and it's not worth the headache. That doesn't mean that it's bad advice. It just means that based on their personal preference it's not worth it to them.

However, for me personally, the mid-term rental on Kauai has been one of the most gratifying experiences of my life. I'm a college professor that makes 60K/year and I would never have imagined in my wildest dreams that I could own a 1.25 million dollar house on Kauai and also stay at the property 1-2 months/year. Since it became a rental in October 2019, I've had about 450K in equity gain and the rent increased from $4300/month to $6300/month. PITI is $3150, but with utilities and GE tax, the total monthly cost is $3600/month. There are also opportunities to build additional units on the property in the future when I get closer to my FIRE number.

[LightStache]

Appreciate your thoughts all. To clarify, I'd buy the condo in the next few months, put it on the short- or medium-term rental market, and move into it in February when my lease ends. I'll move earlier if I get fired from my job.

Then after I move into it, I'd still keep it on the rental market and find temporary lodging, like a travel trailer, when I have a booked guest.

What I mean by "strike while the iron's hot" is buy while I have $200K of W2 income and can qualify for a mortgage.

After being voluntarily homeless for 12 months, I've decided I want to have at least one vacation rental property before I pull the plug on full-time work. I love the mountains and having the property in Nevada instead of California will allow me to escape income tax in FIRE.

I'd be open to other locations. Proximity to a large town and my family in Southern California are factors.

[GilesMM]

Incline Village is hot with no signs of cooling off other than threats from STR regulations.  You could probably rent it 30% of the time at $150/night, so $1500/mo minus AirBnb expenses of maybe $300, so $1200/mo income.  Not a barn-burner on a $5000/mo note, but better than nothing if that is where you want to live.

[Telecaster]

This idea sounds kind of intriguing.  I can think of shittier places to live than on a ski hill in Tahoe.   Before you get too carried away you need to break out the pencil sharpener and the green eye shade.  There are a lot of question marks and assumptions.  But main thing is it sounds like you are going to need a job at some point, right?  Can you work from there?   If you can't work from there the whole plan becomes way too risky.  If you buy this place and then need to leave for work then there are a whole bunch of versions of this story where things go to shit in a hurry. 

I'd plan to put it on the short term rental market and figure out somewhere else to crash while it's rented.

 

I see you clarified down below, but this sounds a little seat of the pants to me.   You need to manage it as an STR or not.  Otherwise, you'll functionally wind up paying for two places to live.  If you are going to do that, try for multi-plex where you live in one of the units.  And STR have upfront costs.   I dunno.  There are lots of question marks.  Most of your answers are "I'll wing it."  "Wing it" is not a plan. 

So, I see many landmines and pitfalls with your plan.   But that doesn't mean you shouldn't think about it. Don't fall in love with the idea. But figuring out a way to live in a ski town in Tahoe sounds like a good project to me.  Work on it for a while and let us know. 

[LightStache]

What about this fourplex in Reno instead?

https://www.realtor.com/realestateandhomes-detail/590-Denslowe-Dr_Reno_NV_89512_M22598-89404?from=srp-list-card

It looks like rents are $1,300 so if I live in one of the units it'd be $2,500/mo out of pocket. That's obviously a lot more than renting the equivalent but at least I'd be building equity.

[FINate]

What about this fourplex in Reno instead?

https://www.realtor.com/realestateandhomes-detail/590-Denslowe-Dr_Reno_NV_89512_M22598-89404?from=srp-list-card

It looks like rents are $1,300 so if I live in one of the units it'd be $2,500/mo out of pocket. That's obviously a lot more than renting the equivalent but at least I'd be building equity.

If you're going to buy an investment property and become a landlord, then evaluate potential properties as rentals first. It's fine to live in one of the units, very nice way to keep an eye on the other units. Think of the unit you occupy as imputed rent. But make sure above all else it's a good rental.

That said, the fourplex you linked to (on the surface) isn't a good investment property. With all four units rented it's cash-flow negative on the mortgage alone, even worse with other expenses like insurance, maintenance, etc.

To be transparent with my biases, which come through in my comments on other threads, I prefer cities like Reno over resort towns like Incline Village. So I personally find the idea of living in Reno better, but that's me. Just know the trade-offs involved. Incline Village has a pretty alpine vibe, with easy access to the lake and skiing and so on. But you also get resort town prices, resort town crowds, less dining options, and limited healthcare.  Reno is a high desert climate, so hotter summers and milder winters with much less snow. Way more to do, lots of diverse dining and entertainment options. Much better access to healthcare. For me, day-to-day living is way better in Reno.

If I were buying in Reno my plan would be to look for a small house/condo/townhouse near Midtown. Walkable and bikeable with good restaurants and away from the casinos. Tahoe is a short 30 minutes away, though the problem with Tahoe is that it's so ease to access from the Bay Area's ~8M people. So I would probably make more use of stuff that's slightly further from the BA (though closer to me) and less impacted. Such as getting a season pass at Mt Rose and mountain bike the trails up that way, north of Reno, and towards Carson City. Or going to the Eastern Sierras between Mono Lake and Tahoe... an easy 1.5 hr drive from Reno but much more difficult to access from California's population centers.

But again, this is all based on my preferences. You do you. Whatever you decide, I still believe you don't need to rush to buy something immediately. Instead, I would take some scouting trips in different seasons. Explore different neighborhoods, get a sense for the vibe. And start watching and learning the market.

[spartana]

Why not look at a place in Big Bear Lake if you want to stay close to people and things in SoCal? You can airbnb it, use it yourself as often as you want, self-manage, have family and friends up for a day or two, etc. Not Tahoe of course but perhaps a middle ground that's immediately useable for now.

Also, if you're single with no kids or pets why not just rent a room or shared place for a fraction of the cost of renting an expensive place in SoCal? Your salary is high enough that you should be able to save a lot more then 25%.