Author Topic: questions about buying a vacation home to both use and rent out  (Read 3501 times)

tag

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We are starting a conversation about buying another home 1-3 hours from where we live to use as a cabin/vacation house and we would intend to list it on VBRO and similar sites as well. We would plan to rent it out FAR more than we would use it ourselves.

This basically seems like a good idea because we could collect well on it as a vacation rental, so it seems.

We're in very early stages in this conversation, I don't even know what to ask. Maybe my question is: what questions should we be asking ourselves and others!

We are saving about 41% of income right now and putting another 25% (ish) towards our HELOC which has a balance of $270k. We own two other houses outright which have tenants.

I guess I'm just thinking outloud here.....

Would we only do this if we could pay for the vacation house in cash? We can't do that.
Would we do the standard 20% down payment or wait until we could put down considerably more if that is the MMM way to do it?
Would we not put much down with the plan of being able to pay huge mortgage payments with all of the income it generated? Doesn't seem like the MMM way to do things.

We'd plan to buy in Asheville, North Carolina - very popular place for local, domestic and even international travel.

I'd really appreciate any comments any of you have!

Catbert

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Re: questions about buying a vacation home to both use and rent out
« Reply #1 on: May 20, 2013, 01:10:59 PM »
We have a vacation home about 2 hours from our primary residence.  I enjoy it but definitely not MMM approved!  (We are fully retired and can afford it.)  Things to think about:

Is this a weekly rental area or monthly.  Lots more work if weekly.
How are you going to get it cleaned between renters?  Check for damage?  Transfer keys?  Handle maintenance? (Answer:$$$$)
How long is the season?  Won't renters want it the same time you do?
If the whole rental thing doesn't work out can you happily afford to pay all costs as your vacation home.

We never planned to rent ours out other than casually.  We have loaned to family members, bartered (with massage therapist) and even done home exchanges.

nktokyo

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Re: questions about buying a vacation home to both use and rent out
« Reply #2 on: May 20, 2013, 04:25:51 PM »
Real estate investor here...

A vacation home counts as a toy. It's the same as a sports car in that it's an inefficient use of your capital.

If you're financially free with screeds of free income then sure, buy what you want. However if you're still working this will delay your getting off the hamster wheel.

Take that money that you would have spent on those and buy cheap units to rent out. When you get enough of those then use the spare cashflow to go buy your party pad, if it's still important to you.

In the meantime just rent one out every so often. You'll get the same enjoyment out of it

tag

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Re: questions about buying a vacation home to both use and rent out
« Reply #3 on: May 21, 2013, 12:03:58 PM »
Noted! Not buying. Thank you!

Ary

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Re: questions about buying a vacation home to both use and rent out
« Reply #4 on: May 21, 2013, 05:11:33 PM »
I think this link might be very helpful!

Ary

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Re: questions about buying a vacation home to both use and rent out
« Reply #5 on: May 21, 2013, 05:12:34 PM »
Sorry, of course I had forgotten to insert the link! :-)


http://affordanything.com/2013/05/15/what-do-you-think-of-vacation-rentals/


nktokyo

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Re: questions about buying a vacation home to both use and rent out
« Reply #6 on: May 22, 2013, 06:21:21 AM »
Noted! Not buying. Thank you!

Glad to be of help!