Author Topic: Build/buy a mountain cabin for investment purposes?  (Read 1442 times)

VirginiaBob

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Build/buy a mountain cabin for investment purposes?
« on: October 23, 2014, 09:18:41 AM »
Trying to think outside the box.  Since rents in my area are low compared to real estate purchase costs, getting in the rental market is not very profitable, if at all. 

A couple of years ago, my wife and I were looking into renting out a cabin for our vacation, but opted not to do so since they were so expensive to rent.

Even the cheapest cabins seem to rent out for $50/night or weekly rates of $500/wk, and cost about $50K, land included.  It appears to be year round too.  The mountains are about 3-4 hours away from our current location, so upkeep would be kind of tough, so I'm assuming some sort of management agency would be needed.

Anyone have any experience with this?  Does this seem too good to be true (like high vacancy rates, or something)?

totoro

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Re: Build/buy a mountain cabin for investment purposes?
« Reply #1 on: October 23, 2014, 09:23:52 AM »
Find someone who is doing this and ask them and then do a complete budget.   In my area there are definite seasons where you can and cannot rent for a reasonable rate and cleaning costs are going to eat up a bunch of your projected rents.  It would be a rare market that has a year-round high season.

$50,000 sure is inexpensive though.

GrayGhost

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Re: Build/buy a mountain cabin for investment purposes?
« Reply #2 on: October 23, 2014, 01:34:40 PM »
Vacation rentals are a business in their own right, so we could discuss them for pages. They can be a great way to make cash, but there are definitely management and cleaning fees that cut into your bottom line. It's just like any other business, you have to look at expected income and expenses, and the cost of buying into it.

With that said, I would not recommend building a mountain home to rent it out. That's spec housing, and it's risky. Sure, you could get huge returns, but unless you're intimately familiar with the market and precisely what people want in the area when they rent out cabins, you could be shooting yourself in the foot.