I was just offered a job at Kauai CC and will be moving to Lihue, HI in August. We will probably rent a 2 bed/2 bath condo near the college to start. However, once I am settled, I am going to start looking into different situations of possibly buying.
We will be in Denver during winter break December 10 - January 10 and during summer break May 6 - August 20.
I found a vacation rental condo complex on the beach that is selling 1 bed/1 bath condos (650 sq. ft.) for 52K - 60K. The reason that they are so cheap is because the HOA is 1300/month. The HOA is 1300/month because they provide a full service of renting your place out when you are gone. I am sure they get some sort of commission for every transaction, maybe 30%?
The math is pretty good on this hypothetical because a regular 1 bed/1 bath condo would rent for about 1300/month. However, a regular condo would not be on the beach. I'm pretty sure that you won't be able to legally sublet an apartment, but it could be done on the down low.
If we bought a vacation rental condo, we would be able to rent it out about 135 days a year. If we rented it out for 150/night and got 40% occupancy, we would be looking at about $8,000/year of income and I think some tax write-offs. After a 30% commission, it would be $5600/year.
If we had 60K in the stock market and hoping for an 8% return that would be $4800/year.
I'm not really looking to make a profit, just subsidize my housing expense if it makes sense. Would it be worth it to purchase? I would guess that I would be 75% occupancy during winter break, but probably around 25% during summer break, for an average of 40%.
I know that it's typically a losing situation for people who only vacation at their vacation rental for 2 weeks out of the year. However, we will be living in it for roughly 230 days/year and renting it out 135 days/year. I also think holiday break and summer break are the best times for vacation rentals, so maybe I could do better than 40%?
Anyone have any experience with this? Care to share occupancy percentage or HOA commission for transactions?
Thank you.