Vacation Home/Rental

[koonja]

We are starting to discuss buying home/condo/town-home in a vacation hot spot that would be used both as an annual family vacation home, but also as an airbnb rental for the rest of the year. We're open to locations, but places we've considered are: Virginia Beach, West Palm Springs, St. Augustine, Panama City Beach, and Destin. A few of these will probably price themselves out of our budget, but this is our starting list. As much as I hate HOA fees, we'd likely go the condo route so that maintenance is taken care of.

We are at ground zero, and are realistically ~2 years from pulling the trigger due to savings and research. Has anyone gone this route? How is it going? Where do you get started trying to understand what you can get for airbnb rent?

We're not expecting on having it rented out all of the time. We would only purchase when we're comfortable enough to assume no rental income (which would be very tight, but we could survive). But we still want to get into a place that maximizes that rental income.

Did you go Condo or home? Is it a pain in the @ss and you would do it differently? Is it awesome and you'd highly recommend it? Did you know what you'd get for rent or did you just wing it?

Any advice is useful.

 

[wizards8507]

Any advice is useful.

This is a terrible decision, step off the ledge before it's too late.

The risk you take on by holding a mortgage on a second property is nowhere near worth it. Real estate is smart investing, but not with debt.

 

[koonja]

This is a terrible decision, step off the ledge before it's too late.

The risk you take on by holding a mortgage on a second property is nowhere near worth it. Real estate is smart investing, but not with debt.

99% of people who invest in real estate do so with debt, home debt isn't the same as consumer debt. I'm surprised you'd advise against this.

And for some context, we're going to Destin in May, we rented a 3 bedroom condo. We got a price cut through my coworker, but it rents out for $3,200 per week, and it had ONE week available from February 20th through June 1st.

This condo is probably in the ~$600K range, and that's probably double our budget, but still, that's a lot of cheddar.

 

[NorthDakota]

Avoid Destin and Panama City. Do Fort Walton Beach. Prices are better and its literally 5 minutes from Destin, much more quiet.

 

[koonja]

Avoid Destin and Panama City. Do Fort Walton Beach. Prices are better and its literally 5 minutes from Destin, much more quiet.

I did look there, I also looked at a beach a little bit down from Virginia beach. On Fort Walton, I did not find anything in our price range, but it's worth keeping an eye on.

IIRC, there's an airport that goes to FW too, which would be a draw as a rental. Thanks for the recommendation.

 

[Henges24]

Shoulda just went with the time share...

 

[koonja]

Shoulda just went with the time share...

I wish.

 

[wizards8507]

House of Debt: How They (and You) Caused the Great Recession, and How We Can Prevent It from Happening Again

Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System--and Themselves

 

[wizards8507]

Also, don't you live in Minnesota? Why would you own a rental property that you can't even physically check on if you need to?

 

[koonja]

Also, don't you live in Minnesota? Why would you own a rental property that you can't even physically check on if you need to?

Wiz, I think you're out of touch on this. Living in MN is exactly why people become snowbirds. Have you ever had a had a winter here?

HOA takes care of basic maintenance and security on the premise. There are also alarms, and renters would be going in and out (along with a cleaning service) virtually every week.

I don't need to stare at the place to become aware IF there ever is an issue - I would be alerted immediately. There's a risk, but it's greatly mitigated with some practical strategy.

 

[zelezo vlk]

Koon, will you let us know if you're on HouseHunters? I just saw an episode similar to your situation this past weekend

 

[koonja]

Koon, will you let us know if you're on HouseHunters? I just saw an episode similar to your situation this past weekend

Look for my leprechaun tattoo on the shoulder. I'm always sleeveless.

 

[wizards8507]

Wiz, I think you're out of touch on this. Living in MN is exactly why people become snowbirds. Have you ever had a had a winter here?

HOA takes care of basic maintenance and security on the premise. There are also alarms, and renters would be going in and out (along with a cleaning service) virtually every week.

I don't need to stare at the place to become aware IF there ever is an issue - I would be alerted immediately. There's a risk, but it's greatly mitigated with some practical strategy.

LMAO people in Minnesota are such hardos. It's 2019, nobody is freezing to death. You spend two minutes outside every day walking from your car to your office and the rest of the time you're in 70 degree climate control. Even the sidewalks in Minneapolis are indoors.

 

[Veritate Duce Progredi]

I also think it's a bad idea but I haven't done a ton of research. I have family members who own condos in Destin.

HOA fees, maintenance and unbooked weeks really eat into the other cashflowing months. It's still a net loss at the end of the year, they aren't making money on it (otherwise, many people would have 2-4 condos).

If you are looking to get into real estate for additional income, I'd also suggest something closer to home that rents by the year or at least 6 months.

But if you've done the research, take the plunge. I'll stand on the sidelines with Wiz and hope you have great success. If you do jump, please give us updates every year, I'd be interested in the numbers over time.

 

[zelezo vlk]

Honestly Koon, you should build a cabin out in the woods for you and friends/family. It'd be a great summer retreat and think of all the memories you and your young family could have there!

 

[wizards8507]

Honestly Koon, you should build a cabin out in the woods for you and friends/family. It'd be a great summer retreat and think of all the memories you and your young family could have there!

Or just spend $10K on a camper.

2019 JAY SPORT 10SD

Only 2,000 lbs, you can tow it with almost anything.

 

[BleedBlueGold]

We own a lake house in Michigan. Love it, but there's a ton of work and expense involved in owning two places. We don't rent it out for a couple of reasons: 1) we go there all the time since it's close by and 2) we don't trust anyone to be coming and going. The rental income isn't worth the risk. Too much liability.

Owning a condo in FL sounds like easy money, but I'd doubt it's the cash cow you're expecting it to be. Obviously, there's money to be made or people wouldn't do it. But I'd proceed with caution. Just my opinion.

 

[IrishLax]

Don't buy a condo.

If you have the money to invest in a beachfront house, that can be good rental income and a good investment. My family bought a beach house in South Carolina and we have it managed by the company on the island that basically manages everyone's. It commands high rental value whenever we want to do that, and when we don't want to rent it then it's our house we have full control over and is great.

No HOA, etc. like you have with a condo and I can tell you as someone who works in repair + restoration that HOAs can explode on coastal condo buildings. If you don't have enough money to afford anything but a condo you shouldn't be buying rental property somewhere far away from where you live.

 

[Ndaccountant]

Don't buy a condo.

If you have the money to invest in a beachfront house, that can be good rental income and a good investment. My family bought a beach house in South Carolina and we have it managed by the company on the island that basically manages everyone's. It commands high rental value whenever we want to do that, and when we don't want to rent it then it's our house we have full control over and is great.

No HOA, etc. like you have with a condo and I can tell you as someone who works in repair + restoration that HOAs can explode on coastal condo buildings. If you don't have enough money to afford anything but a condo you shouldn't be buying rental property somewhere far away from where you live.

This.

Kiawah or bust IMO.

 

[wizards8507]

Don't buy a condo.

If you have the money to invest in a beachfront house, that can be good rental income and a good investment. My family bought a beach house in South Carolina and we have it managed by the company on the island that basically manages everyone's. It commands high rental value whenever we want to do that, and when we don't want to rent it then it's our house we have full control over and is great.

No HOA, etc. like you have with a condo and I can tell you as someone who works in repair + restoration that HOAs can explode on coastal condo buildings. If you don't have enough money to afford anything but a condo you shouldn't be buying rental property somewhere far away from where you live.

What are real estate prices like in South Carolina where you're buying freestanding beachfront homes as starter investment property? My mother-in-law just bought an ocean front condo in Ocean City, NJ and it was $800K. A freestanding house would have been well over $1m.

 

[Ndaccountant]

What are real estate prices like in South Carolina where you're buying freestanding beachfront homes as starter investment property? My mother-in-law just bought an ocean front condo in Ocean City, NJ and it was $800K. A freestanding house would have been well over $1m.

https://www.kiawahisland.com/real-estate/property/429/0009OP/

go big or GTFO

 

[FightingIrishLover7]

...Investing? But has he even paid for his speeding ticket yet?

 

[zelezo vlk]

What are real estate prices like in South Carolina where you're buying freestanding beachfront homes as starter investment property? My mother-in-law just bought an ocean front condo in Ocean City, NJ and it was $800K. A freestanding house would have been well over $1m.

Few know this but Lax is actually the King of Spain and we are his rightful subjects per the Treaty of Tordesillas.

 

[koonja]

I feel like I need to restate, we wouldn't be baking on renting this year round. Based on the location, I'd expect to rent it out for ~3 full months of the year. Which is very conservative considering the locations I'm considering.

 

[koonja]

Don't buy a condo.

If you have the money to invest in a beachfront house, that can be good rental income and a good investment. My family bought a beach house in South Carolina and we have it managed by the company on the island that basically manages everyone's. It commands high rental value whenever we want to do that, and when we don't want to rent it then it's our house we have full control over and is great.

No HOA, etc. like you have with a condo and I can tell you as someone who works in repair + restoration that HOAs can explode on coastal condo buildings. If you don't have enough money to afford anything but a condo you shouldn't be buying rental property somewhere far away from where you live.

How much do you pay for the management though? I assume it's something like a HOA, but not as expensive? Do you mind sharing what city your property is in?

 

[Me2SouthBend]

LMAO people in Minnesota are such hardos. It's 2019, nobody is freezing to death. You spend two minutes outside every day walking from your car to your office and the rest of the time you're in 70 degree climate control. Even the sidewalks in Minneapolis are indoors.

This is such a great thread w Koyackesque potential. Every time you offer advice, he shoots it down after advice was exactly what was asked for in the OP. The thread title should've been "I want to buy a vacation/rental property, please be supportive"

 

[Luckylucci]

These situations always come down to numbers. Impossible to say it's a good or bad idea without the necessary numbers.

 

[IrishLax]

https://www.kiawahisland.com/real-estate/property/429/0009OP/

go big or GTFO

Haha yeah we own on Seabrook right next door... when you get to the island take a right at the circle not a left

Our house is not a 9 million dollar mansion though, obviously.

 

[Me2SouthBend]

https://www.kiawahisland.com/real-estate/property/429/0009OP/

go big or GTFO

Played golf at the Island Club on Kiawah last year. Caddy pointed out the house that Jack Welch was building. 15,000 sf house at $1,500/sf. That's some top end Real Estate down there.

 

[IrishLax]

How much do you pay for the management though? I assume it's something like a HOA, but not as expensive? Do you mind sharing what city your property is in?

Nothing like an HOA. They just take a cut of the rental revenue.

Koon, the main point I'm trying to emphasize is that HOAs are out of your control and can change rapidly. If you own a condo, you are legally obligated to pay them... and if the situation changes in a bad way you can get absolutely screwed. Owning a condo for a primary residence has its pros and cons, owning one for vacation rental income and capital gains is extremely risky.

Imagine buying into a place and then a few years later getting a letter in the mail saying you're being charged a $10k assessment because they have to do widespread concrete repairs to the building due to corrosion from the slat laden seawater. That is a reality hundreds of condo owners in Florida face every year.