Author Topic: Investing in a vacation rental  (Read 4401 times)

rkbabang

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Investing in a vacation rental
« on: August 12, 2019, 12:03:16 PM »
Like a lot of people I've been moving back into cash the last couple of months (this is about the same time of year I started moving into cash last year).  But this time I decided to put some of that cash into real estate.  This is something I've been thinking about for a while now, and now that both of my kids are adults, my wife and I have some time on our hands to put into something like this.   We bought a property on Lake Winnipesaukee and close to Gunstock Mountain with the intent to rent it out as a vacation rental on Airbnb.   We put 1/3 down and financed the rest with a commercial loan. We bought it in the name of an LLC for liability reasons.  We just closed on Monday (a week ago today) and spent 3 days working on it before our first rental arrived on Thursday.  We went on 3-4 hours of sleep/night trying to get everything we wanted to get done in those 3 days and didn't quite make it, (I've never installed a dishwasher at 3am before), but we got the place looking ok.  We will have more time to work on it in September when the busy season is over.

I talked to one person from this board already a few months ago who gave me some great advice on how to get started, get funding, etc.   Has anyone else here done anything similar?   I think with airbnb rentals success probably depends a lot on the specific location and the price you paid.  I think I did good, but only time will tell.  I was pleasantly surprised how quickly the reservations started to come in as soon as we went live.

(and now for the shameless promotion) If anyone is looking for a nice place to stay by the lake or for skiing this winter:  https://www.airbnb.com/rooms/36937304?s=67&shared_item_type=1&virality_entry_point=1&sharer_id=278245836


Orchard

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Re: Investing in a vacation rental
« Reply #1 on: August 12, 2019, 12:28:11 PM »
how are your loan terms vs a 30yr residential loan?

rkbabang

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Re: Investing in a vacation rental
« Reply #2 on: August 12, 2019, 12:36:07 PM »
how are your loan terms vs a 30yr residential loan?

Not as good, but not terrible either.  I got 5% fixed for 5 years then adjusts on the prime rate for the next 5, then again at 10 years for the last 5.   We were able to close in a little over 3 weeks, so I figured I could re-finance down the road if I wanted.  There are no pre-payment fees except for the fact that they waived 1 point of closing costs if I hold the loan for at least 3 years.  So after 3 years it won't cost me anything to pay it off.  Since I will be having hundreds of people stay there, so I thought the liability protection of having it not in my name was crucial.  I've owned the place a week and already 3 families have stayed there.  1 for 1 night, 1 for 2 nights and there is someone there now who is staying 2 nights.

Pelagic

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Re: Investing in a vacation rental
« Reply #3 on: August 13, 2019, 09:27:57 AM »
Would you be open to sharing some of the pro-forma numbers for it in terms of an investment? Occupancy sounds great to start, do you expect to primarily rent it through AirBnB?

CorpRaider

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Re: Investing in a vacation rental
« Reply #4 on: August 13, 2019, 10:18:02 AM »
There was a guy on that "Millionaires Unveiled" podcast a few weeks ago who had some rentals that were exclusively Airbnb's targeted at mountain bikers in a region of Arkansas.  They didn't get into a ton of detail, but you might find it interesting.
« Last Edit: August 13, 2019, 04:45:40 PM by CorpRaider »

Castanza

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Re: Investing in a vacation rental
« Reply #5 on: August 13, 2019, 10:37:41 AM »
A family member of mine bought land up in Sauble Beach Ontario about two years ago. Built a cottage on it. Mortgage is$1k a month (all expenses) and they rent it out Spring -> Fall for about $2200/week. They have had almost every week booked the past year. They live in the states and pay some local company $50ish a week to clean it.

There are definitely some niche locations you can find as CorpRaider pointed out.

Orchard

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Re: Investing in a vacation rental
« Reply #6 on: August 13, 2019, 10:50:19 AM »
A family member of mine bought land up in Sauble Beach Ontario about two years ago. Built a cottage on it. Mortgage is$1k a month (all expenses) and they rent it out Spring -> Fall for about $2200/week. They have had almost every week booked the past year. They live in the states and pay some local company $50ish a week to clean it.

There are definitely some niche locations you can find as CorpRaider pointed out.
wow that's great. Must be a really nice cabin at $315 per night vs all the other cabins on Air BNB at less than half of that.

Spekulatius

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Re: Investing in a vacation rental
« Reply #7 on: August 13, 2019, 06:55:00 PM »
A family member of mine bought land up in Sauble Beach Ontario about two years ago. Built a cottage on it. Mortgage is$1k a month (all expenses) and they rent it out Spring -> Fall for about $2200/week. They have had almost every week booked the past year. They live in the states and pay some local company $50ish a week to clean it.

There are definitely some niche locations you can find as CorpRaider pointed out.
wow that's great. Must be a really nice cabin at $315 per night vs all the other cabins on Air BNB at less than half of that.

Some here say needs to be taken with a grain of salt, sort of like claims on stock portfolio performance  ::)
To be a realist, one has to believe in miracles.

meiroy

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Re: Investing in a vacation rental
« Reply #8 on: August 13, 2019, 08:52:00 PM »
rkbabang,

Looks fantastic, comfy for a family.  Other than what you mentioned, success also depends on the reviews, as you probably know. If there is something materially wrong with the house it should be fixed promptly. Disappointed it doesn't come with a goat.

John Hjorth

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Re: Investing in a vacation rental
« Reply #9 on: August 14, 2019, 01:08:26 AM »
rkbabang,

Looks fantastic, comfy for a family.  ... Disappointed it doesn't come with a goat.

LOL! - But I agree with meiroy, rkbabang,

It really looks fantastic. What a wonderful spot... - I suppose it would be impossible to maintain usual stress levels while taking a break from the hamster wheel at such a place. I especially try to visualize how the place would look in the autumn [the colours of the leaves on the trees in NH in the autumn]... Do you plan to use it yourselves if it's not occupied by tenants? - Good luck with it to your wife and you.
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