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FINDING AN IDEAL VACATION HOME #1 11/22/15
In 2011 my wife Phyllis and I decided to buy a vacation home for use by ourselves, our kids, their spouses and grandkids (19 total) and planned to rent it out to offset some of the maintenance expenses.
We have managed our own rental properties for many years in Northwest Louisiana and are also Realtors, so we had a good working knowledge of how to rehab and manage single family rental home. The vacation rental market was somewhat different in that we would have to furnish the property and before we always offered rentals vacant except for one or two appliances.
Whether you are financing the purchase or paying cash, these tips are the same. Cash purchases are always faster transactions and I believe it puts the buyer in a stronger bargaining position. In our case at Lake Tahoe – in California – cash buyers are quite common.
First, select an area that you will personally enjoy. Even if it is a good investment, if you don’t want to visit the vacation home yourselves several times a year, find someplace else to own one. With many different groups coming and going, there is always something that needs attention when we go, even though our housekeeping/maintenance service does a good job. Only the owner can spot small items that need fixing.
2nd – Select an area that your family will enjoy and can easily travel to – whether driving or flying. I look for major airports within about an hour’s drive. Any more than that is a bit tedious. And for the first year, you will be coming and going a lot.
3rd – Pick a moderate climate. An all season location with activities year round is best. You want something to bring people into the area all during the year – so look for multiple climates and events. We have been to various parts of the United States and some regions are so cold in the winter nobody can hardly move. This really limits your potential rental groups.
4th – Check to see if there are local ordinances/taxes concerning vacation rental properties. Many towns require a 10% or so tax be remitted on vacation rental income – just like a hotel/motel tax. You just have to report it and pay the tax – so build it into your fees.
5th – Try to find an area of town that offers some privacy. Groups of short-term renters make noise. Try to find cul-de-sacs, corner lots or large lots that will absorb some noise without causing too much complaining from neighbors. Also, some towns have ordinances on vacation rentals concerning inspections and locations. Savannah, GA is one of them.
6th – Decide how many people you will try to sleep. For income purposes, try to comfortably sleep 8 or more. We advertise to sleep 11, using twins, queens, kings and bunk beds. 3 bedrooms and 2-1/2 or 3 baths should be a minimum requirement.
7th – Allow time to find the right property. We started our search in October of 2011 and closed on February 2012. We made several trips to the Tahoe area and looked at over 60 properties. The first offer did not work out, thank goodness, and our 2nd offer was successful on a different property –which turned out to be a winner. Have a thorough inspection made.
8th – Many vacation homes are sold with the existing furniture and it may or may not have any value because of damage, the wrong style or wrong color. No doubt, your home will need some remodeling/rehab and this is always a challenge because you probably live a good distance away and need to get the work done.
In our case, it took us 13 months and we contracted with local craftsmen recommended by our Realtor. We would travel to the home from Louisiana and supervise the work for 7-10 days at a time and then return home. Allow some money in your budget for this remodeling, as you want the best look for the commercial vacation market. There will also be needed upgrades and redundancy work.
9th – Take tons of professional photos – hire a good photographer to do stills, night shots with indoor lighting, moving shots, day and night shots. This is your best advertising for the 3rd party web sites you will use to promote the property. Most groups stay 3 nights at our Tahoe location. All groups book trips from what they see online – so make it good.
David S. Martin
David Realty Company