Pros and Cons of Purchasing a Vacation Rental Property?

Growing up I had the blessing to see a family owned cabin in Munds Park which is located just outside of Flagstaff, Arizona. We might visit our cabin 5-7 times year after year if we have the chance. We have very fond memories within the cabin but when my parents decided to sell about 6 yrs ago I immediately began searching for a cabin of my very own. I needed to provide my kids with similar opportunities to make memories with a family cabin because l had. We started seeking a cabin or land in order to develop June 2006. We quickly found some land in Pinetop-lakeside Arizona which is in the white mountains and approximately 3 hours from the Phoenix area. It was a modest 8,000 sq. ft. lot but we loved how close it was to the movie theater, restaurants, ski resort, lakes, and more. We decided against building a site built home and placed a new manufactured home on the lot which we were able to complete by November 2006.

We figured we might use the cabin a number of years and could market it for a profit in the future (yes, this was all through the real estate boom so you can imagine just how much underwater We are). I can’t describe the joy we had during our first journey with the children to check out our new cabin. We had a lot of fun our first time together, the youngsters and ourselves couldn’t wait to come back. We took the 3 hr journey to our cabin as many breaks as possible. After realizing we couldn’t sell the cabin, much less give it away, we had a problem on our hands. We were able to scrape together enough money to pay cash for the cabin. What we didn’t realize is how expensive a cabin without any mortgage would be. Whether a cabin is paid off or otherwise you have still got to pay for property tax, property insurance, basic utilities, frozen pipes, re-staining the porch and several other expenses. We didn’t have a need to be out of pocket on a cabin we just visited 5 times each year therefore we quickly jumped on the web to identify a method to rent our cabin. This is when we met many of the vacation rental websites services on the internet today. What really sold us about many of the vacation rental websites was the simple fact there was a few of our friends who swore by it. We paid an initial $299 yearly fee and off we were praying to rent our cabin. Over the years and months we certainly have had positive results therefore we have the ability to bring in roughly $8,000-10,000 per year. Some might think how wonderful it might be to bring in this type of money. We thought the same until we realized there seemed to be no money left over at the end of the year.

Don’t misunderstand me, we’re very grateful to obtain the cash as it helps us break even each year rather than being out of pocket. It is amazing how expensive it was to rent our cabin. If you think about it though, the more you rent the cabin the more utilities costs as well as more deterioration occurs. Hiding within the shadows were all the other negative elements of renting our cabin which I soon stumbled upon and have never managed to chase away. After owning our cabin since 2006 we’ve ultimately come to a conclusion we’d rather be renters of any vacation rental property as opposed to owners. I’m sure lots of you’ve have a different view, which I would like to hear, but for our little growing family of 6 it is just far too much to manage. Mentioned below are some pros and cons of being a vacation rental owner we’ve experienced. Purchasing a house has never been something we ought to do on impulse so take some time, study your options, review your finances and interview anyone you can find regarding their experience. Listed here is a quick benefits and drawbacks of owning a vacation rental property.

PROS

1. Vacation Property – you will no longer have to pay somebody to rent a property you may or might not like. You are able to decorate the property the way you like and then make any changes without needing to call for permission. You have complete influence over where you purchase property and precisely what it will look like.

2. Potential Rental Income – we successfully rent our cabin 10 or so times annually using a vacation rental website service but I’m positive that we rented it additional days we might finally receive a profit. Depending on the place you find the property and ways in which it is actually purchased you may well be able to produce a profit quicker than we do.

3. Tax write-offs – If the property is purchased as an investment and/or rented annually there could be potential tax deductions you are able to receive. Obviously I’m not really an accountant and that means you will have to inquire additionally with a professional.

4. Bragging rights / Bucket List – As funny as it might read I’m sure many people purchase a vacation rental just for bragging rights or even to cross it off a bucklet list. The thought of purchasing a cabin was obviously a great fantasy I had likewise which was a part of the reason I acquired one.

5. Investment – If you pick the investment at the perfect location and time period you might be in a position to sell the vacation rental to get a profit a little while down the road.

CONS

1. Maintenance – I’m sure the majority of you looking to acquire a vacation property currently own a house. So then I’m sure you could have something month after month in the house that needs just a little TLC. We found the upkeep of our cabin contains a hefty yearly expense from re-staining our porches or siding to rushing out a plumber in the event the pipes freeze and break through the winter. There’s always surprise expense.

2. Handling renters – This will only be a headache if you decide to rent your vacation property. I have many fantastic renters stay in my cabin but there will always be several nightmare renters each year I have to take care of over the dumbest of complaints. Honestly, even getting a perfect renter still requires an initial conversation, a request for money, a signed rental agreement, vacation rental instructions, plus more. Even today when renting our cabin during the winter I have a daily fear my renter will call me and make me aware the heater broke or a pipe burst. There can be an unnecessary stress without anything even occurring.

3. Resell value – I bought our cabin in the peak of the real-estate boom and currently it is worth roughly $60,000 less than I purchased it for. What really hurts is when I recall I paid cash for the property. I’m not gonna say your resell value will drop however it is a danger you have when purchasing any kind of property.

4. Vacant not being used – We have been only able to use our cabin about Five times a year. When we’re there it’s really a fantastic time together. When we aren’t there I just sit and think of my vacant cabin not being used and ask myself why I bought something with such little use. I could possibly have put that large chunk of cash on my personal home and dramatically reduced or almost eliminate my mortgage as an alternative to buying this other piece of property. It’s actually a painful thought, I promise.

5. Mortgage – Many of us investing in a vacation rental property don’t have the luxury of paying it off as a result yet another mortgage hangs over their head. A mortgage loan isn’t really something you can easily eliminate easily. Consider, a mortgage loan, TLC, and other things that occurs might be detrimental to the wallet.

6. Lawsuits – This ought to probably are categorized as renters having said that i needed to allow it to be it’s own category. One time I had a renter who slipped on ice on my small front porch and broke his leg. His wife called me a couple of times saying what occurred and how it occurred due fishing for funds from me. I quickly got out my vacation rental agreement to be certain I had put together the appropriate language incorporated but that also isn’t foolproof. Thank goodness they never attempt to come after us but where do you think my stress level was for a couple of months? Having a vacant property comes liability.

7. Basic Utilities – Again, this should probably fall under another category above however i thought it ought to mentioned separately. To improve my probability of renting our cabin when not being used we offer cable television, Internet, toilet paper and soap (how about that), and the basic utilities. I’ve got a monthly expense starting the very first day of every month whether I rent the cabin or not. The expense is varying from $100-200.

8. Maid Service – Since I live 3hrs away from our cabin I have to work with a maid service to clean after each renters stay. The cost is $75-85 for a 3hr clean. They call me afterwards and report on their findings and inform me if it’s going to cost me an extra hour or not depending on how trashy the renter was. They even restock some of our basic supplies. That is another task you have to manage in addition to anything else.

9. Emergencies (plumber, handyman, glass repairman, electrician, snow plow) – I’ve got a long list of emergency contacts which i’ve used repeatedly. It is not fun if you need to call one of those contacts but it doesn’t help when one particular isn’t available. I got smart after the first few times of having nobody to refer to but Google thus We have at least 3 contacts for each and every emergency category

10. HOA – I actually built a cabin where an HOA exists. An HOA can either be amazing or perhaps a headache and I’m sure you have all experienced both types. There’s always a yearly fee associated with a HOA and certain demands that has to be met.

11. Location – How are you affected when many years at a later date you want to obtain a seaside vacation property instead of a mountain property. Oops, can’t really pick up your property and move it to a new state (you probably could however, you know what What i’m saying is). Also, what will happen when the vacant lot next to you now is being built and your views now are gone?

12. Vacation Website Rental Fees – It’s important to advertise your vacation rental property somehow if you opt to rent it. I began advertising paying $299 annually and am now paying over $500. Yes my yearly rentals cover the charge but it is still a headache to manage and yet another expense.

My cons list could go on and on. What amazed me concerning the pros list was how little I was able to put on paper. Honestly, following first couple of points in the above list I had to ask my spouse which helped me to consider the other 3. For us, we would most likely not purchase a vacation rental property again unless we were able to utilize it greater than 5 times annually. Remember 5 times a year is my average, I was only able to use it Three times this past year. We always tell ourselves how many times we’re likely to utilize it but life comes at you quickly and plans change. We realized we’d prefer to be a renter and then we can pay a nightly rate to live from any location and whenever we are prepared to leave we’re able to throw our towels and sheets on the floor without having to be concerned with having it spotless. I manage our property and so the neat thing for me about not having a vacation property will be leaving all the stress of owning and renting the property behind me. I want to go on vacation to relax and do nothing at all, instead of worrying and losing sleep over owning such a luxury. If you are the ledge deciding between owning a vacation property Lets hope this helps with the decision. If you find this post helpful please leave a comment and tell me your thoughts at http://VacationWebsiteReviews.com