For many years spouse and I have daydreamed about purchasing a condo in a popular resort town that we both love.
Purchasing this property would require us to keep it rented via VRBO as much as possible, but we’d spend a couple weeks there each year. We can cash flow what we don’t make in rental income but again, the idea would be to offset that as much as possible. My question is, if you made the leap and purchased a second home with the idea of renting it out as a necessity when you’re not using it, do you regret it or was it worth the stress/risk? Did it end up being more trouble than it’s worth? Or are you glad you got on the property ladder in your favorite place on earth? |
We’ve done it. Twice. Regretted it both times. We now own a place that we don’t have to and never in fact rent out and it’s much better. I’d never invest in a rental property again. I’d rather park my money somewhere else and rent a few weeks a year. |
I haven’t done it but I would be pretty hesitant to do it— seems like vrbo might have peaked (of course one reason I haven’t done it is I tend to be a little risk averse) |
We've done it once and regretted it--sold the house earlier this year. Neither DH or I needed/wanted a side hustle of property management, and it was more work/stress than enjoyment.
One day, we will purchase a second home but we won't rent it out. Absolutely, not worth it. |
We did it, and are very happy that we did - it worked out exactly as planned to get us a property we love in a place we love to go that we would otherwise not have been able to afford.
OP, it might make sense but realized that (1) renting it out on AirBnB and VRBO does take time and work to manage with renters, cleaners, etc. (2) You will not make quite as much as you think you will on AirBnB/VRBO, so be a bit conservative in your financial planning (3) Wear and tear is real, and you will have unexpected costs to keep everything nice - just like in your own home. And I bet that after this post, (4) random anonymous people on DCUM will come and yell at me that it is not really a second home if I rent it out. |
Absolutely not. Rent. |
It depends on part on what kind of community/resort this is, and who the normal clientele would be. In this economic climate, I would not buy a place hoping to rent it primarily to the kind of normal, stable, GS15/SES types of live in the DC area. Those folks are not going to be splurging on vacation rentals in the immediate term. |
I can't imagine renting out our second home. If it's a place you actually want to use and enjoy yourself, expect that it will be trashed--especially if you are not local and can't check on it regularly. |
It’s a ski resort in Colorado. Easy access to Denver. But we are in DC. It would be marketed as a luxury condo and we have the money to make it look upscale. But it’s small, 2 beds 2 baths, just large enough for a couple and their two kids. Or two couples no kids. |
OP here. So what I’m hearing from those who have done it, the stress is more about the management and upkeep, and less it not making any money at all to offset the costs? Would greatly appreciate the details and nuance here. |
Best advice we ever got was from a woman who lived in the Hawaii condo community we wanted to buy into in the 2000s. She said the HOA dues alone were $1000 a month (then). So that was $12,000 a year we could spend flying and renting a place there or staying in a hotel there.
Getting on the property ladder only makes sense to me if things will appreciate dramatically and paying for it isn't a scramble. You will be competing on price with all the other condos around. |
We did it 3x (1031 exchange) and were able to get our toe in the door in an area we loved vacationing, and then upgraded to a better/more profitable rental, and then to our "forever home."
I put "forever home" in quotes because we thought it would be a house for many generations, but so much had changed in the community post-COVID (overdevelopment, insurance issues, high demand) that when we got an unsolicited offer to "name our price," we sold. And that was the happiest day of our lives. I don't regret the decisions we made, as at the end of the day, we had many years of great family vacations and made a ton of money, but it was also a lot of work and worry. I am a person who "hustles" by nature, so I was willing to take on the extra responsibilities (DH did almost nothing) including "managing" the prop mgmt co, building a social media presence to ensure bookings, scheduling repairs and remodels on the fly/during short turnover windows, and finally negotiating the private sale. |
No, not unless you like the hustle to rent it out and take care of it. Definitely not worth "stretching." |
I would only do a SF house. Condos HoAs are too unpredictable. One of my best tennis friends bought a condo in Marco Island around the time we bought a small SFH also in Marco Island. This was around 2014. We both had similar mortgages we both paid off in ten years, but she STILL has a monthly HoA of 1090.00 and in 2014 it was 710.00. Besides lawn care no other “bill” is taken care of on that payment. So I am able to rent my off weeks much cheaper because of this and in return have no problem filling up even crappy weeks. She rents about 70 percent of her goal. Also, her HoA limits how many guests and ages and parking spots each weekly rental can include, thus narrowing her marketability and profit. Also, beyond the money, the personalities on this HoA have been a nightmare on certain issues like paint color and mailboxes etc. |
Sounds like a very poor return on your time and effort. And one problem tenant can wreck up the place and cost you all your profits. |