Second home as an investment property - worth the stretch?

[Anonymous]

It’s not a second home, it’s an investment property.

[Anonymous]

Anonymous wrote: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.

And they’d be right because it isn’t.

[Anonymous]

We use a management company for our OBX rental property and it can still be a pain. But the numbers work so it’s worth it. If it was a stretch, the 2020 year would have been devastating because we lost 8 weeks of renters. Things happen. You have to have a strong stomach to have an investment property, IMO

[Anonymous]

You need to research rules related to short term rentals in that area. You also need to hire someone to manage the property and the guest turnover and guest issues. Hosting or being a landlord isn’t for the faint of heart.

[Anonymous]

This is not for a newbie who has very thin, if any, margin. There are so many factors to consider, including HOA fees, insurance, property taxes, etc. You also need to hire housekeepers you trust, replenish damaged/stolen items, and also figure out how to fix/repair/replace appliances, toilets, faucets, etc. Guests are unpredictable. Some are amazing, but others think nothing of smoking in your unit, bringing pets, turning the AC/heat to damaging levels, washing absolutely filthy items in your washing machine, etc., etc.
We have a vacation home, but we only bought one that we could afford NOT to rent out. And we love it.

[Anonymous]

Anonymous wrote:

Anonymous wrote: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.

And they’d be right because it isn’t.

Phew. I was getting worried that something had happened to you, PP.

[Anonymous]

Anonymous wrote:This is not for a newbie who has very thin, if any, margin. There are so many factors to consider, including HOA fees, insurance, property taxes, etc. You also need to hire housekeepers you trust, replenish damaged/stolen items, and also figure out how to fix/repair/replace appliances, toilets, faucets, etc. Guests are unpredictable. Some are amazing, but others think nothing of smoking in your unit, bringing pets, turning the AC/heat to damaging levels, washing absolutely filthy items in your washing machine, etc., etc.
We have a vacation home, but we only bought one that we could afford NOT to rent out. And we love it.

+1 This is not something you stretch for with little margin for error.
- experienced landlord who closed two weeks ago on a new investment property and found out *in the midst of that closing* that our air conditioning system at home conked out and needs a five figure replacement

[Anonymous]

We did it but had a longer term plan for the property (DD to move in while at college) It was decent enough return and would have been better if we managed it ourselves. But I don’t have the time and we found a good manager. The property has also increased quite a lot in value. We will sell once DD finishes college and then probably buy something else.

[Anonymous]

There are risks. My dad had a place in Whistler - premium at the time he bought it, but then with global warming it stopped being ski-in ski-out very often, plus they built a lot more upscale places, so the rental return fell quite a bit. In the end he sold barely breaking even. Just be aware that as with every investment the value can ho down as well as up.

[Anonymous]

Anonymous wrote: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.

This 1000%!!

Owning and renting it out means you have to plan your own trips 1year in advance (or go at non peak times where it won't be rented). Avoid the hassle and just rent when you want to go.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: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.

And they’d be right because it isn’t.

Phew. I was getting worried that something had happened to you, PP.

Sorry I recognize reality. If you are taking out a mortgage to purchase a property and then renting out that property to pay the mortgage and cover other expenses and hiding your personal stuff in locked closets when you’re not there it’s not a “second home” — you are investing. Plain and simple.

[Anonymous]

I wouldn’t do it. We have a ski house out west and it always needs something! We don’t rent it out and that would add a huge layer of complexity, plus you wouldn’t get it really use it at will. Plus the benefit of keeping the house ready to go kind of goes away.

I think you either do investment properties or buy a second house that you acknowledge will cost $, don’t try to combine. I would not stretch for either.

[Anonymous]

I’d also keep in mind that finding folks to for repairs in a resort area can be difficult and if not timely fixed, can destroy your reputation as a host (think broken HVAC on the day a vacationing family arrives). I have friends who stopped renting out their condo in Bethany after having one too many vacationers run the AC at full blast in the low 60s with the doors and windows open. The unit was promptly destroyed. Vacationers do not treat your property like renters who do not treat your property like owners. Finally, if it’s an older condo, getting insurance or being hit with a huge deferred maintenance assessment is a real risk these days. Managing all of this remotely and profitably can be quite challenging. FWIW, we do own an investment property and would’ve done better just putting the money in the stock market. It’s not worth the hassle or liability.

[Anonymous]

No, not if it is a stretch and/or you need to rent it.

[Anonymous]

Anonymous wrote:

Anonymous wrote: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.

This 1000%!!

Owning and renting it out means you have to plan your own trips 1year in advance (or go at non peak times where it won't be rented). Avoid the hassle and just rent when you want to go.

And also plan on doing a lot of cleaning and other maintenance while you're there because you will not be happy with the condition you find your home in.