When the real estate market was thriving, vacation homes were a luxury that only those with expendable income could dream of owning. Today’s market sets a different tone for vacation homes and second homes with a country wide rise in affordable properties and some of the lowest interest rates in centuries. While vacation homes of years past may not have been able to pay for themselves, is it possible for today’s vacation home to pay for itself? When vacation homes were more of a luxury and finding affordable log cabin foreclosures was like searching for lost treasure, the idea of renting out a property for a few weeks a year to counter expenses and taxes often left owners falling short. However the market is flooded with mountain vacation homes for sale and log cabin foreclosures galore.
The log cabins and mountain vacation properties available now have a greater chance of producing a positive cash flow if the buyer is diligent in making sure it does just that. An affordable vacation home purchased at or below market value would need to be rented for at least 12 weeks out of the year to start paying for itself. This is about 3 months, and for mountain vacation rentals this works great for summer rental properties, but can work equally well for log cabins located in ski areas or attractive fall foliage areas which can extend their renting season beyond the 12 weeks of summer.
With renting out a mountain vacation house you have to book the property early. Leave room in your rental price to offer a discount for booking the property for the next year to encourage return renters. It also pays to advertise your log cabin or mountain vacation home on the Internet where you are able to reach a wide audience for minimal expense. A huge money saver and big step for making your mountain vacation home pay for itself is to leave the middleman out of the picture. Management companies suck upwards of 30% of your rental income into their pockets and not in yours. Handling rentals and maintenance isn’t that difficult, even from a distance.
Consider a reasonable property manager instead of a property management company but check the references well as a bad property manager has the potential to hit your return on investment pretty hard. You should take the time to establish relationships with local services near your mountain vacation home and a simple calendar can make scheduling rentals a breeze. Selecting the location of your mountain vacation home or log cabin will also play a big role in its’ ability to pay for itself.
Obviously you will want to select a property in an area that people would want to rent. This usually means a resort area or an area with local attractions in addition to a beautiful mountain setting. Once you select an area to purchase a mountain vacation home, you are going to want to check to be sure the area does not have any fees for vacation-home-owners or costly permits for renting out the property for less than a month at a time.
These fees would have an obvious negative effect on the bottom line of your investment and you would need to adjust your weekly rental rate accordingly. If you have decided to take the plunge and are looking to purchase a mountain vacation home and have it pay for itself, here are the final questions that you need to ask yourself. Are you ready to invest a lot of time and research into costs, maintenance, taxes and more before buying anything? Are you willing to give up use of your great mountain vacation home during the peak renting seasons for at least the first three to five years? Are you willing to put in necessary work for unforeseen issues that arise with any property purchase? And finally, you need to be sure that you can cover the cost of the property should times get rough or you are unable to rent.
If you can answer yes to all these things, you just might be ready to buy a log cabin or mountain vacation home that can pay for itself.
Look to Smoky Mountain Real Estate for your second home. Find log cabin foreclosures and vacation homes for yourself or to rent with the help of Kasey Enckler, your Smoky Mountains Realtor with Century21.