When the real estate market was booming, vacation homes were a luxury that only those with expendable income could dream of owning. Today’s market sets a different tone for second homes with a nationwide rise in affordable properties and some of the lowest interest rates in centuries. While second homes from years past may not have been able to pay for themselves, can vacation homes today pay for themselves?
When vacation homes were more of a luxury and finding affordable log cabin foreclosures was like searching for lost treasure, the thought of renting a property for a few weeks out of the year to offset expenses and taxes often left homeowners lagging. short. Yet the market is awash with mountain homes for sale and log cabin foreclosures galore. Available log cabins and mountain vacation properties now have a greater chance of producing positive cash flow if the buyer is diligent to ensure they do so.
An affordable second home bought at or below market value should rent 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 areas of fall foliage that can extend your rental season beyond 12 weeks of summer. When renting a mountain vacation home, you must reserve the property in advance. Leave room in the rental price to offer a discount for reserving the property for the next year to encourage renters to return. It is also worth advertising your log cabin or mountain vacation home on the internet, where you can reach a wide audience for minimal expense.
A big money saver and a big step in making your mountain vacation home pay for itself is to take the middle man out of the picture. Management companies absorb more than 30% of their rental income in their pockets and not theirs. Managing rents and maintenance is not that difficult, even remotely. Consider a reasonable property manager rather than a property management company, but check references well, as a bad property manager has the potential to affect your return on investment quite heavily. You should take the time to establish relationships with local services near your mountain vacation home, and a simple calendar can make scheduling rentals easy.
The selection of the location of your mountain vacation home or log cabin will also play a role in its ability to pay for itself. Obviously, you will want to select a property in an area that people want to rent. Usually this means a tourist area or an area with local attractions in addition to a beautiful mountainous setting. Once you select an area to purchase a mountain vacation home, you’ll want to make sure the area doesn’t have vacation home owner fees or expensive permits to rent the property for less than a month to an hour. These rates 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’ve decided to take the plunge and are looking to buy a mountain vacation home and pay for itself, here are the final questions to ask yourself. Ready to spend a lot of time researching costs, maintenance, taxes, and more before buying something? Are you willing to give up the use of your large mountain vacation home during peak rental seasons for at least the first three to five years? Are you willing to do the necessary work for unforeseen problems that arise with the purchase of any property? And finally, you need to make sure you can cover the cost of the property in case times get tough or you can’t rent. If you can answer yes to all of these things, you may be ready to buy a log cabin or mountain vacation home that can pay for itself.