Something dangerous happens when P and I watch House Hunters, we start fantasizing and dreaming about homes. We spend hours discussing what we would do to our home, how we want to remodel it, change it, and we have even gotten into arguments about the remodel. It looks a little something like this:
P: I think we should replace all the appliances with stainless steel
Me: I hate stainless steel
P: They look good, and will help with resale value, why do you hate them?
Me: Because they get dirty and show smudges
P: That’s it? That’s not a big deal
Me: It’s a big deal when you are the one cleaning it.
Then we realize we are arguing about a remodel of our home that is not currently happening, nor do we have any plans to remodel our house in the next few years, and decide to stop fighting about a fantasy!
Lately however, our focus has shifted a bit, and we are now thinking about rental properties. We save money each month, invest in the stock market, but we really want to diversify, and we know that nothing offers a return like real estate. We both work in commercial real estate, but have little knowledge of residential real estate. Even though they are both real estate, they are vastly different beasts, and there is very little carry over from one to the other.
Our goal right now is to dream, and acquire knowledge. I am actually getting my real estate license this year, and my company is paying for it, so that will be a great place to start gathering knowledge. We have been bouncing back as to whether we would like to buy a home in our area as a rental, or if we would look to buying and renting a vacation condo somewhere that is within driving distance. I really like the idea of buying a condo on the beach, so that it could serve two purposes. First, it would be a great vacation destination for us, and secondly, it would bring in additional income. We want something that is within driving distance 4-5 hours away so that if needed, we could drive there and back in a weekend. We also want do have it within driving distance because we know we would be more likely to visit more often. Our ideal condo would have 2 bedrooms, but we could do a 1 bedroom, with a sleeper sofa, and a nook for bunk beds, so that we could sleep 6, with 2 baths.
I have done some analysis, and in our state condo rentals on the coast rent from between 125.00-300.00 per night, depending upon the season. While the Texas beaches are not the most beautiful in the world, they are still beaches. Plus, the area we have been talking about has world renowned fishing year round. The other attraction to the area we are looking at is the fact that we have family located within 20 minutes, and we know they would be willing to help with the condo in a pinch.
Expected expenses for a vacation condo:
Mortgage
Cleaning Fee
Maintenance Fee(a contingency for repairs and replacement of items)
HOA Fee
Taxes
Condo Attractions:
Onsite management
Onsite cleaning services
Security
Pools
Play areas
Advertising—the condo building has its own advertising website, which we could pay a fee to be listed
Management- for a fee, we could pay a condo management to do full service management, and they would get a percentage of the earnings.
Anyone out there have rental property? What are we overlooking? What are we forgetting about? I know that a rental property is hard work, but right now, it is looking like an exciting and attractive option. What do you guys think?
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4 comments:
are there rental management companies in your area? we've got our rental cabin listed with a good one in ours and they more than make the % they take each month AND make life easy breezy on us.
if you want to email me to chat its brooke (at) frugaltrophywife (dot) com
To me it would just depend on the numbers. The cost of the Condo, the financing, how much the fees would include, the occupancy rate. If its a property that you think you would be using fairly often and you could make enough to cover all the expenses, fees, mortgage, etc. Then it would totally be worth it. It would be like having a free place to stay even if it didn't bring in a lot of extra income and you'd be building equity and hopefully it would increase in value.
I know you said the beach, however, with hurricanes and insurance costs it might be a better choice at some popular lake or even skiing area. Maybe something in central Texas where alot of people go for weekends and family reunions.
LAA
hmmm, I like this idea but I also like the idea of not being stuck to always going to the same place out of obligation. It is a big world out there!
I've never wanted to rent out a home/condo either but I do like using a rental management company would be the way to go!
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