Owners of vacation rentals

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If you own, or previously owned, a vacation rental (house, condo, rv, boat(?)) I’d love to hear your experience - various pros/cons, and if you made money or thought it was/is worth it - all data points - but interesting for H and I to consider.

We’re mulling over buying 3 properties in the next couple of years - each one near one of our kids. Two would be on or near Lake Ontario (NY) and Erie (OH) and the third would be in Puerto Rico. We would want to spend some time in each ourselves, but offer them for renting when we’re not there to help them pay for themselves (not necessarily totally).

We need pros and cons to contemplate if we like the idea or not. H loves sailing - hence the Big Water aspects. We both want to be near the kids/potential grandkids and not just travel to them as often as we do.

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We have a cottage behind our house that has done very well. The secret is understanding the community regulations, plus supply and demand. You can sort that out with a program like AirDNA.

Having channel management software like Hospitable is important if you plan on listing on both AirBnB and VRBO.

Dynamic pricing software like PriceLabs is a must.

If you have any super specific questions, feel free to PM me.

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We have friends with a ski condo. Their attitude is they “make memories” with it, not money…. though they have no regrets. Not sure how hard they try on the rental aspect.

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Won’t you still be traveling to them, though? Just going to “your” place?

I thought about this but decided against it, basically because I watch our neighbors come up here every weekend to their 2nd home - they love it here - and spend the weekends doing maintenance etc. They don’t rent it out.

I really want to snowbird in a few years, and we considered buying a condo someplace warm/renting it out but the costs (especially insurance) just didn’t make sense. It would be cheaper to spend, say, 3 months in a warm place with no strings than to commit a lot of money for long-distance headaches, basically for the same amount of time.

That’s just us, though. We don’t have much investment money to spend.

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No, in our case it would involve selling the farm and would happen after FIL passes away and H retires officially (since his job is based there). While I love our farm, being near my kids and potential grandkids would be a higher love. None of the boys plan to move back to where our farm is. Their jobs have taken them elsewhere.

We’re in the mulling it over stage having recently driven between the two northern boys after visiting the southern one for 6 weeks in the winter. There are areas we find appealing.

Renting has been our plan, but would be more expensive with “no” investment return. If we could “invest” in semi-rentals, even if seasonal, it could make it work for us.

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We have a second home and do not rent it out, but it is in a small, rural, waterfront community where some new owners are renting their places out in order to, I think, afford the mortgages.

One thing to strongly consider: how do your new neighbors feel about any of the existing vacation rentals?
A place that sold late last year was remodeled and put on booking sites. There has been enough noise, trespassing, and aggravation, that the neighbor has decided to move. At another home, people renting were going into neighboring yards, using lawn furniture, and stealing their firewood. The homes on the “lagoon” now have notices that shellfish harvesting by renters is not allowed.
One long-time owner rents out another home down the road, but keeps very close tabs on it & is not afraid to ban anyone making trouble. They are fantastic neighbors & community members.

We like to entertain as much as the next person, but we keep the noise down and don’t set off fireworks (haha).

Those owners who do rent out get very little community support like picking up deliveries, checking on homes when folks go away, clearing fallen branches, etc.

Also, there are a lot of help wanteds on the greater area FB groups for cleaners for these places.

We get solicitations all the time from VRBO, vacasa, air bnb, etc. & toss them all.

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It sounds to me based upon the distance between properties and the amount of time that you want to spend at each, that it would put you in a tough position. You really can’t do the upkeep yourself and you don’t want to spend money on a management company when you are at the property.

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I’m not sure how much the kids will be able to help with this, esp since we’d be letting them use the properties when they wanted to as well. It would have to be scheduled use since renting would be involved, but they also need to schedule their vacations and will know what days they have off, so it shouldn’t be too difficult.

It’s also entirely possible it would mainly be rented by people they know who are looking for a nearby “escape” when we aren’t there, rather than strangers. That said, AirBnB and VRBO are what we usually use, so came to mind as possibilities for any unoccupied “holes.”

And we certainly don’t plan on having the “Party House” to rent. Both of the above allow you to approve the renters.

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I used to rent a family home (by the week) at the beach to help cover the costs. The upside – some $. I was not there to oversee it, so here is the litany of downsides:

Getting that phone call on a Sunday morning that there’s no hot water/toilet is clogged/you name it and having to find someone to repair on a weekend. (I still have a home in that town and the last time we had no hot water, we were told it would be 3 days for an emergency call. Service is hard in many vacation areas!)

Having a guest show up and decide they didn’t like it and leave, demanding a full refund from managing agent, leaving house empty for a week.

Managing the cleaning service.

Things getting broken/lost, etc. If you need to leave beach chairs, boogie boards, etc for guests, don’t count on them being there all season.

Too many guests for septic.

Having to lock up your own things in a closet (which the occasional guest may feel obligated to try to get into.) This, as well as things not finding their way back to where they belonged, can make the place feel a bit less than fully yours.

Not being able to be spontaneous about using your vacation home because it’s already committed to a renter.

Having said this, we had a few regulars who, over the years, took their same 3 weeks every year, sent us hand-made notecards with pen and ink drawings of the trees around the house, bought fun coffee mugs that matched the decor, and who ultimately ended up feeling like family as,we all shared a love for the spot. Not every guest was a problem and some were a joy.

If you are going to do this, as with any second home, be prepared to spend part of your time there doing maintenance. With renters, you will never want a fridge to die, etc., so you may need to do maintenance and repairs more aggressively than you would for yourself. If the place is big, you may need to do what a friend did and get 2 washers and 2 dryers so the cleaning company could turn it around quickly. You’ll need to be more careful about safety (no older places with possible lead paint, careful pest control, extra safe steps, etc) and pay more for insurance.

Know rules about evicting non-paying renters (especially if you are doing longer term rentals) and know local regulations about short-term rentals, including those around collection of “hotel taxes”.

Personally, I have seen this work best for local owners who can respond quickly to issues. It’s much harder if you are further away. No doubt, that’s why a service like Vacasa came to be. But for all the grumbling, it can be a good way to mitigate the cost of a second home, and in most cases, you can stop renting if it’s not working for you.

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We go back and forth with renting our vacation place. It’s appealing because renting for the month of August covers a good percentage of our operating costs (property tax, maintenance, caretaker). What’s unappealing is dealing with tenants. We don’t do any of the rentals ourselves; we go through a local real estate agency, which is fairly common in the area where our vacation place is located. While the agent does take a percentage of the rental, it’s worth it IMO. Most tenants are fine, but there are always a few who aren’t.

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This is the rub. The ones who aren’t can be PTSD-inducing!

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Absolutely!!

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Some jurisdictions, like our little town, require every STVR to have a property manager who lives within x miles. Towns are cracking down on new STVR permits… it definitely pays off to do a careful investigation of the local regulations.

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That was very helpful, thanks!

I’m thinking we could start off doing it and if it doesn’t work, contemplate selling the one we like the least up north. I’ve been looking at some for sale now. They aren’t necessarily as expensive as I expected. Cold weather for a good part of the year likely turns some off, but as global warming comes, perhaps that will work in our favor!

We’ve shifted to the Great Lakes due to the kids. Previously we had been thinking further north along the St Lawrence River close to where I grew up, but again, being closer to the kids is what we’re after. The cold just doesn’t turn us off. It means we’ll be winterizing.

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Also, it’s a bit of a pain for tax prep. You have to be diligent. Sorry, this thread has reminded me of a bunch of memories I tried to suppress! :wink:

But on the good side, it’s not unusual to buy a place in a vacation area with several regular rentals already on the books for the coming year. Regular, return rebters are not problems, so if you find a place like that, it could be a bonus!

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I have seen many similar issues, & some beach towns are getting more strict,such as requiring a resident agent who lives within thirty miles. Property managers want all the best weeks and charge 15-20% overhead.

Used to be if an owner can depreciate the property and keep records on all expenses…could break even on expenses with business deductions. I don’t know how the latest tax laws & regs treat vacation rental properties.

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H does our taxes now, including those for his business. Since he’ll be retired I guess rental taxes will slide in to replace business taxes. Plus he’ll have to do OH as well as NY and PR. He did NY before for my mom and our son who lives there. He’s Type A and seems to thrive on doing taxes - totally opposite of my reaction TBH.

H will also do the majority of the upkeep. He’s helped build houses before and we have a current rental house near us that he keeps up (we would sell that too), so I doubt much would be new there. In NY in the same area I also have a cousin that does home building and more. I’m sure he wouldn’t mind the extra work if something came up. In OH we would have to find new contacts unless our son will have them by then.

In PR we’d likely buy a condo in a rental"ish" complex, so there’s bound to be a management company.

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My dad would agree with you. He has a beach condo and two houses that he rents. The expenses lately have been exorbitant. He has good management companies but it’s still a hassle. I don’t think my sister and I will hold on to them if we inherit them.

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Also, consider who will own these properties. An LLC? A trust? You and your H as JTWROS? Real property goes through probate in the state it is located, unless it is owned by a trust or an LLC. A few hundred $$ spent on an estate attorney fees will be money well spent.

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We would also have to figure out which place would officially be our home. We’re not sure about that one yet. This is all a new idea for us from the last month. Previously we assumed we would stay in PA and just travel. We could still do that, but the more I think about it the more I like being closer to each of the kids for a period of time.

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