When the real estate market was booming, vacation homes were a luxury only those with expendable income could dream of owning. Today’s market sets a different tone for second homes with a nationwide surge in affordable properties and some of the lowest interest rates in centuries. While the second 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 thought of renting a property for a few weeks a year to offset expenses and taxes often left homeowners short . However, the market is flooded with mountain homes for sale and log cabin foreclosures galore. Log cabins and mountain vacation properties available now have a better chance of producing a positive cash flow if the buyer is diligent about making sure they do.
An affordable second home purchased at or below market value would need to be rented for at least 12 weeks per year to start paying for itself. This is around 3 months, and for mountain vacation rentals, it works great for summer rental properties, but can work just as well for log cabins located in ski areas or attractive fall foliage areas that can extend your rental season beyond the 12 weeks of summer. With a mountain vacation home rental, you must reserve the property in advance. Leave room in your rental price to offer a discount for reserving the property for next year to encourage return tenants. It’s also worth advertising your log cabin or mountain vacation home online, 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 cutting the middle man out of the picture. Management companies absorb more than 30% of your rental income in their pockets and not yours. Managing rents and maintenance is not that difficult, even from a distance. Consider a reasonable property manager instead of a property management company, but do a good reference check as a bad property manager has the potential to hit your ROI quite a bit. You should take the time to build relationships with local services near your mountain vacation home and a simple calendar can make scheduling rentals easy.
Selecting the location of your mountain vacation home or log cabin will also play an important role in your ability to pay for yourself. You obviously want to select a property in an area that people want to rent. This usually means a tourist 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’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 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’ve decided to take the plunge and are looking to purchase a self-paying mountain vacation home, these are the final questions to ask yourself. Are you ready to spend a lot of time researching costs, maintenance, taxes, and more before you buy anything? Are you willing to forego 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 the 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 it. 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.