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, can today’s vacation home pay for itself?
Back when vacation homes were more of a luxury and finding affordable log cabin foreclosures was like searching for lost treasure, the idea of renting a property for a few weeks a year to offset expenses and taxes often left homeowners short. . Yet the market is awash with mountain homes for sale and log cabin foreclosures galore. The log cabins and mountain vacation properties available now have a higher chance of producing positive cash flow if the buyer is diligent in making sure they do.
An affordable second home purchased at or below market value would have to be rented for at least 12 weeks a year to start paying for itself. This is about 3 months, and for mountain vacation rentals, it works great for summer rental properties, but can work equally 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 vacation home rental in the mountains, 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 returning renters. It’s 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 toward making your mountain vacation home pay for itself is to take the middleman out of the picture. Management companies absorb more than 30% of your rental income in their pockets and not yours. Managing rentals and maintenance is not that difficult, even from a distance. Consider a reasonable property manager over a property management company, but check references well, as a bad property manager has the potential to affect your return on investment 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 easier.
Selecting the location of your vacation home in the mountains or log cabin will also play a role in your ability to pay for yourself. You will 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 buy 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 your bottom line 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 vacation home in the mountains that will pay for itself, 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 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 put in the necessary work for the unforeseen problems that arise with the purchase of any property? And finally, you need to make sure that 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 vacation home in the mountains that can pay for itself.