Valuable Coaching and Consulting Expert Advice; Spotlight the Mountain Magic!!
Yesterday I got some great news today; clients I have been working with for several months purchased and closed on the acquisition of a vacation rental investment real estate property in the Canadian Rocky Mountains.
They took possession on April 18, 2018.
This couple is seasoned residential rental real estate owners but had never thought of adding vacation rental investment real estate to their investment real estate portfolio.
Andrew and Ivory had heard my guest podcast on Breakthrough Real Estate Investing Podcast, http://www.breakthroughreipodcast.ca or https://www.vaulttoinvestmentrealestatesuccess.com/episode-54-recreational-vacation-rental-properties-rick-harris/ and approached me to help them in all aspects of owning a vacation rental property.
I have a process they have followed; it is set out in Three Stages:
- Before The Purchase
- The Purchase
- After The Purchase
The timing of each stage is a moving target as there are so many variables to deal with.
Several of the variables are identifying the proper zoning, market conditions, purchase and vacation rental and revenue and financing.
Let’s take a closer look at these areas:
- Zoning: Even if the complex is excellent; will the vacation rental property provide the services for your guest’s vacation experience.
- Market Conditions: The Purchase and Vacation Rental and Revenue Market
- Financing: Who will be your lender?
Zoning:
In most towns or cities because of the entry of Air BnB; zoning of vacation and vacation rental investment properties has reached a new level of scrutiny and regulation.
Some Towns and Cities have been very friendly in their approach to vacation rentals, and some have been downright hostile to allowing these tourist rental homes to exist.
Market Conditions:
I had worked with a couple in the spring of 2017, and even though there was not much inventory, prices were stable, and as an owner, in this marketplace, I felt properties were a little undervalued.
The couple was able to secure a property; there were no competing offers and quick acceptance of their proposal.
Fast forward a year later; I started working with another couple; same town, same real estate market but had things changed. We lost four deals to people outbidding the offer the couple presented, and the proposal they submitted was over list price. Based on the revenue and operating expense numbers it still made sense to purchase at the higher prices.
The couple I had worked with the year before have seen their value grow by tens of thousands of dollars, but for them, equity growth was not a priority of the purchase; they are in for the long haul.
The rental marketplace also had improved in what we call High Season in the vacation rental business. ( High Season as you may have guessed is when most tourists visit your area.) We have seen a 10 to 17% increases in vacation rental rates.
The Revenue Model:
The good news is; if you buy in the right zoning area that allows for a short-term vacation rental you can expect to rent your vacation rental property for around twice the yearly income versus renting to a long-term tenant for a year.
The other magic piece to the rental process is you earn this revenue based on renting your vacation rental only half of the nights during the year.
Yes, a 50% vacancy rate and you make twice as much money. Far less wear and tear on your property; not only because of fewer nights stayed but because tourists want to see the area and like to return at the end of the day of recreational activities to a beautiful, comfortable place to lay their heads at night and cook the occasional meal.
Financing:
Unfortunately, this is where the rubber meets the road when it comes to purchasing vacation rental real estate.
The big banks have lost their appetite for providing these type of mortgages and even many of the smaller lenders like credit unions.
One of my clients had to use business-funding to purchase, and my other client had to source short-term (One Year) financing and a higher interest rate to close the deal.
Creativity is critical when it comes to Investment Vacation Rental Real Estate financing, and many of us have found the way.
Was it Worth if To My Clients?
All you have to do is reach out and touch the mountain skies, and you will know this type of vacation investment rental property is worth all the ups and downs of purchasing and owning.
If you have never thought of purchasing an investment vacation rental real estate property; do you believe I have given you enough information to think about this type of investment rental real estate property?
Is a Rocky Mountain Vacation Rental Home an opportunity you might want to entertain?
But you are not sure, go to http://www.HomeAway.com (Property ID# 3817784) and look at our property; rent it and decide if this is something you might like to do. You will notice we booked until mid-September 2018; many of these bookings come a year in advance.
You could also go to http://www.HomeAway.com (Property ID # 4771771) rent one of my client’s vacation rental homes and look at the finished product.
Remember I did not do the renovation and furnishing work; I provided the references of Professionals, Trade, and Services to do this work part of my TEAM REAL©.
See if the coaching and consulting work I provide is the Valuable Expert Advice you require; Spotlighting the Mountain Magic solution for you.
You can reach me through the comments box below, through my LinkedIn page or e-mail at wrick@vaulttoinvestmentrealestatesuccess.com.
Warmest Appreciation,
Rick
About the author, W. Rick
Dynamic entrepreneur and sales management strategist; with over 20 years of experience in his field. Rick has achieved multimillion-dollar sales growth while providing award-winning sales leadership and coaching in highly competitive markets.
An active real estate investor since 2002, Rick has developed his purchasing strategies and processes specializing in vacation and recreational properties, single-family homes and condo rentals.
In 2005, Rick re-financed his first rental property to fund the purchase of more positive cash flowing rental properties.
Rick sits on the Board of Directors for several condominium associations and is an active President and Treasurer. Sitting on these boards has given him a wealth of experience and insight into working with property management companies.
Rick has partnered with several joint venture associates and is committed to creating a positive investing experience for his associates by finding the properties, developing the investment, securing the financing and executing a proven positive cash flow system.
Why should you choose Rick as your Online Vault to Investment Real Estate Success Advisor?
An outstanding mentor and coach, Rick will work with you to build your investment real estate business starting from the foundation. From guiding you through the market research and critical drivers, building your team of trades, realtors, and lenders to attracting the investment real estate properties right for your portfolio and the joint venture partners to help you grow.
Through direction and training, Rick will help you develop your investment real estate goals and be a catalyst for you to purchase your first investment real estate property so you can build a strong financial foundation unlocking sustainable wealth and a living legacy for you and many generations to come.
Thank you for taking the only asset that gives us so much through life, but we can never get back our time.
Please join Rick on living his mantra:
” Prosperity for all aspects of your life forever.” W. Rick Harris