The Rock Stars of REI World
I’ve been an investor for over 15 years. I’ve designed and built, rehabbed, purchased commercial property, had a very quick foray into note buying (not for me!) and manage 14 long term rental properties.
With the exception of one rogue property, each one has been a financial success. My long term properties not only provide tax breaks and pay down the mortgages, each brings in about $100/month in my pocket. When you look at paying down the mortgage, that $100 turns into $200 per month. With tax savings, the number goes up.
BUT, there’s one investment that outshines all the others- on a myriad of delightful levels.
If you’re an investor or considering investing in real estate, there are a plethora of choices where you can make a solid return on investment. Of course, you can lose money, too. While no investment is 100% guaranteed, with a wise purchase, there’s no better way to use my motto, “Buy Low, RENT High” than with a well-purchased vacation rental, kitted out for a stellar vacation experience.
“Why?” you ask. I’m glad you did. Here are 23 reasons why I think VR’s are the Rock Stars of the Real Estate Investment World.
Different (Better) Than Long-term
1. Rule of thumb – you can get weekly for a vacation rental for what you can get monthly for a long-term property. The average owner rents 18 weeks a year. (I can help you do better than average!) Choose wisely in an area with high demand and a long high season, and you’re putting money in your pocket.
2. Personal Use – With a long-term rental, the property very much belongs to the renter during their lease. Same thing with a vacation rental. You usually need to give 24 hours written notice or get permission to even enter the property. Understandably. But, with a vacation rental, it’s almost unheard of to have 100% occupancy. There are all sorts of nooks and crannies in the calendar that you can yourself or to share with friends. Make money when you want. Then, when you feel like staying there, simply mark the time on the calendar and it’s yours. All yours. Muahahaha!
3. Other than a full rehab, there is no easier way to increase your earnings than to add features and amenities to a vacation rental. Even if you totally redo the kitchen in a long-term rental, you are likely looking at an increase of a few hundred a month. I can easily find low-cost amenities that can add $50/night to my rental – and if I only rent 100 nights a year- that’s $5000/year – every year.
4. Tenants – ahh, tenants. Some of them are fantastic. Others…truly awful. The really bad ones know how to game the system and you could be stuck with them for quite a long time. I’ve been to court a few times. I’ve always won but it’s never been fun. With vacation renters, you’re dealing with travelers. People who have jobs (or are happily retired) and are usually whipping out a credit card to pay in full. You have all the money up front, usually 30-60 days prior to their arrival. Nice.
5. Frequent Pay-Days – With long term rentals, payday, while gratifying, comes once a month. Sometimes, there are not fun things in with the rent, like a notice of intent to vacate. That means work. Cleaning, maybe replacing carpet, painting, advertising, showing, real work. With vacation rentals, you can have multiple paydays every month. I, like most owners, break the rental amount into 2 payments. So, with 3 bookings in one month, that’s 6 paydays. For just one property. Sweet!
6. Enter the world of travel – Being a vacation rental owner allows you to enter the world of travel – without dropping hundreds of millions of dollars on a resort. The travel industry contributes 10% to the world’s GDP. You pay residential prices (shh– don’t let the word get out) for offering someone a vacation experience. Essentially, you’re becoming an entrepreneur, a business owner, CEO of your own company. If you don’t want to take on any or all of the responsibilities, you can have some or all tasks outsourced.
7. Live like a local – Being an owner in a vacation destination allows you to live more like a local. You’ll probably spend some time at the hardware store choosing paint and furniture and art. You’ll get to know your neighbors. Pretty soon, you’ll become an expert that travelers come to when they want to know “insider secrets.” Sharing this knowledge on your website can set you apart from the competition and make the decision to choose your home over others easier.
8. Complements – Even though I have upscale apartments, I rarely get compliments except when showing to prospective tenants. As the owner of Starfish Blue, I often get gushing letters telling me how wonderful their vacation was, how they felt like rock stars, and how they will remember their stay fondly for a lifetime.
9. You build friendships in a place you love. Tucking a little corner of the world you already have even closer to your heart than you have as a visitor. When you return, time and time again, (for free!) you can have your friends over for bar-b-ques, drinks, or a night in your hot tub, under the stars, celebrating the good life.
10. The vacation rental can be in your family for generations. You, your children, your grandchildren and generations to come can build memories into the photo album of your life.
Money, Money, Money!
11. As a landlord, have you ever woken up, checked your email, and found that a tenant has selected your place and paid you?
Neither have I.
But, it has happened to me more than a few times as a vacation rental owner. It’s glorious to wake up to unexpected money. Your marketing machine, which you essentially put in place once in the beginning and tweak here and there, is working 24 hours a day, 7 days a week. You never know who’s looking at your listing and dreaming, coming back to your site over and over until they can’t stand it anymore, they have to go. And, by “go,” that means send you money.
12. You can easily 4x’s your money with a well-staged vacation rental that you made a wise decision on – remember, “Buy Low, Rent High.” However, you can use Wow Factor to up your occupancy levels and your nightly and weekly rates. Take the back yard. It can be grass with trees, or you can set the stage and create a dramatic effect. It doesn’t take much. Little things like hammocks, a hot tub, indoor/outdoor sound systems, fairy lights, a fire pit (if you’re comfortable with the risk), grill, a horseshoe area, plush, colorful seating—there are so many options.\
Then… stage it well and take fabulous photos and maybe a video, and suddenly your place is “the” place they want to spend their hard earned vacation money and time.
13. Tax deductions – As a real estate investor, you understand how significant tax deductions can be. But, with vacation rentals, you open yourself up to the world of travel expenses as deductions. Always check with your tax professional, but I’ve been able to take my flight to Fiji, rental car, and meals at a 50% rate and get deductions on them.
High-level tip – get a tax advisor that owns vacation rentals. It took me a while to figure this out, and it cost me money as my previous accountant was not familiar with all of the ins and outs of tax laws for vacation rentals. My new accountant was able to go back 3 years and get a substantial check from the government, but there’s a limit to how many years you can go back. You can save money by starting out with the right tax accountant.
14. Cash in pocket – not only does my vacation rental provide a real profit – it’s appreciating year after year. Except in rare cases, most months I put about $2000 in my pocket. Of profit. After the bills, the mortgage, the staff, the utilities, and marketing fees, I get to give myself a generous salary – considering I don’t work more than 5 hours each month.
The Way Cool Factor
15. Most people dream of what you’re about to do. They want to own a property at the beach or a lake cabin so badly, yet fear is holding them back. It seems like a dream so big they can’t even imagine it. So, when you go to a party or a football game, you’re instantly granted “coolest person in the room” status. The questions keep coming, and you can see the wheels turning in their head. Most people simply don’t have the guts to think their dream could happen now – rather than after they retire, if at all. And to have other people pay for it? That’s just crazy cool.
16. A Shared Experience – It’s not too hard to make an extra effort and bring the best gift to the birthday party or the best dish to a gathering. Just a little extra effort and you’re way ahead of the people who stopped at the store to buy a bottle of wine. But, what if you could share a vacation experience with people you really care about? Opt for a place with enough bedrooms and you can get to know people on a deeper level. Not only will you share a vacation, maybe zip lining or lounging surfside, relaxing in an outdoor café, but you’ll have evenings together, sitting around the table playing cards, chatting on the back porch – quite a different experience to spending an evening in a hotel. The good news is that while there are gathering spaces, if you are ready to read or sleep, just go into your private bedroom and close the door.
17. Not many people can say they have true friends in another locale. Sure, you meet someone on vacation, but then the relationship runs its natural course and you lose track of each other. I am blessed to have unique friendships with people in Fiji. I am happy to call some of the friends. I’ve been to their houses, helped them build their business, and laughed and gotten to know them. I’m friends with them on Facebook.
18. Charity – I have given my church, on two occasions, a week at my vacation rental to use towards their mission program. People bid on it, and the highest bidder gives their donation to the church, not to me. Check with your accountant to see if you are able to use that as a tax write off.
19. Free vacations – I get to stay in a home with a private pool, maid service, a hanging bed, impressive furniture, and incredible island and ocean views—free! And, it’s exactly to my taste- right down to the art on the wall and the linens and pillows. Anytime I want to go, as long as there isn’t a guest there, I can stay at my home. Sometimes, I’m a little late on getting my vacation on the calendar and I end up selling the time to someone else, but there’s always another time. And, that’s just more money in my pocket to fund my trip.
20. Travel the world – free! With companies like HomeExchange.com, you can trade time in your place (even your primary home) for time in someone else’s home, worldwide. In the last month, Ive had offers for trades in Paris, just outside of Paris, Amsterdam, multiple locations in California, Brooklyn, and Iceland.
21. You can change someone’s life. Some people get in this business because they inherited a home, they wanted a home at the beach and didn’t know how else to afford it, or it just made a sound investment. However, the best vacation rentals are owned by people who truly care about their guests.
Here’s an example – I had a couple coming from Australia. He was non-religious but had married a woman who kept her hair covered for religious purposes. She spent her entire life, since adolescence, keeping her hair covered in public. The only man who could see her hair was her husband.
They naturally gravitated towards my vacation rental. But, what about the gardener? And my manager – who checks in on things? After talking to the future guests and getting to know more about them, I was able to set things up so that we could ensure that she could wear her hair uncovered – a true luxury in her life, and not be seen by any males. It meant so much to them that I was willing to go the extra bit so that she could truly enjoy herself. Feeling the breeze in her hair was a memory she won’t forget.
I can talk about vacation rentals for days. If you think vacation rentals are for you, then check out my new, online program, “Buying Your First Vacation Rental.”
I walk you through, step by step by step, including:
- An overview of the vacation rental industry
- Buying Smart
- Wow Factors
- Building your team- Realtor, Lawyer, Accountant
- Why a Cougar Property could be just right for you
- Financing and Insurance
- Building the Vacation Rental Experience
And more! Including a 6 month membership in a private FB group.
The course is worth thousands. You’ll learn from all of my mistakes and start out making more money than traditional owners. In fact, you can’t afford to miss out on this deal.
But, you’re not going to pay thousands.
It’s priced at a more than fair, can’t miss out $497.
If you act now, and since you’ve read this far, I assume you think this could be a good fit for you, so I’d like to invite you to a private, pre-release price. Click here to sign up before September 30 at midnight PST to save $200 and pay just $297!