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jmarto1 
LSU Fan
Houma, LA
Member since Mar 2008
10047 posts
| Vacation properties as investments (Posted on 1/6/13 at 10:02 pm)
Anyone have experience? I'm thinking about purchasing something around the Orange/Sugar Beach area in Alabama. I've had rental properties before but not as vacation properties. Any advice? What kind of vacancy can I expect?
This post was edited on 1/6 at 10:15 pm
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bryso 
Clemson Fan
The Real Death Valley
Member since Dec 2006
26768 posts
| re: Vacation properties as investments (Posted on 1/6/13 at 11:14 pm to jmarto1)
not worth the hassle, IMO.
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GenesChin 
Ole Miss Fan
The Promise Land
Member since Feb 2012
3191 posts
| re: Vacation properties as investments (Posted on 1/7/13 at 1:05 am to jmarto1)
Bunch of friends' parents rent vacation properties out. Almost without fail, they all say they buy the property for their own vacation desires and rent it out just to help cover their costs.
All of them say that it wouldn't be a good investment any other way.
Unless you had it during the BP crisis, friends grandma got to claim renters every week for like 6 months and made a killing off that spill
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Lookin4Par
Northwestern Fan
Shreveport
Member since Jun 2012
606 posts
| re: Vacation properties as investments (Posted on 1/7/13 at 5:58 am to GenesChin)
I have looked into this extensively. You will need to rent the property out 80% of the time to break even, on average, give or take a couple of percent. 80% is doable but you will cut it close every year. The insurance costs are high and the monthly fees range from 600-1300 a month.
If you want to do this you must be financially solvent. Do not take an 80% occupancy for granted, no matter the history of the property.
If you buy one do so for your own enjoyment. Think of the 80% occupancy goal as a bonus that will enable you to build equity and have a low cost vacation home of your own. Be prepared to shell out cash during off months and years.
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yellowfin 
Illinois Fan
Paige is Pretty
Member since May 2006
51857 posts
| re: Vacation properties as investments (Posted on 1/7/13 at 7:36 am to jmarto1)
quote:
Vacation properties as investments
Terrible unless you can get them for a great price
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ynlvr
LSU Fan
Baton Rouge
Member since Feb 2009
498 posts
| re: Vacation properties as investments (Posted on 1/7/13 at 8:09 am to yellowfin)
quote:
Terrible unless you can get them for a great price
This. The return (or vice versa - loss) is from rapid appreciation if or when that happens. You are still smiling if you sold in 2006, still hurting, six years later, if you didn't.
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CHSBears 
Texas A&M Fan
Baton Rouge
Member since Aug 2007
334 posts
| re: Vacation properties as investments (Posted on 1/7/13 at 8:25 am to ynlvr)
BIL purchased a condo in July, 2004 about 45 days before IVAN. Almost nine years later the ASKING price per square foot in the same development and on the same floor with the same view is about 40% of his cost. Very few, if any are actually selling at a even lower price. Monthly condo fees will eat you alive and if you do have a storm with damage the assessments for the deductable are large. BIL paid two assessments after IVAN, one for 25k and six months later one for 20k. Condo was not usable for 2 years, monthly payments continued and monthly condo fees continued.
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Poodlebrain
LSU Fan
Way Right of Rex
Member since Jan 2004
12688 posts
 Online
| re: Vacation properties as investments (Posted on 1/7/13 at 8:44 am to jmarto1)
If you use the rental property for the greater of 14 days or 10% of th days it is rented to others at a fair rental price, then the property is considered a personal residence and your tax deductions will be limited. This will decrease the benefits of owning such a property.
I have clients with vacation rentals, and most regret ever getting involved. The clients who have had positive experiences have tended to invest in more exclusive destinations such as Hawaii, Lake Tahoe and Jackson Hole.
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yellowfin
Illinois Fan
Paige is Pretty
Member since May 2006
51857 posts
| re: Vacation properties as investments (Posted on 1/7/13 at 9:24 am to CHSBears)
quote:
BIL purchased a condo in July, 2004 about 45 days before IVAN. Almost nine years later the ASKING price per square foot in the same development and on the same floor with the same view is about 40% of his cost. Very few, if any are actually selling at a even lower price. Monthly condo fees will eat you alive and if you do have a storm with damage the assessments for the deductable are large. BIL paid two assessments after IVAN, one for 25k and six months later one for 20k. Condo was not usable for 2 years, monthly payments continued and monthly condo fees continued.
I would have let them foreclose on that fricker
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bryso
Clemson Fan
The Real Death Valley
Member since Dec 2006
26768 posts
| re: Vacation properties as investments (Posted on 1/7/13 at 9:41 am to yellowfin)
quote:
I would have let them foreclose on that fricker
well, at least i think OP got the message. 
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Tenforty1728
LSU Fan
Baton Rouge
Member since Oct 2012
46 posts
| re: Vacation properties as investments (Posted on 1/7/13 at 11:11 am to bryso)
Terrible investment. If you want it for your own fun and to write-off some interest that you're going to borrow anyway then it may make sense. I prepare hundreds of tax returns a year and NO ONE makes money off these, especially in those areas. Property taxes and insurance are so outrageous you'd have to get top dollar rentals in November and December to ever think about making any money.
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bigblake
Member since Jun 2011
512 posts
| re: Vacation properties as investments (Posted on 1/7/13 at 11:25 am to jmarto1)
(no message)
This post was edited on 4/6 at 1:07 pm
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bryso
Clemson Fan
The Real Death Valley
Member since Dec 2006
26768 posts
| re: Vacation properties as investments (Posted on 1/7/13 at 11:34 am to bigblake)
you can buy a shite ton of hotel rooms all over the world for $300k.... not to mention the interest you will pay..
it really boils down to being stuck in one place (and maybe offsetting some cost) vs the option of going else where... personally i don't want to spend every vacation on the gulf of mexico.
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