May 2, 2007
Buying a vacation fome the financially responsible way
This is a very practical article in which the author writes about her experience buying a vacation home. She partnered up with some relatives to make it more affordable and chose a place where people want to rent year-round. When the family isn't using the vacation home, it's being rented out fully furnished.
There is some faulty thinking here:
The one advantage to the high cost is that, between the management company's fees and all the other expenses needed to run the house, no matter how often the house is rented, it will always operate at a loss. That should mean some big deductions come tax time.Operating at a loss is never an advantage. Sure you're getting a tax deduction, but don't forget that you're losing money! Now you expect a vacation home to cost you money - all vacations cost money. There's nothing wrong with spending money on a vacation home but there is something wrong with looking for ways to lose money in order to get more tax deductions.
Despite the flaw, I do think this is a good article. The author made some errors we can learn from (especially with the insurance) and warns us of some potential problems.
Posted by James Trotta at May 2, 2007 1:32 PM | TrackBack
The Real Estate Management Company in this story charges 50 percent of the rental revenue.
There are internet rental companies which only charge a small flat rate fee eliminating the real estate middle people.
For example, Vacation Rentals By Owner (www.vrbo.com) is an excellent rental website.
Lower management costs equate to higher rental profit and lower costs for renters.
Posted by: ray anderson at May 3, 2007 8:53 PMYou're right Ray - 50% is pretty steep. However I understand why the reader chose them since they have an office in the area and supposedly keep the place rented out.
VRBO requires more work from the owner (hiring cleaning people between tenants, checking for damage, etc.)
Posted by: James Trotta at May 4, 2007 3:01 PMMe & my Wife Mary are Investing in Vacation home Resort Area around Phoenix in Two Bedroom Condo that can used in winter & that can be rented in Rest of the time Thank You
Posted by: Rajendra H Shah M.D. at May 5, 2007 11:08 PM