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  • Beach House anyone actually make money?

    I've reviewed prior threads and understand members are largely not in favor of purchasing beach property as a rental property. Has anyone made any money or felt a break-even was worth it to enjoy several weeks throughout the year at the beach? This is a small town, fairly desirable, with limited property which should lend to reasonable re-sale, within 1.5 hours of home and one we have visited several time a year for >20 years. We don't ever go in season and have no problem diverting family who might want to use it gratis. I have residential rentals that I manage myself so am thinking with a property manager although costly it would alleviate much of the burden except writing the check for repairs. We generally rent small, but nice condos and spend about $10,000 a year on beach rentals. I am not going to buy anything in this market but my crystal ball, also known as advanced age, leads me to believe things will cool off in a big way in the near future so I'm mulling around something that is technically a luxury purchase but with the possibility to make a few dollars.

  • #2
    would consider if that volume if beach trips remains in your future with whatever your family situation currently is. also try to factor in hurricane risk (insurance cost and insolvency risk). if you will continue to go a lot off season then i imagine it may work out if you run numbers.
    “. . . And the LORD spake, saying “First shalt thou take out the Holy 401k. Then shalt thou save to 20%, no more, no less. 20% shall be the number thou shalt save, and the number of the saving shall be 20%. 25% shalt thou not save, neither save thou 15%, excepting that thou then proceed to 20%. 30% is right out . . .””

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    • #3
      I have heard that a Colorado ski property was a money maker, primarily due to the appreciation.
      The rentals were breakeven but are now very positive. Location, location, location.

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      • #4
        There's two way of looking at this:

        1.) You want a place that you go to every year but would also like to maybe try to make some money off the place.

        2.) You want an investment property.

        You're looking at it through the first lens. I would proceed with caution.

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        • #5
          We have been all over the place with this second home issue over the years. For us, it came down to a few points:

          1. While we like going to the same place over and over again, sometimes that place falls out of our favor, too. I can think of a couple of examples of places where we traveled every year for 5-7 years, places where we considered buying property, places we have not returned to in at least seven years.
          2. I do not mind renting someone else's place or staying in a hotel. I might mind staying in my own place that is also being used to rent to other people. I have friends who have purchased places, with this intent, and quickly decided that they did not like how others were treating their place. It is a different mindset than owning something exclusively for rental.
          3. I personally do not enjoy maintaining one home. The idea of owning a second home would be "1 1/2 too many" homes to maintain.

          YMMV

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          • #6
            Originally posted by StateOfMyHead View Post
            I've reviewed prior threads and understand members are largely not in favor of purchasing beach property as a rental property. Has anyone made any money or felt a break-even was worth it to enjoy several weeks throughout the year at the beach? This is a small town, fairly desirable, with limited property which should lend to reasonable re-sale, within 1.5 hours of home and one we have visited several time a year for >20 years. We don't ever go in season and have no problem diverting family who might want to use it gratis. I have residential rentals that I manage myself so am thinking with a property manager although costly it would alleviate much of the burden except writing the check for repairs. We generally rent small, but nice condos and spend about $10,000 a year on beach rentals. I am not going to buy anything in this market but my crystal ball, also known as advanced age, leads me to believe things will cool off in a big way in the near future so I'm mulling around something that is technically a luxury purchase but with the possibility to make a few dollars.
            Appreciation is not a given thing.

            So for it to make money you have make money during the peak and shoulder seasons to cover expenses ( mortgage, taxes, upkeep, manager fees etc). That leaves very little quality time weeks for you to visit for personal use.

            If you go in the peak season, you are cutting into the rental income. That might make it a money loser. Whether it will be a $10K money loser or more is for you to dig into.

            Most second mountain / beach homes are for personal pleasure. Rarely do they make money. They lose money. Can you afford that loss?

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            • #7
              Originally posted by CordMcNally View Post
              There's two way of looking at this:

              1.) You want a place that you go to every year but would also like to maybe try to make some money off the place.

              2.) You want an investment property.

              You're looking at it through the first lens. I would proceed with caution.
              Kind of like combining investment with life insurance. But I must say, I am a big fan of Reese peanut butter cups.

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              • #8
                Originally posted by Kamban View Post

                Appreciation is not a given thing...

                Most second mountain / beach homes are for personal pleasure. Rarely do they make money. They lose money. Can you afford that loss?
                It is a consumption item, for sure. If money were no object, I would surely have a second home. I would definitely enjoy it. I have lots of friends with second (and even some with third, fourth, etc.) homes. Nothing would be more enjoyable than packing up the dogs and driving to Colorado for weeks on end. We know this because we have done it a couple times and worked form there.

                With money being a constraint, owning a second home could be the difference between never having to really worry about money and having to worry about it. What does this really mean? It means that having a second home may mean that I or my wife would have to work longer. Or we would not be able to travel as much. Or make other lifestyle sacrifices. Or have less of a cushion if there was an emergency. Etc. We probably could afford it, but not comfortably.

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                • #9
                  Agree you're trying to justify consumption as an investment. Just embrace it as consumption; you can likely afford it. If you happen to make a few bucks on summer and holiday weekend rentals, great, but that's not a raison d'être to buy in the first place.

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                  • #10
                    Can you make money with a beach house? Maybe. Your odds are better with an Airbnb or VRBO that you buy explicitly for the purpose. Need a good cleaner and a good local manager.

                    If you buy a vacation rental for yourself and try to make money renting it out from time to time, the odds of making this a prudent investment go down significantly. Figure out what you’re buying: an investment property or a second home.

                    Perhaps the best deal is to rent out a second home for a week or two that someone else impudently purchased.

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                    • #11
                      Buying a lake house last fall has been the best decision I've made in years. Absent appreciation, it pays for itself in the off season and maybe a little more. We did some updating to it this past summer, so it wasn't rentable till after Labor day, but I'm renting it 12 days a month for ~$450 per night after the cleaners.. During the summer season I would have had 60-70k in income minus my use. In addition to that, I'll knock a big chunk off of my taxes from bonus depreciation (roughly $150k).

                      What is most amazing is how much time my family spent together this year. I saw my kids and their friends more than I have in I don't know how long.

                      My only regret is not doing it five years earlier. If it were farther than 90 minutes away, I wouldn't have done it.

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                      • #12
                        I feel like the people in this thread recommending against it are people that don't own a second home, because none of you guys are giving examples, unlike the people that do own a second home who think otherwise...

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                        • #13
                          Originally posted by Craigslist View Post
                          I feel like the people in this thread recommending against it are people that don't own a second home, because none of you guys are giving examples, unlike the people that do own a second home who think otherwise...
                          My wife and I own several residential rental properties, a commercial building, and some farmland. We deliberately don’t own a second home for ourselves, much less one that we would use sometimes and rent out to strangers at other times.

                          This may be a personal bias, but I don’t want to go to the same exact place again and again and again when we have a long weekend or vacation time. There are too many cool places in this country and all around the world that we haven’t seen yet. Many of these locations have good Airbnbs and VRBOs as well as decent hotels.

                          Then again, we have a beach house already as our primary residence, so that decreases the need for a second home.

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                          • #14
                            Originally posted by Molar Mechanic View Post
                            Buying a lake house last fall has been the best decision I've made in years. Absent appreciation, it pays for itself in the off season and maybe a little more. We did some updating to it this past summer, so it wasn't rentable till after Labor day, but I'm renting it 12 days a month for ~$450 per night after the cleaners.. During the summer season I would have had 60-70k in income minus my use. In addition to that, I'll knock a big chunk off of my taxes from bonus depreciation (roughly $150k).

                            What is most amazing is how much time my family spent together this year. I saw my kids and their friends more than I have in I don't know how long.

                            My only regret is not doing it five years earlier. If it were farther than 90 minutes away, I wouldn't have done it.
                            Before the pandemic your family were real globetrotters. What happens after the pandemic?

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                            • #15
                              Originally posted by Craigslist View Post
                              I feel like the people in this thread recommending against it are people that don't own a second home, because none of you guys are giving examples, unlike the people that do own a second home who think otherwise...
                              And there's typically good reasons why people don't own second homes, especially when likely the majority of people in this thread could afford it if they wanted.

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