I’m away on vacation this week (and it is expensive), but here’s frequent contributor Kosmo with an article about his last vacation.
No, we didn’t go to Disney World.
In 2017, we made our first trip to Door County, Wisconsin. For those who aren’t familiar, it’s the “pinky finger” on the eastern border of Wisconsin – a peninsula with Lake Michigan to the east and Green Bay to the west. After the initial trip, we decided that we’d definitely make a return trip. We planned a trip in 2019, but it was derailed by a family health situation. Last year, it was postponed because of COVID. This year, we finally made a return trip. Even with a somewhat limited set of activities (because our 11-year-old isn’t old enough to be vaccinated), it was great. We’ll definitely be back.
A funny thing happened. We started looking at homes on Realtor.com. Just goofing around at first. What would we do with a second house? Especially a house that’s considerably more expensive (per square foot) than our primary residence. That’s just crazy.
The idea percolated and eventually turned into a new idea. Perhaps a rental property that we use for a couple of weeks per year, plus some sporadic weekends.
Financially, we’re in a position where we could try this. I’m 46 years old. We have about 75% equity in our house and have a bit of money in an investment account. We would swing the down payment and setup, and even get through some lean years with limited rentals, if worst came to worst. I actually don’t think we’d have trouble renting a place, because it’s a very high-demand area.
The hard part
The bigger factor is the fact that we live 400 miles away. Even if we bought something that didn’t require a lot of maintenance, trying to get things set up on weekends would cause the setup to stretch longer than we’d like. Setting up a short-term rental takes a bit more work than setting up a long-term rental. You need to furnish virtually everything. Not just beds, a couch, table, chairs, and TV, but things like spatulas, corkscrews, and frisbees. And, of course, toilet paper. Nobody wants to check into an Airbnb and realize there’s no Charmin.
We would also have to hire a local cleaning service, as well as have some sort of arrangement with a local maintenance person to handle any acute issues that arise. If there’s a leaky pipe on a Wednesday, I wouldn’t be able to jump in the car and go fix it, since I have a day job. Nor could I mow the lawn every week or clear snow in the winter. Naturally, paying locals to assist would cut into the profitability of the venture.
Does it make sense?
Of course, the venture doesn’t actually need to make a profit. We’d be getting some personal use out of the property, plus the likely appreciation in property values. We could lose a bit of money every year and wouldn’t cry about it. If we could simply defray a decent chunk of the costs, that would be great.
We’re going to dip our toes in the water. My wife (a CPA) and I are both the type to plan things. We’re putting together a list of the furnishings we’d need, so that we can get our arms around the potential cost. Everything from bed frames to pizza cutters.
We have a local realtor that we’ve used to buy two houses and sell one. We’ve always enjoyed working with him. It seems like a longshot that he’d know some realtors 400 miles away, but we asked. Yep, he knows a couple of people. He’s going to get their information to us today, and we’ll engage with them very soon.
Do any of you own and remotely manage short-term rentals? What has your experience? Is it worth the cost and effort? Are there potential pitfalls that I should be aware of?