Vacation Property Valuation
All of my experience in valuing properties is for residential properties in the 2-4 unit range that have year long tenants. I have learned a good bit of what I know from postings on this forum. I am now looking to move onto buying a vacation home at the beach and renting it out. What are the differences between evaluating long term tenant props against weekly rentals like vacation homes? Thanks for any input.
You are essentially in the hotel business with weekly vacation rentals. You are not going to get much evaluation of vacationers other than to guarantee you will be paid and that you have means of collecting should damage occur. You will need large deposits and get yourself paid up front. Credit cards are a very good idea.
I agree credit cards are a good idea.
Also have a standard rental agreement where you require an initial deposite to reserve the property and payment in full a few weeks prior to occupancy.
You will not rent it out for the entire year so be sure to set your pricing based on peak weeks. For example if you have 13 peek weeks per year make sure your pricing has you covered for your expenses with those 13 weeks.
dburch,
I have a number of Section 8 tenants. Overall, I like the program. That being said, there are some difficulties. The Section 8 office that services my CA investments has recently cut back on the amount that they will pay. This does not effect my current rental contracts, but the portion of the rent that they pay has been reduced and the tenant is burdened with a larger share. I have not had any turnovers due to this, however, I have not had any Section 8 replacement tenants due to the limit on the the rents they will allow.
I have had an awful time with one office in the midwest. It has been four months that they have not scheduled a re-inspection for a tenant who really wants to move in.
I hope this is of some help to you. You might want to check on the local rental market to see if you will be OK should you lose some of your Section 8 tenants.
Regards,
Ed
to Kimesha, your maintenance and/or reservices should be at least 10-20% of your gross rent.
oh, also do it per building its easier and if you can get a solid rent roll history that will be helpful.
I have several Section 8 tenants and have had no problems. My properties are on the lower end of the "middle class neighborhood" but not in the "projects" although they are nearby. I have never had a lender ask me if my tenants are low income or Section 8--they just look at the rent roll against the value of the property and Section 8 pays market rate rent and it is deposited directly into my bank account. I have had no problems with the yearly inspection, but I understand they have cut back on the number of people they are letting into the program---EB
Has anyone heard of Hal Roark and his Section 8 material? If you have read it please post if you thought it was worth the money.
If you decide to keep the property, refinancing will incur more closing costs that will likely eat up all the extra cash flow you made from the minimum option payment. Sort of a no-win situation. Just start making the payment that is specified for the 30-year amortization.