Second Home Income
You’ve always dreamed of owning a cabin, being able to spend several weeks a year in your own slice of heaven. But you awaken from your dream wondering if you can justify this type of lifestyle purchase. Will you use a cabin often enough to justify the high prices that today’s vacation homes are fetching? There is, however, another way to view a cabin purchase.
Photo by Dreamstime.com
Think of a cabin as an investment. It’s possible to provide a retreat for your family, watch it appreciate in value, and get a little bit of income, or at least enough to help offset your mortgage and other expenses.
Today, many vacation home buyers are buying with investment in the back of their minds: investment in family, investment in a lifestyle and, yes, possible financial investment. When not using their cabins personally, they’re renting them out. Renting on a nightly or weekly basis can yield tens of thousands of dollars in rental revenue each year, especially when done without the use of a property management company (saving the 20 to 50 percent in management company commissions). Over 100 million vacationers are seeking cabins, beach and other vacation rentals each year.
Renting your cabin when you’re not using it can be easier than you think:
• Occupancy – Rent it 17 weeks and use it 35 weeks yourself. When your monthly mortgage payment is less than or equal to one peak week rental, 12 weeks’ rental will pay your mortgage payments for the entire year. Other costs – including bills for your phone, power, cable, even association fees – are paid by your earnings from approximately five off-week rentals.
• Advertising – Use established vacation rental Web sites, including national sites like the www.homeaway.com network and regional sites like www.lakeplace.com, which serves Wisconsin and Minnesota.
• Housekeeping – Hire an individual or company to clean and assess your cabin after each guest.
• Maintenance – Be proactive; fix things before they break and have plungers, tool boxes, light bulbs and other quick-fix items handy for your guests.
Of course, there are tax and insurance matters to navigate, but they’re not insurmountable. Don’t let the fear of logistical issues paralyze you from realizing some financial benefits from your investment. The rental revenues can help offset the costs associated with owning your cabin, and when done properly, can even yield positive cash flow.
Christine Hrib Karpinski has also written the book “How to Rent Vacation Properties by Owner,” www.howtorentbyowner.com.