Ever dream of your own vacation property?

[TrustedTraveler]

Wow, I dream of owning my own vacation property all the time, but with a twist: I'd like to find 12 to 24 others who might form a corporation and buy a property together, each kicking in enough to pay for the unit so all we have to cover is expenses. Each "owner" would be responsible for renting or finding renters for the share they own 1/12 or 1/24th etc.). This would give us a property with no mortage and rented out all year.
My dream continues to eventually owning a share in several homes perhaps in different locations, like beach, mountains, etc. It becomes a network of homes where we could swap weeks and have our own little RCI kinda thing.
With a ton of second homes in foreclosure now would be a good time to buy. Perhaps the current owner (facing foreclosure) could become a partner and not loose the whole thing.
This is not a business offering, just a chance to kick around my dream. Any thoughts?

 

[chalee94]

it sounds a lot easier on paper than it actually is to execute.

here's a good recent thread that discusses some of the pitfalls.

 

[Coach81]

Especially in today's economy.. be careful.

 

[Acklander]

all weeks are not created equal. Christmas and Easter are highly popular and can rent out for much more than September.

 

[TrustedTraveler]

I've owned rental property before and I am aware of the problems and pitfalls. That's probably why I lean towards sharing the risk and establishing a nearly full rental schedule from the outset.

(That was an interesting and useful thread, thanks)

Sure, some weeks are more valuable than others and that would have to be taken into consideration. There has to be a way to deal with that fairly over the years.

But if a group could buy at way below the old market value, and the value only recovered halfway back over the next several years, it still could be a good deal. Especially is each partner paid rent each year for their own vacation.

I looked at buying a pool home myself a few years ago and did an online survey of over 200 homes in VRBO and found the average home had less than 12 weeks booked at that (booming) time.

Any other thoughts?

 

[castanhope]

We're doing it!! Or at least something very similar to what you're suggesting. We have loans, however, buying the property free and clear would be a dream. Another family who we are close friends with and vacation with decided to use some investment money that wasn't doing well in the market to buy a vacation rental property. We contributed and ended up finding four other families who wanted to invest as well. We formed an LLC, and each party's investment in dollars translates to their percentage of the company. For example, if someone contributed $40,000 and our total investment was $400,000, they would hold a 10% share in the property. If we sold the property, they would receive 10% of the profits. If we had bills to pay that we couldn't cover with the company's income, they would be responsible for 10% of those bills, etc.

My friend and I are "managing partners" and the other investors are "silent partners." In other words, we do all the work But that's how we wanted it (we have control issues! ) and that's how the other partners wanted it. As a monthly source of income...not a good investment. As a long term investment, I think it will work out wonderfully. The market WILL go back up. We purchased this brand new home at around 40% less than what they were selling for a few years back. It is the time to buy as long as you know what you are getting into and you are in it for the long haul.

Yes, the Florida/Disney market is saturated. Completely, ridiculously saturated. However, if you do your research, you will find that there isn't really much heavy competition. There are very few properties that stand out above all others. Everyone uses the same decorators, gets the same furniture package, there are lots of nice properties, but not a lot of different properties that stand out. There are a few owners who are consistently booked. They don't have any secret method, they just have very nice properties that stand out a little and hit their target groups full force. Figure out who you are marketing to, and make your property stand out within that market. Then it is a good investment.

 

[TrustedTraveler]

Jeeze, I'm jealous! I knew I wasn't the only one who thought this was a good idea. Best of luck to you and your friends.

 

[spiceycat]

if you don't demand brand new - you can find something now at what you can afford.

going to be looking myself in a week.

 

[Purseval]

Florida's landscape is scattered with the carcasses of buildings bought by people who thought they were getting a great investment.

 

[4Seasons]

I honetly think a vacation rental in a place like Hilton Head, Ocean City, etc. would be a better long term investment. There is only so much coastline to build on.

The building in the Orlando area has been nonstop for several years. I wouldn't expect to make a profit even if you buy at a steal. There will always be hidden and unexpected expenditures that pop up, and finding renters can turn into a full time job. I'm not being Debbie Downer, just being realistic. If you have money spend and aren't looking for profit and have the time, stamina and energy to "tow the line" then go for it. From what I understand, having a 40% occupancy during the year is pretty good. I would never go into it expecting anything higher than that.

It's not an easy thing to be a landlord. I know firsthand, we've been (residential, not in Orlando) landlords for over 21 years and I could literally write a book with all our nutty experiences. And this is considering overall we've been pretty successful during that entire time. Just when you think you've seen/heard it all, something will top it.

Oh, and don't expect to stay friends with the other investors (if they are friends in the beginning). Business and friendship are like oil and water the majority of the time. It's the nature of the beast unfortunately.

 

[My4Mouses]

I think this could be a great idea for several people that want a vacation home/condo. With the prices that are out there right now you could purchase a home around Disney out right with several people.

 

[TrustedTraveler]

I think this could be a great idea for several people that want a vacation home/condo. With the prices that are out there right now you could purchase a home around Disney out right with several people.

That's what I thought. If enough people belonged to the LLC to buy the property outright, and all were committed to renting an/or finding renters for the majority of the weeks each year, then it should be a success.
I found a web site several weeks ago where a Realtor displayed a whole page of vacation rentals, what they were appraised for 2 years ago and the price now. Despite the glut in rentals, I think this plan would work.

 

[tednvon]

Hello, here are 2 threads from a while back...good info from those of us who have been there....I posted some numbers that might help you....hope it helps...Ted

http://www.disboards.com/showthread.php?t=1550084


http://www.disboards.com/showthread.php?t=1570186

 

[Brian Noble]

Trying to share the actual work/responsibility with that many people is just a recipe for disaster. The silent partner approach sounds easier, but even then, complicated.

If you really just want a fractional interest, either go the timeshare route or a destination club. For whole-ownership, castanhope has the right idea---you're buying for the long-term, and renting is not an income producer so much as a way to defray the costs of vacation home ownership.

For what it's worth, that's what most of the realtors on OBX will tell you, too---while it is true that coastline is more limited, so is the effective rental period because of seasonality.

 

[Princess Disney Mom]

Nope never had this dream. I like paying for my hotel etc going home after and being free and clear.

 

[Kay1]

I don't see the attraction either. There are so many places to rent. When I visited two Orlando websites looking for rentals, I was just bombarded-and that was for Christmas week. I'd rather just rent from someone else and let them worry about the problems that go with owning a place.

I opened this thread, though, because just yesterday I was thinking about buying a place where my husband and I think we want to retire. Prices are way down but will likely go much lower as the Alt A mortgages reset. I'll be keeping an eye on things for the next few years, so never say never.