vacation home as investment potential, interested, investment, buying

busprof

I'm interested in general real estate investments, but specifically, let's say I'm considering buying a vacation home/condo in (insert city here). The plan is to rent it out 90+% of the year, and use it personally maybe ~1 week of the year. Also assume we have to hire a 3rd party to maintain & schedule.

1) Is the long term profit potential small?
2) What if the city is outside the US?
3) Does it have to be a limited supply / high demand city (ex. NY or Miami).
4) Any good/bad experiences?
5) Will sites like homeaway.com help slash vacancy rates?
6) Any good educational websites?



Edited 1 time(s). Last edit at Wednesday, June 8, 2011 at 04:29PM by mp3bu.

IAmNeil

Personally, not too big a fan of vacation homes as either an investment or pure personal use.

Wouldn't consider for personal use because I feel restricted in my choice of vacations.

You may also want to reconsider your ability to rent out for 90% of the year. A 5% vacancy in cities is reasonable, so just 10% vacancy looks aggressive. Consider that most tenants would want to use it for the weekends mainly.

Also consider if you would need access to your cash locked into investment. Would you consider buying someone else's vacation home as an investment? If not chances are that you may not be able to sell it when you want it (or at the price you want). So factor a total return for your investment.

Also if you think more people in your area think a holiday homes is a good investment, the more you should reconsider.

But anyway things may work differently in your area.

kingstongal

I think you can get a tax deduction from the mortgage interest if you live in it a % of the year (under US tax code, that is).



Edited 1 time(s). Last edit at Wednesday, June 8, 2011 at 06:37PM by 99 cannon sloop.