Little over a month now...

[Mischief Managed]

We moved aboard on July 29. Loving it. Our house is under contract and due to close later this month. Unfortunately, health issues of a family member have forced us to stay in New Hampshire year round (rather than heading south on the boat each Winter like we originally planned), so we'll be either buying a beach condo (if we find one we love) near our marina, or renting one this Winter.



If we buy a condo, we plan to rent it out on a weekly basis to beach vacationers while we live on the boat during the warm months. I am told there's a high demand for condo rentals near the beach and a nice condo can generate a lot of revenue. The upside of staying in NH is that my wife will continue to work, so if the condo makes money, we may use her income and revenue from the condo(s) to buy 2 or 3 more of them and perhaps we can retire a little earlier than planned.

 

[kchace]

Congratulations Dave. It’s been a tough year but you still put it together.

Ken

 

[SoWhat]

Check AirB&B rental availability for Hampton Beach. That should answer your question about how much a condo will rent for and how many are available. (Although I suspect this year is an anomaly because Canadian border is closed)

 

[JohnEasley]

Well done! Sounds like everything is coming together nicely. Hope those health issues tying you to the North resolve quickly.

 

[Mischief Managed]

Check AirB&B rental availability for Hampton Beach. That should answer your question about how much a condo will rent for and how many are available. (Although I suspect this year is an anomaly because Canadian border is closed)

I have actually done more than that and have conversed with a few people that own condos here and rent them out through AirBnB and VBRO. Most use a management company to handle the paperwork and a maid service to clean up between rentals. Makes it mostly a hands-off business that just rakes in money. Might not be the best investment I could make from a pure business point of view, but it also gives me a place to live that typically appreciates in value. I plan to buy the condo with an LLC too.

 

[MOM]

Hmm. With COVID-19 still heavy duty in the picture that wouldn’t be a route I wanted to go, it seems rather risky on so many levels. Just throwing that in for your consideration.

 

[Mischief Managed]

Hmm. With COVID-19 still heavy duty in the picture that wouldn’t be a route I wanted to go, it seems rather risky on so many levels. Just throwing that in for your consideration.

The first condo would not be risky as I need a place to live in the Winter regardless, and I can afford it without any rent revenue. Any other condo purchases would be at least a year away and very carefully considered. That said, I would not buy additional condos unless I could also afford them without rent revenue.

 

[HiDHo]

Positive cash flow from rentals the goal, oh and appreciation.
A great rental agent is also a plus.

 

[Jmk2000]

We moved aboard on July 29. Loving it. Our house is under contract and due to close later this month. Unfortunately, health issues of a family member have forced us to stay in New Hampshire year round (rather than heading south on the boat each Winter like we originally planned), so we'll be either buying a beach condo (if we find one we love) near our marina, or renting one this Winter.



If we buy a condo, we plan to rent it out on a weekly basis to beach vacationers while we live on the boat during the warm months. I am told there's a high demand for condo rentals near the beach and a nice condo can generate a lot of revenue. The upside of staying in NH is that my wife will continue to work, so if the condo makes money, we may use her income and revenue from the condo(s) to buy 2 or 3 more of them and perhaps we can retire a little earlier than planned.

Sorry to hear the bad news. But on the upside sounds like things will workout nicely. Out of curiosity what did you buy to live on?

 

[catalinajack]

Covid-19 will go away sooner or not much later. Making a long-term decision based on the transitory nature of something like Covid is not the approach I would take. This year's rental season is over. Next rental season starts May 30 in New England.

Hmm. With COVID-19 still heavy duty in the picture that wouldn’t be a route I wanted to go, it seems rather risky on so many levels. Just throwing that in for your consideration.

 

[nmcafee]

Check out Airdna.co not com, just .co
It gives some pretty detailed metrics for airbnb and vrbo rentals. You can get some for free but to get complete info it costs $. However, if you are trying to figure out what and where to buy a rental unit it is pure gold.

 

[Mischief Managed]

Sorry to hear the bad news. But on the upside sounds like things will workout nicely. Out of curiosity what did you buy to live on?

We bought a 1992 Tollycraft 44 CPMY and love it.

 

[Mischief Managed]

The real estate market is insanely tilted toward sellers around here right now (we exceeded our stretch goal for our house sale proceeds in just 3 days on the market in a 7-way bidding war), so we have decided to just sit tight, hope the market reverts to normal and rent a condo for this Winter. Condos we looked into last February are selling for 20% more now than they were priced at then. I seriously doubt that level of inflation will sustain and I think there will be a correction.

 

[FF]

Our CT next door neighbor retirement plan was a condo to rent all summer in the FL panhandle (Destin) and occupy in all winter , with a place in a ski area in NC or VT for his summer residence.

 

[Swfla]

Check condo association rules about vacation rental restrictions.Otherwise, best wishes.

 

[MNdiver]

Hmm. With COVID-19 still heavy duty in the picture that wouldn’t be a route I wanted to go, it seems rather risky on so many levels. Just throwing that in for your consideration.

Sounds like the OP has done his homework. Here in northern MN> tourism is life, rentals have done well even thru the covid crazy

 

[NowhereHome]

Little late:

Just a note RE: COVID's impact on real estate. The largest impact is interest rates being ridiculously low. People shop payments (or what they can afford) and that means the actual sale amounts have gone up, combined with a ton of cash injected into the economy that inevitably needs to find a home. Downside is the price of your home could be impacted by a return to higher interest rates.

$3k/mo at 2.75% (flyers I am getting today) is ~$735k
$3k/mo at 6% (2005-6 mortgage rates) it is $500k

You could also say the $735k's house today likely owes $235k of its appreciation due to lower mortgage rate

The good news is the injection of money and various other policies should result in inflation and thus more pay, so theoretically more people will be shopping for a higher monthly payment or have more to blow on your vacation rental.

 

[SoWhat]

Hampton Beach is a Canadian destination and as mentioned, the border is closed. So Canadians may have found other destinations in country for vacations. Hampton Beach may not recover 100%.
If you can shield regular income with depreciation, then the numbers may look good even assuming low occupancy rate.
Appreciation is not something to count on during retirement. Net income counts.

 

[Alaskaflyer]

ROI can swing wildly on vacation rentals based on so many factors, some of which are within your control, many not.

We are in the business mostly as an accident, as a way to reinvest profits from agriculture. Search Google and you’ll see some wildly optimistic ROI reports. We’ve found that small 3 bedroom residences on long term rental contracts to be more stable and a lot less headaches, with a ROI somewhere in the high single digits.

That said, if you are simply trying to squeeze value out of property that you want to use yourself, then theoretically a ROI in any positive number would be fine if you’re willing to suffer the opportunity cost of locking that money up (down payment, full amount or something in between) on the venture, and the pain of other people mucking about in your condo.

 

[OldDan1943]

generally, house prices go down when interest rates go up.

 

[BandB]

Living in a condo during the winter and renting it as a vacation home in the key vacation months is an ideal situation. The key is finding someone you can trust and depend on to do the management and handle the rentals. As someone said, be sure of the rules of the condo association. Most allow monthly rentals but many highly restrict shorter term rentals. I would absolutely not go airbnb unless I was close enough to do drive by's and check daily.

 

[Mischief Managed]

Check condo association rules about vacation rental restrictions.Otherwise, best wishes.

That has been the first question when we have looked into places. No point looking any further when renting short term is prohibited by the association.

 

[OldDan1943]

That has been the first question when we have looked into places. No point looking any further when renting short term is prohibited by the association.

Yup, the association does not want a 'motel look'. The condo I own on the west coast, minimum is 3 months.

 

[Mischief Managed]

That said, if you are simply trying to squeeze value out of property that you want to use yourself, then theoretically a ROI in any positive number would be fine if you’re willing to suffer the opportunity cost of locking that money up (down payment, full amount or something in between) on the venture, and the pain of other people mucking about in your condo.

This is exactly our thought process. We unexpectedly need a place to live in for the next few Winters, we are perfectly happy living in a simple condo when we can't be on the boat, and if we can make money from it while we are not using it, why not? We don't need the money, it's just a plus. If we do buy one, I am 100% confident that we won't be falling in love with a condo or its contents, so renting to random people won't be an issue at all. So far, all of these kinds of condos that we have seen on the market come fully furnished and outfitted, so it most likely won't even be "our" stuff in it when we rent it out.

 

[Mischief Managed]

Hampton Beach is a Canadian destination and as mentioned, the border is closed. So Canadians may have found other destinations in country for vacations. Hampton Beach may not recover 100%.
If you can shield regular income with depreciation, then the numbers may look good even assuming low occupancy rate.
Appreciation is not something to count on during retirement. Net income counts.

We won't really be counting on any income from the condo we plan to live in, warm weather rental is just a little side venture, and not in any way a main investment. If we make money from it and opt to invest in more condos, it will become an important part of our portfolio, but we would use income from condo 1 to buy condo 2, and income from condo 1 and 2 to buy condo 3, and income from condos 1, 2, and 3 to buy condo 4. etc. We would also augment said condo income with my wife's income since she is not retiring while we are "stuck" here in New Hampshire. We have no plans to risk our current retirement investments on this venture.

 

[Mischief Managed]

Living in a condo during the winter and renting it as a vacation home in the key vacation months is an ideal situation. The key is finding someone you can trust and depend on to do the management and handle the rentals. As someone said, be sure of the rules of the condo association. Most allow monthly rentals but many highly restrict shorter term rentals.

Funny you mention that, we are auditioning a property manager right now, he just does not know it. He is the manager for the condo we rented out for the Winter (in our favorite building, so far) and we are throwing him occasional challenges to see how responsive and professional he is. We have also met some owners in the same building that use him for Summer rentals, and they are very pleased. The other option we have, if we grow, is to have our youngest daughter manage it all for us. She has expressed an interest and is well-suited for the job. I would not have her do it initially though, it would only happen if we buy a few condos, it would not likely be worth it to her to manage just one place (economy of scale and all...).

I would absolutely not go airbnb unless I was close enough to do drive by's and check daily.

The buildings we are interested in are literally visible from our slip. We would not even need to drive by to check up, we'll be walking by the place all the time.

 

[Mischief Managed]

Thanks to all that took time to reply. It's been very informative and interesting to read the advice. I think most of us are on the same page too, which makes me suspect the idea is at least reasonably sound.



For now, we are just tenants enjoying the freedom of not having a house, a yard, a tractor, a heating system, a snowblower, a generator, a driveway, appliances, a fireplace, and all the other crap that comes with owning a big house on 5 acres of land. If something breaks here, it's not my problem. Not raking leaves is wonderful and not moving snow will be even more wonderful. I'm thoroughly enjoying the time I can spend working on boat projects that are an an easy and pleasant 5 minute walk from our home.

 

[OldDan1943]

Take as much depreciation as quickly as possible on the contents ie furniture, carpet etc.
My brother and I own the condo. We are self managed. A check in and a check out inspection.
The the renters are good, we will rent to them again. If they are not good, they can look elsewhere next season and we keep the damage deposit.
If they hope to rent the next season, the deposit stays on the books.
We usually rented to Canadians. This may be a lean season.

 

[Mischief Managed]

update on our situation

In March, the owner of the condo we rented from Oct 15 to May 15 unexpectedly offered to sell it to us for 5% below market value if we could do a quick closing. Considering places around here have been selling for well above asking prices, this was an exceptional deal; and considering we love the place and the condo association allows short-term rentals, the decision to buy took about a nano-second. We closed in April.



We kept the same property manager that we were working with as tenants and things have been great. It has truly been hands-off for us. We just get a direct deposit once a month and pay our rooms and meals taxes to the state online which takes about 2 minutes. Despite a fairly high rent, the place was fully-booked from May 15 to late September, almost immediately, and we have had no issues with any tenants. After closing, we carefully addressed any shortcomings we found with the place and tried to outfit it to be as comfortable and inviting as possible. We have had all 5-star reviews since we took ownership, and the comments on the reviews are glowing.



We've never had a plan come together so effortlessly. Living on the boat full-time since May 15 has been wonderful and we have inspired three other couples in our marina to do the same. Prior to last year, there had been no live-aboards here for years.



We are not looking forward to the end of boating season, but living at the beach all Winter is much more fun than we expected and we have made some great friends nearby. While the vast majority of restaurants around here are seasonal, our condo is located in a cluster of 5 places that are open year round and we enjoy being local regulars at these places. The best part, however, is that the condo is 1500 feet from the boat, so Winter projects are incredibly convenient.

 

[LakeMJim]

Being a landlord

I am not sure being a landlord is a good idea for anyone these days, but I also think if I was I'd prefer AirBnB to a long term tenant.

My brother has a rental condo in a resort designed for short term rentals.

He exclusively rents via AirBnB and vets the applicants, never taking a reservation from a new member or one who has no reviews. He turns down a lot of requests. It's a party kind of resort.

AirBnB also theoretically takes responsibility for people who trash apartments.

My brother has never had an issue, over several years.

My brother's neighbour (a RE agent) rented long term to a tenant who proceeded to stop paying rent ($2,500 weekly) for the next 8 months, the exact amount of time he could get away with it before being evicted.

Just days before the tenant could be legally evicted a mysterious fire happened in the condo (I was a few yards away in my brother's rental).

Later the tenant was charged with taking a hammer to the inside of the building's elevators.

He was finally removed as the condo was deemed unfit for living. I suspect the tenant knew or thought insurance would have to find him a new place to live. He might be right, I don't know.

Anyway, with laws greatly favouring tenants over landlords these days, AirBnB or similar is the only way I would go. I am not sure, but I don't think a short term tenant has the same ability to stay for months without paying.

Just my 2 cents.

p.s. these tenant laws are in Canada, and have nothing to do with the pandemic. Any tenant can do the same, if they know how to play the game.