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Looking Into A Vacation Investment Property

26 August 2009 6 Comments

I spent the weekend at one of the best beaches in the world: Siesta Key, FL.  What an amazing place.  Furthermore, I stayed at an absolute amazing condo right on the beach.  Because of the way my mind works, I’m always thinking about investment potential.

Although I can definitely not afford a unit similar to the one I stayed in, I wanted to look into other units on the same beach.  Excellent location, crappy unit… that is the formula I am looking for.  Perhaps then, with the attraction of Siesta Key as a desirable destination for people around the world, maybe such a unit could cash flow based on the lower purchase price and consistent rental income.

Siesta Key Sunset

Siesta Key Sunset

The problem is that real estate prices are for the most part, still too high to cash flow on a unit (from my limited research).  The days of assumed appreciation are most likely over.  I want something that will cash flow and any appreciation would be considered mere icing.

As I mentioned in my previous article about why it could take several legs down to achieve a real bottom, I believe the same could be true for real estate.  There are still too many people who think real estate is a viable investment opportunity for there to be some insane steals out there.  When the majority of people tell you that you’re nuts for considering investing in real estate, THEN you will know you are at or near a bottom.  The question is, will we get there?  In a totally free market, I would say yes.  In a market propped up by government policy and action, I would say it’s 50/50.

I’m not sure that until we get at least close to such a scenario would there be a viable investment property where your rental income could cover your expenses and earn a reasonable return.  If it were possible, and if the condo were on such an amazing beach such as Siesta Key, then you could potentially use the unit during the few weeks a year that it was not rented out… an ideal scenario.  For now, I’ll keep an eye out.

6 Comments »

  • Darwin's Finance said:

    I’ve run the numbers before for vacation/rental properties in various places we could see ourselves using for years to come, plus collect some income on the side. What I’ve found is that in the high cost areas (Fl being one of them), you need to really just want to have a house there and be OK with eating annual losses. Finding a cash flow positive vacation home in a desirable place in a high cost area just doesn’t seem to pan out. The rents and high-demand seasonal occupancy weeks per year just don’t tend to add up to compensate for a conventional 25 or 30 yr mortgage, repairs, running the place, having it cleaned in between tenants, etc.

  • Kevin said:

    So the question then becomes, what are some high cost areas that are still attractive places to live/own? And do the numbers work out in location X?

  • Nathan Property Investment said:

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  • spence said:

    I love to travel, to go on trips with my family or my friends. At the same time I respect the environment because I know very well that if I don't do that the nature will deteriorate in time. Therefore every time I went to a trip I clean after me. Do the same to breathe clean air. My next vacation will be in Dubai, so I have to search for some cheap Dubai holiday rentals, to choose one.