Comment by scarface_74
3 years ago
It literally is 300-400 units in a resort “hotel” and they rent out your unit as part of a pool of units. They do all of the marketing, replenishment of supplies for the kitchen, maintenance, payments etc. The units are rented out by the night just like a hotel when you aren’t there.
But you don’t understand the other part. I’ve done the landlord thing before. I would rather get an anal probe with a cactus than ever be a landlord again. The entire purpose of it was never to make money. But to have a place to stay for six months, a legal residence in a state that didn’t charge taxes, and for it to pay for itself when we are not there.
When we leave every year, we pay a one time $110 cleaning fee and don’t think about the place again until we come back in six months. The income comes in the same account where the mortgage is paid automatically.
I did the math on one of these in Clemson and it would have still cost me $10,000 / year if it was rented year round.
I liked the model but the numbers didn’t work out to make it an investment. Sounds like the one you found does, so congrats!
The numbers don’t work at all for most people. It only works because we live there during off season as our only “home”.
Even then considering that we did a HELOC on our primary home (which is now rented out) , we still lose $12K a year that is only offset by moving to a state with no income taxes.
We also didn’t live in a state that thinks they have the right to tax you on all of your RSU grants that you got when you lived there even if you moved by the time the RSU’s vested.
I stayed in one of these places in Miami FL, but I didn't realize what it was until we arrived. Really interesting model.
I can’t recommend it for most people. It’s a horrible “investment” by any sort of analysis. We barely break even and that’s only because we stay there during low season.
We also had to pay 30% down since it is considered a commercial property. But you buy it just like you would any other commercial unit through a bank. On top of that, we took a HELOC on what was our primary home to get the 30%, just as interest rates were rising. We rent our home out to our grown son and two of his friends that we have known forever.
The HELOC isn’t covered by either rental income and that only makes sense because it is offset by the state taxes we don’t pay.
The only time this makes sense for most people is if their primary home is paid off and as a vacation home and for retired snowbirders.
Also people do it to avoid taxes on real estate sales using a 1031 Exchange.
Even knowing what I know now, I wouldn’t do it under any other circumstances besides what we are doing now or as part of 1031 exchange if had taxable real estate capital gains.