REAL ESTATE: VACATION RENTAL BY ACCIDENT

1. VACATION RENTAL BY ACCIDENT

Our first vacation rental came about by accident. The intention was to buy an oceanfront vacation home on the Oregon coast to enjoy with the family, remodel and sell at a profit. We purchased the property at the peak of the market, completed the remodel and were unable to sell.

The property was a severe financial drain.

We had to work out a way to make money, so we found a property manager and rented the property as a vacation rental. The property management company generated a good income, however they took 30% of the gross income. The rental income we received helped a little, but the property was still losing money every month. A real estate mentor suggested we learn how to create a website on VRBO (Vacation Rental By Owner) and rent it out ourselves as a vacation rental. That suggestion seemed impossible at the time, and way too difficult. However, renting our property through VRBO changed everything. We were able to generate more income than the property management company, and we did not lose 30% of the revenue. There was a small fee to VRBO to create the site and very small fees when the guest makes a booking. This was definitely an example of buying a lemon, and being forced to make lemonade.

Sites like Airbnb & VRBO can be a great way to turn a money pit into an asset. In fact, to my surprise I learned that I could actually make a profit owning a vacation rental. This opened up a whole new world for us. 2. VACATION RENTAL & MARKET CRASH

After learning how to manage a vacation rental by accident, we thought that we would see if we could make it happen again.

The market crashed in the US in 2007/2008 and there was an abundance of inexpensive properties on the market. We purchased a townhouse in a beautiful location in Bend, Oregon. The townhouse was in foreclosure and we were able to purchase the property for less than half the value of what it cost to build. Because the purchase price was so low, it was easy to make the numbers work on this property. We furnished the property and set up a VRBO website. The income was much greater than the expenses because of the low purchase price. This created a great vacation rental investment property. Now, we were on a roll. 3. VACATION RENTAL & MXN CURRENCY

Now we were on a roll with vacation rentals and excited to buy another. However, the market in the US had improved and we could not find any great deals.

The US currency was strong but the Mexican Peso was weak.

We found a run-down property in an amazing location in the Marina at Puerto Vallarta. The price was great, but the condo was infested with termites and the kitchen cabinets were rotten. When we asked why the property had not sold the realtor told us that there was a rumor that someone had died in the property and there were ghosts. Another lemon. We purchased this property for an incredible price, gutted, fumigated, knocked out walls and completely re-built the condo. We got a designer to help us furnish the property and set up the VRBO website. OMG!!! Another winner. 4. VACATION RENTAL & CAD CURRENCY

If the system works, repeat. The Canadian dollar was low against the USD so we purchased a condo right in the middle of the Whistler Village stroll. We looked for many months but it was impossible to find a great property in the village. Our realtor told us he had a property available right in the middle of the Whistler Village stroll but we would not want it because it was very dark and right near a popular nightclub. Another lemon. We jumped at the property, completely gutted, remodeled from scratch, added a large amount of extra lighting and triple pane glass to the windows to reduce any possible noise. We made a point to tell guests that they need to be aware that we are located in the happening area of Whistler right in the middle of all the action. This central location right in the hub of all the activity has been a positive, not a negative. From the first experience on the Oregon coast we have learned to look for lemons in a great location, and turn them in to lemonade. 5. APARTMENT RENTALS

Apartment rentals have been the bread and butter of creating financial freedom for us. We started saving money and buying small rental properties over 30 years ago. The goal was to buy one small rental property every year and eventually create enough passive income, so we no longer needed a job. We were taught to look for a great cap rate (return on investment). There are many things to consider before buying a property. I think the ways that we have learned the most is by taking action, making mistakes and learning as we go along. Finding a good location is key. Ensuring that the monthly income is greater than monthly expenses is critical.