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No. of Recommendations: 1
IP asks:

If you don't mind a few questions...

How far away is the property from your home and do you have a manager running the day to day transactions?

Are you letting someone act as your rental agent or will you be doing it yourself on line with a website such as VRBO.com? We once rented a house in the US Virgin Islands from someone who lived in CO. He mailed the contracts and the keys to us, his property manager mailed them back. He told me he saved tons of money this way, given that the leasing agents wanted something like 30% of the gross rent for getting him the client.

How did you get involved in vacation rentals? Do you have any resources you recommend?

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The property is 535 miles from door to door. I have a second rental home that has long term tenants in it that is another 10 miles further away.

As fas as day to day, the agent handles all contacts, keys, cleaning post guest, deposits, etc.

My agent charges a flat 20% of whatever she can get. These rentals, while called "vacation" rentals, are more like 2-6-10 week rentals, more longer term than the average 1 week in paridise style. For example, while I was renovating it she called and said she has 2 lawyers that need my place for 6 weeks, starting the Sunday that we were leaving. I told her it would be "turn-key" ready for them. She negotiated $5600 for the term, less her commission of 20%, my net would have been $4480. My carring cost run around $1400 a month so I would have cleared close to $2500 - $3000 for the term. That covers another 1.5 to 2 months carring costs.

Unfortunately they haven't commited yet (1 week later) and I suspect she is marketing it to other clients. My home is the only one she has to offer out of @ 20 she markets (half townhomes half SFR).

The only reason I got involved in this was that my townhome had the lease coming up for renewal and I wasn't too happy with my tenants. I actually acquired them when I bought the home 18+ months ago. So, I'm reasearching the going rate for my property now and I came accross the website that my agent has, http://desertvacationrentals.com/, and after reviewing it I decided to contact her. I have a home in the same complex that she has a unit, except mine is 3 bedrooms. She was very enthusiastic about having a 3 bedroom to market in the Mt View Falls complex and after discussing fees, responsabilites, etc., my wife and I decided to take the plunge and not renew the lease, conv ert the home and then see what happens.

I took a 2nd mortgage out on the home and used @ $10000 to complete the process; furnishings, painting, repairs, etc. It adds up fast but we did save alot of money by refinishing alot of our own personal furniture and bringing it with us, aquiring some form my wifes parents (they live nearby) and doing the sweat equity (we paint it vs. hiring, etc.) The balance of the 2nd is to be used to cover operating expenses for the next 12 to 18 months to give it a chance to prove itself.

I expect to break even over the first year, based upon the projections from my agent. If I don't or it's a money pit I'll reconvert it back to regular rental or sell it furnished, I don't know, but I don't really want to sell it. The complex is quiet, clean and safe. Well taken care of and many of the residents are "snowbirds" (northern USA, Canada, etc.) who come to the desert during the winter. It's very pleasant.

Here is a lnk to the virtual tour that she has had done for our place. http://www.circlepix.com/tour.htm?id=360097&refurl=

We have done more work since the tour, such as finishing decorating the back yard and adding curtains in the living room.

I just finished totalling up my property that was used to convert it and the net is @ $13,000, with roughly $5000 being personal property that we have put on the books at the fair market value. I need to do this so I can depreciate the property over the next 5 years (it's all 5 year schedule property). This is in addition to previuosly scheduled property (washer, dryer, fridge, etc.)

What is nice is that we can use the property anytime we want but I won't really until I see that it is being used by paying clients forst. Then, I'll work around thier schedules.

cat
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