Purchase Another Vacation Rental? Why Not

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Copyright © 2009 Jon Ludwig


Fellow Vacation Rental Owners:

As a vacation home rental owner and operator of a vacation rentals by owner advertising website, I have been following the situation closely with regards to the recent sharp decline in both real estate prices (commercial and single family homes) and the stock market. Like a lot of investors out there that I have spoken with, I pulled my savings out of the stock market a few months ago (phew...) and have been wondering what to do with my investment capital.

I recently read an article on the RIS Media site. This was an interesting read - their main point was that housing prices in many markets have declined significantly in the last several months, making it a good time to consider investing in real estate. Based on my own experience, this is especially true in real estate markets where one tends to find a lot of vacation rentals. Those markets seem to be driven by speculation as opposed to serious longer term investors.

Based on that, I did some research of my own to verify that was I suspected was true was actually true. I looked at some of the inventory on my vacation rentals advertising website, including the markets I am most familiar with. This included Kissimmee FL, Destin Beach, FL, Lake Tahoe, CA, Breckenridge, CO, and Las Vegas, Nevada. I looked at how many listings we had in each of those markets, and I looked at general real estate data showing foreclosures and overall pricing levels. What I found was that while our number of active listings in each of those markets either stayed about the same or increased in the past several months, those markets were extremely hard hit with the recent decline in overall real estate prices.

Assuming vacation rentals owners are rational, they will not continue to pay to advertise their vacation rentals if there is no demand for their vacation rentals by renters. In my own vacation rentals in Florida and Tennessee, I have seen farily steady demand. I have had to offer some discounts, but that is mostly because everyone that is traveling seems to think that it should be at a greatly reduced price due to the overall economy being where it is.

So, all that said, I have concluded the following:

I am still very nervous about re-investing in the stock market; real estate is looking pretty much like it is at a bottom right now.

The demand from renters for vacation rentals is still pretty strong.

By picking up vacation rentals investment properties for up to 40% less than what they sold for a year ago, my mortgage payment will be lower, which will increase my potential cashflow from the vacation rental.

I am going to look for some really good deals on properties in markets that have been hit pretty hard by sharp price declines due to the speculators getting flushed out of the market.

I am going to get creative on the discounting of my vacation rentals so if I do happen to pick one up in this buyer's market, I'll be sure to keep it as utilized as I can so I can cover my costs.

Best of luck to the rest of the owner community out there,

Jon Ludwig


This article originally published here with links.


About the Author:
Jon Ludwig owns and operates the Find Vacation Rentals website, located at: http://www.findvacationrentals.com/ You can also find discounted vacation rental specials on his website.


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