Does anyone have vacation rental property they actually make money on or know of a trusted resource on this topic? My income has increased drastically in the past couple years and I am interested in vacation rental property but have heard too many horror stories about vacation rentals being money pits. I figured with all the vacation rentals out there someone has to be making money off them. I'm probably about a year out from investing in real estate and am trying to decide between producing ag land and vacation rental property. I know ag land but need more info on vacation rentals.

Before anyone asks - we have an emergency fund, are funding retirement accounts, are funding kid's college 529 accounts, no debts except mortgage and wife's car.

IMO they are only viable if they are professionally managed.

I would not do ANY retals of ANY real estate without a professional to manage it for me. This is what my brother does, and it's saved him many a heartache.

Had a couple condos on galveston island. Got tired of being hit uo almost every year for capitol improvements, in  the thousands. For shit like an ac in a conference room that they rented out and i saw none of the profit.Nearly every year the monthly asessment increased as well.
Was pretty cool mardi gras

Vacation properties are hit and miss.
In a down economy people spend less, its possible to have multiple lean years.
Bleeding money hurts.

Rental properties can be great investment vehicles with vacation rentals it can be tricky as most places the money making season is about 10-15 weeks and all your carrying costs have to be earned then.  Tax advantages can be good too as you can write off the deprecation of stuff in the property.  I personally would hold the place for a couple of years and then sell if not then I would leverage the equity to buy other properties for cash flow.

I have rental properties. I take vacations.

I would never mix the two unless the right deal popped up. You're bypassing the easier safer returns of local rentals and jumping into something that has to be managed by someone, depends on seasonal tourism, depends on the economy more so than regular rentals.

It's like going skiing and when you get to the top of you mountain you see a blue trail and a black diamond. You said "Screw it, i think i'll ski off the cliff to the left of the black diamond. . Can it be done? Sure. But I wouldn't do it your first time out unless you are sure.

One thing to be sure of if you do it, make sure you can pay the mortgage and expensive repair bills with no rental income bc sometimes that is what rentals do. Something like a foundation, sewer line or roof.

I don't own any, but I have a few customers who have paid me quite a bit to repair damages to cabin rentals in this area. Renters don't give a shit about anything. It's not as big a money maker as it looks. If you get into with the goal of having a home to retire into, it may work out well for you.

Thanks for the replies.

I have already decided that if I do this I am using a management company and that I would have to include their fee in the numbers. I had a former co-worker that had a residential rental that used a management company and a friend with a duplex that did everything himself - watching both convinced me management company is the way to go.

One reason I'm looking into vacation rentals is that my wife and kids have been to the beach for two weeks already this year and are planning on another week this fall. I figured if I'm already dropping three weeks rent I should look at the possibility of owning a vacation rental.

Family member has a couple in Colorado.  Mostly there for him and family to use though.  One is where they will retire. Keeps them priced slightly higher than market to keep the riffraff out, accepting the fact that he will have lower utilization.

Talk to your Tax Adviser/CPA regarding personal use of a rental property. I've been told too much personal use can really mess up your tax benefits. Make sure your adviser has vacation rental expertise.

This, unless you're counting on overseas ducats to keep you going.  Mind you, it'll be worldwide.

Around 2002, I bought a nice condo pre construction in Panama City, FL.  I paid pre-bubble prices too, 175K if I recall. At the height of the bubble units like mine was going for over 450K.

I found out pretty quickly that the beach was boring for me. I like to dive and fish, but lying around in the sand is not for me.  By day three I'm climbing the walls.

Even with a low mortgage payment of around 800/month , it never cash flowed. I averaged 5K loss per year.  Everyone else gets their money first. If a light goes out in the bathroom the tenant complains. The management company installs the lightbulb and sends me a bill for $30.

It was a nuisance at times. I didn't want to go during busy season because that's when the bulk of the money was made for the year. My wife didn't want to go in the off season. As  a result, I think we averaged going down about two weekends a years the last few years. And the first day was spent doing  minor repairs.

Also, all your friends and relatives expect deals.   Your brother will call you up and will get mad when you turn down his offer  to rent it during July 4th week for half price of the normal $1500, Most do not understand the opportunity cost lost. You'd be financially better to just hand him $500 bucks out of your own pocket than to rent it at such a steep discount.

In 2013 I had enough. I sold it for a few K less than I paid for it.  I knew I could hang onto and they would appreciate,  But I came to resent the place.  

I would only consider another if I was convinced I was going to really, really enjoy the place. I would rather have a condo with a boat slip than on the beach.

I Live in a beach area that is about half rentals.  I would not suggest buying a house strictly to rent unless you can afford the house on your own, and the rent is just icing on the cake.  Every year I see houses fall into short sale and foreclosure because people thought they could rent it and make money.  

Check out the property management fees closely, locally they are around 20 percent.    Then figure the WEEKLY cleaning costs for cleaning the house, pool, hot tub, etc..  Then grass must be cut, dishes and other items replaced.  Remember you are renting your house to strangers and many of them do not take care of the house.  

Property managers will repair your house, supply replacement stuff such as microwaves , plates, grills etc that get broken, BUT it will cost you dearly for them to handle this for you.

Then figure long term repairs, Painting, carpet replacement, appliance replacement, light fixtures, beds dressers,  etc...  Renters break stuff and leave without telling you.    

Then figure you will only rent during summer months depending on location. Any weeks the wife and kids go to the house, means no rental income.

Also, check out home owners insurance on a beach house, and rental house.  

Many localities and utility companies require you to have a commercial account with them.  Commercial phone, cable ,etc. is much higher then residential.  

Then the taxes are usually pretty high as well.

I have spent many hours looking into this exact thing.  My conclusion, I will buy another house when I can afford it without depending upon the rental income.  

If you are just looking to save money on the few weeks a year the family goes to the beach, maybe look at buying a condo for personal use and then "rent" it to friends on the side.

Best wishes on your search.

This depends upon how the rental property is held.  MY understanding (for what it is worth ) is: If you personally own it, you can live there as much as you want without a tax problem.

If it is held in an LLC, Corporation etc. then the rules are a bit different.   As the owner of a corp or LLC  you get 2 weeks per year that you can use the property without claiming income from the use.  But certainly get some good financial advice.

Having just sold my last rental off (for a nice profit), I cannot stress this more.  I have friends who are in the game also and would share my same opinion.  Bad management of the property, rental process, etc can ruin the best of places!  Scope the management before you decide on a property.  If you are looking at a house, make sure to interview them personally and run as much research and background on them as you can.