This weekend I will be visiting a lake/winter ski town to search for some possible vacation home properties. I have never been to this certain area, but I hear great things about it, from all sorts of people. So I felt that I should check it out, called up a local real estate agent and set everything up.
And to the venture we go…
Unless you have been living in a cave for the past couple of months, then I’m pretty sure most of you know how volatile this housing bubble is right now. All the subprime loan mumbo jumbo and suddenly everybody is apparently losing money over this. Well, I have a rather different opinion about this (maybe is just the wild risk-taker in me), but I feel that there are still tons of people that can afford the finer things in life, such as a vacation.
Another problem with the current housing market is that the supply of housing units are rapidly increasing, thus causing the prices to go down. A simple supply and demand graph can show you this, and, obviously, as the amount of an item increase, then the value of that particular item starts to decrease because it easier to obtain. However, I also believe that the value of markets around vacation hotspots such as a body of water or ski slopes can never really be hurt that bad because you cannot create more of the certain entity that drives people to that area. For example, you cannot add more coastlines, so the supply of houses around the coastline can never really change. If anything it can only go down (if the Grinch comes and takes them all).
So this brings me to why I am going to this particular area in search of properties. What is so great about it, is that this town has a lake to entertain people in the spring and summer months and also has slopes that bring people to this hotspot in the winter, so unlike many of the beaches, houses could be rented almost year round.
Another great thing about this town is that it isn’t some major city that brings people from all over the country. It tends to attract people that are from the nearby states, and want a close and CHEAP place to have a vacation. It also brings regulars who like to get away during the weekend.
Although I said at the beginning that many people can afford the finer things, there are also many who cannot afford to take their annual long distance, tropical, Alaskan tour, or wherever it might be trip. At the end of the day everybody is going to go on vacations, and I feel with this current market those vacations will DRIVE right into town.
As my progress of this investment continues, I will update with more in-depth details, but for now I will quickly tell you a simple version of what I plan to do, and what you could possibly do. I plan to find a house that is on the lake or (depending on the choices) has close and quick lake access. Then I will plan to hold it for a couple of years (maybe 3-5 years) to let it appreciate in value, and while I am waiting I will be using the house as a vacation rental.
There are many companies in vacation hotspots that help owners with renting out a house. They will take care of check-ins and check-outs, as well as, clean the pool and the house. All for certain price that is, but if you can’t travel up to your house that often it is probably your best choice. The price you can ask renters for will depend on how close you are to the lake or whatever it is. The size of the house or even condo will also matter, but with some careful research you can easily make a pretty penny.
And if there are a couple days when your house isn’t being used, then you can always use it for your own little vacation cause after all you are sitting pretty on your investment.