- Jun 13, 2005
I don't think you will ever see that. I'm not in the rental business, but I understand that WaterColor management charges 40% (not close to the 25% mentioned in the scenario above), and in my opinion, your place will be rented far more often if you use WC management than another. On top of that, the purchase price in the example above is for the properties located in Phase IV, and I don't think those will come close to renting 20 weeks per year. Also, that same scenario is very giving, and while it might work like that for one year, chances are, it won't be that good every year averaged together.
Cash flow break even point is when your expenses equal your income. It will vary from property to property, and is dependent on things such as which rental company you may use, the frequency of rents, the rental rates (which will vary), etc. In general, even at today's prices, we aren't seeing properties with positive cash flow. There are some properties which should cash flow in the long term rentals, but I don't see them in the short term, beach properties.
Very good points SJ. What some "investors" fail to recognize is that vacation rentals (especially at these nose-bleed prices in a non-yearround resort area) are poor real estate "investments."
If one wants to cashflow an investment property, it's best to look at long-term rentals in areas around schools, military bases and such. I have a friend who owns several rental properties around a state university and has been doing very well indeed cashflowing his properties over the years. Of course he bought most of the properties well before the RE frenzy, bought fixer-uppers, did the refurbishing himself and manages and does maintenance on them himself. He loves what he's doing and has stacks (STACKS!!) of money to show for his efforts; unfortunately he doesn't take the time off to spend it (but his wife sure does) and he may very likely become the richest person in his city's cemetery.