I'm thinking about island property

masloki

masloki

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Just throwing it out there to a bunch of smart individuals. Do you own a vacation rental? Where? How is it working out? Mortgages? Beach access rights? Cleaning and maintenance worse or better than stateside? Good way to make a small fortune out of a large fortune or vice versa?

Grand Cayman had a lot for sale, and the prices were doable that it got me and the wife thinking. Maybe a little place to hit on the holidays with break even the rest of the year. And in ~15 years we have a real nest egg.
 
We have owned several rental properties, and currently have a property we've owned and rented for 12 years. Just like leasing back an airplane, it has to be a business decision. Get caught up in how nice "your" place is and you will get upset at the damage, theft, etc.

Our biggest problem has been that the cleaning crews hired by the management company are usually pretty careless. When we go to it, there is always something missing, dirty, broken.

But we do get 10s of thousands in income. So that helps.
 
masloki said:
Just throwing it out there to a bunch of smart individuals. Do you own a vacation rental? Where? How is it working out? Mortgages? Beach access rights? Cleaning and maintenance worse or better than stateside? Good way to make a small fortune out of a large fortune or vice versa?

Grand Cayman had a lot for sale, and the prices were doable that it got me and the wife thinking. Maybe a little place to hit on the holidays with break even the rest of the year. And in ~15 years we have a real nest egg.
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My wife would dearly like a house on one of the coastal beaches between Charleston and Jacksonville. Her thought is to buy it now and lease it until we retire and move there. I've told her that if she can make the numbers work, I'm in. (PS, without crazy appreciation, the numbers will never work.)

The problems are that the properties are expensive, non-resident taxes are expensive, insurance is frighteningly high, maintenance is very high due to the coastal environment and because you're paying a premium to have anything done since you're not there to manage it or do it yourself. Add to that, most management companies take ~20% off of the top of the rental fees.
 
A beach place is fun if you have the coin to keep it just for your own use and you have the kind of job where you can spend a month or two at the place every year. If you rent it out, it is simply a business and not really 'your place' anymore.
 
Funny you should mention it. I have a place on Rum point road. Ken covered it very well. There's always something wrong with the place, usually nothing big, not worth making a stink about but just low level theft, damage, carelessness. Frex; last year we bought a new big screen TV for the bedroom. This year, it has a crack in the corner of the glass. Wouldn't happen at home, but somehow, magically it happened after we had 4 tenants and cleaning services. Each blames the other.

Some hints. If you don't have DIRECT beach access, don't even bother. You'll be offered 'near beach', and 'across the street' from the beach, and all kinds of other stuff that isn't right on the beach. No one rents them, everyone wants the beach. Next, hook up with the local dive shop, and at a min get discounts for snorkeling, and tank/weight rental is best. Have them ready to cater right from the beach or close to the place pick up. For me, don't pay the crazy fees that Cayman comes up with. If you pay one 'admin' fee, you're going to be paying fees out the wazoo. If you pay the weird fees, they just multiply like rabbits.

Whatever the first price mentioned is, cut it in half and work from there. We paid a bit over 60% of the first asking price. Of course they know you're from the US, of course they bump the price relative to native prices. Of course. I didn't want to be on 7 mile beach, just because I don't like people when I'm on vacation. I guess you can do alright up there, but I really don't know because I've never stayed there. May want to look at East End area now, but I haven't checked it for quite a while, maybe all the bargains there are gone.
 
Since I live on the beach already I have a ski place up in the mountains. I avoid management companies at all costs and use VRBO and hired a local housekeeper that I contact via email. A local handyman is good to know as well.
 
We liked GCM pretty well, but are heading to SXM for comparison. I was a little worried about the quantity of properties for sale in Grand Cayman, seemed like 20%. I agree finding someone directly for mx seems the way to go. And well, I have interviewed, kept the good ones and let go of the not good enough, that I know how to do it, not fun as it may be.
 
masloki said:
We liked GCM pretty well, but are heading to SXM for comparison. I was a little worried about the quantity of properties for sale in Grand Cayman, seemed like 20%. I agree finding someone directly for mx seems the way to go. And well, I have interviewed, kept the good ones and let go of the not good enough, that I know how to do it, not fun as it may be.
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SXM>*

I'm hoping to eventually purchase a place on the Dutch side. LOVE it there.
 
kyleb said:
My wife would dearly like a house on one of the coastal beaches between Charleston and Jacksonville. Her thought is to buy it now and lease it until we retire and move there. I've told her that if she can make the numbers work, I'm in. (PS, without crazy appreciation, the numbers will never work.)

The problems are that the properties are expensive, non-resident taxes are expensive, insurance is frighteningly high, maintenance is very high due to the coastal environment and because you're paying a premium to have anything done since you're not there to manage it or do it yourself. Add to that, most management companies take ~20% off of the top of the rental fees.
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$3-5000 a week when rented can do a lot to soothe those concerns.. At least thats what properties were running this summer on Folly Beach, SC.. We were pricing a wedding there for next year.

We will be in the beach house rental market in a few years on the upper texas coast.. Nothing front row... second or third row with a water view will suffice for us. And.. Beach view does rent, particularly during the busy season, For us that includes mardi gras, spring break, and a large motorcycle rally...
 
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I just spent 3 weeks remodeling our beach house in Florida. After working 14 hours a day in 95 degree heat (only had AC the last 2 days) and spending the childrens inheritance I too had the 'original' idea of renting it out to recoup my money. Well a 20 minute visit with the largest rental management company on the island ended that. Basically I was handing them a multi hundred thousand dollar object for them to milk like a Guernsey cow. I would get the bills. I would pay for repairs. I would replace the linens, etc. that came up missing. I would get to use it subject to availability - and not during the high season. I would get a scratched and worn beach house when I finally got there, whereas I had just walked out of a gleaming and new smelling unit on my way to their office.

I am an only child and it shows - I don't share toys well. Same with my plane.
 
Dr. O said:
I just spent 3 weeks remodeling our beach house in Florida. After working 14 hours a day in 95 degree heat (only had AC the last 2 days) and spending the childrens inheritance I too had the 'original' idea of renting it out to recoup my money. Well a 20 minute visit with the largest rental management company on the island ended that. Basically I was handing them a multi hundred thousand dollar object for them to milk like a Guernsey cow. I would get the bills. I would pay for repairs. I would replace the linens, etc. that came up missing. I would get to use it subject to availability - and not during the high season.
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It works like a FBO leaseback.
 
From the perspective of a renter, I will say that if I rent from an individual, I will go out of my way to leave their property better than I found it.

If I rent from a management company, I don't especially feel that same obligation. I've been jacked around enough by management companies in the past that I now simply avoid doing business with them. I've declined to rent from friends because the rental was handled by a management company.

I understand the need for someone to manage a remote property, but as others have mentioned, there are often better ways than though the use of a management company.


JKG
 
masloki said:
Just throwing it out there to a bunch of smart individuals. Do you own a vacation rental? Where? How is it working out? Mortgages? Beach access rights? Cleaning and maintenance worse or better than stateside? Good way to make a small fortune out of a large fortune or vice versa?

Grand Cayman had a lot for sale, and the prices were doable that it got me and the wife thinking. Maybe a little place to hit on the holidays with break even the rest of the year. And in ~15 years we have a real nest egg.
Click to expand...

There are a lot of things to consider, primarily this is not a "nest egg", this is a current business. If you can't make the numbers work as a current business, it's typically a poor deal. International, non resident, deals carry even more risk. Can they work out? Sure, but just like lease back deals on planes, those situations are few and far between and you have to understand that it's a business investment, not a retirement plan.
 
masloki said:
Just throwing it out there to a bunch of smart individuals. Do you own a vacation rental? Where? How is it working out? Mortgages? Beach access rights? Cleaning and maintenance worse or better than stateside? Good way to make a small fortune out of a large fortune or vice versa?

Grand Cayman had a lot for sale, and the prices were doable that it got me and the wife thinking. Maybe a little place to hit on the holidays with break even the rest of the year. And in ~15 years we have a real nest egg.
Click to expand...
If you buy now, you're at (or near) the top if the market.

My advice: Wait for the next downturn. We bought on our island in 2009, at the absolute bottom of the market, and have seen our property values soar 300%.

Could it go up another 200%? I suppose. But it's a real gamble. Prudence would dictate waiting, if you can.
 
Good point. Definitely part of the research is how has property fared there historically to see if it is boom times. Reminds me when we bought our house in 2008, and I had a price chart of housing. At that point we were two standard deviations above normal growth and I mentioned that now is a great time to sell, bad to buy. I think we are finally back even in house value.

With SXM, I do like that with the Euro down 20% things just got a lot cheaper for USD. We shall see more this fall with Greece's mess. I do expect parity by then which saves another 10%.
 
weilke said:
A beach place is fun if you have the coin to keep it just for your own use and you have the kind of job where you can spend a month or two at the place every year. If you rent it out, it is simply a business and not really 'your place' anymore.
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Weilke is right on. We have had a place on Perdido Key since 1988. Right on the beach, use it about 6-7 weeks a year currently, with increasing use planned. Never have rented it (we are forgoing $2K per week in the busy season). Just like avoiding the headaches that come with rental.

If you own on the beach, don't forget hurricane season. We had to rebuild after a direct hit from Ivan in 2004, still paying for that...

Can't wait till retirement, so we can spend half our time there...

Steve
 
docmirror said:
Funny you should mention it. I have a place on Rum point road.
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We are staying in a house on the beach in Rum Point right now. If you need someone to check on anything, let me know. Ill be here until Sat. :)
 
Bravo said:
We are staying in a house on the beach in Rum Point right now. If you need someone to check on anything, let me know. Ill be here until Sat. :)
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Thanks. It's being rented also. Hope you're having a good time. I liked Rum point road because it's so far from anything on Cayman. The wind can get bad sometimes but I hate the crowds on the SW side. If you drive down the road to the intersection of old Robin, there's a salmon colored house on the right, before the gas station. The old guy in there has a boat, and tanks and weights if you want to do some diving. Tell him Doc sent you, he has the best prices on the island. Not fancy, but good service. He'll pick you up at Koko Kai pier.

If you want the best shore dive/snorkel, take old Robin road west toward Wyndham resort. About half way along, there's a small sand road that leads to Barefoot beach. You can have it all to yourself most days. Don't drive all the way in or you'll get stuck. You can shore dive from there. Most of the coral heads to the right are dying, but the left is still very active.
 
Hawaii. Having a place and putting it into a vacation rental pool works great.
 
masloki said:
Good point. Definitely part of the research is how has property fared there historically to see if it is boom times. Reminds me when we bought our house in 2008, and I had a price chart of housing. At that point we were two standard deviations above normal growth and I mentioned that now is a great time to sell, bad to buy. I think we are finally back even in house value.
Click to expand...

Yesterday I saw a roadside sign from a local mortgage broker:

!!!! 580 credit, FHA and VA loans !!!!!!






We are right back where we left off in the summer of 2008.
 
weilke said:
Yesterday I saw a roadside sign from a local mortgage broker:

!!!! 580 credit, FHA and VA loans !!!!!!






We are right back where we left off in the summer of 2008.
Click to expand...

Yep, and they didn't do anything to regulate the OTC derivatives market either.
 
NavAir said:
Weilke is right on. We have had a place on Perdido Key since 1988. Right on the beach, use it about 6-7 weeks a year currently, with increasing use planned. Never have rented it (we are forgoing $2K per week in the busy season). Just like avoiding the headaches that come with rental.

If you own on the beach, don't forget hurricane season. We had to rebuild after a direct hit from Ivan in 2004, still paying for that...

Can't wait till retirement, so we can spend half our time there...

Steve
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Nothing personal, but I've never understood this mentality. I have friends who maintain second (non-rental) homes, and they go to the same place every weekend, year after year.

I simply can't imagine a bigger, more boring PIA than owning a second home. For a tiny percentage of what they spend on property tax alone, we travel the country, staying in the finest hotels, seeing different sights and enjoying unique regional cuisines.

No maintenance, no worries.

Even paradise gets dull with repetition. I know -- I live on an island where tourists flock by the hundreds of thousands each weekend -- most would call this "paradise" -- and I can't wait to get away to OSH! ;)
 
Jay Honeck said:
Nothing personal, but I've never understood this mentality. I have friends who maintain second (non-rental) homes, and they go to the same place every weekend, year after year.

I simply can't imagine a bigger, more boring PIA than owning a second home. For a tiny percentage of what they spend on property tax alone, we travel the country, staying in the finest hotels, seeing different sights and enjoying unique regional cuisines.
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Isn't it amazing that people prefer different things ?

I know a couple of people who work in DC and live in condos and townhouses in DC or Alexandria. The joy of their life is their waterfront place on the northern neck or their weekend cabin in West Virginia. They would think that paying 100eds of $$ for rent of a metal box on an airport is the dumbest waste of money.
 
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Jay Honeck said:
Nothing personal, but I've never understood this mentality. I have friends who maintain second (non-rental) homes, and they go to the same place every weekend, year after year.

I simply can't imagine a bigger, more boring PIA than owning a second home. For a tiny percentage of what they spend on property tax alone, we travel the country, staying in the finest hotels, seeing different sights and enjoying unique regional cuisines.

No maintenance, no worries.

Even paradise gets dull with repetition. I know -- I live on an island where tourists flock by the hundreds of thousands each weekend -- most would call this "paradise" -- and I can't wait to get away to OSH! ;)
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Chocolate and vanilla. I knew from the minute I set foot in the Pensacola area in 1982 that I wanted to retire there. Buying a place there decades sooner just let me enjoy it on a part-time basis decades sooner. Could I pay someone else to rent their place and avoid ownership costs - sure. But now I am basically paying myself and it will be there for my heirs when I'm gone (hurricane season permitting).

By the way, I've been to Mustang Is. a few times, too, and it isn't even close to PK. Nothing personal...
 
I'll say it again guys cuz you're obviously not getting it - VRBO ! I just booked 18 days in September on my place - covers two months mortgage.
 
NavAir said:
By the way, I've been to Mustang Is. a few times, too, and it isn't even close to PK. Nothing personal...
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The Keys are really nice, absolutely.

But I like Mustang Island for different reasons. The 15 mile long beach here is awesome, of course, but living within walking distance of 19 bars and even more restaurants is even more fun.
:)

Better yet, it's Texas, not Florida.
 
docmirror said:
Thanks. It's being rented also. Hope you're having a good time. I liked Rum point road because it's so far from anything on Cayman. The wind can get bad sometimes but I hate the crowds on the SW side. If you drive down the road to the intersection of old Robin, there's a salmon colored house on the right, before the gas station. The old guy in there has a boat, and tanks and weights if you want to do some diving. Tell him Doc sent you, he has the best prices on the island. Not fancy, but good service. He'll pick you up at Koko Kai pier.

If you want the best shore dive/snorkel, take old Robin road west toward Wyndham resort. About half way along, there's a small sand road that leads to Barefoot beach. You can have it all to yourself most days. Don't drive all the way in or you'll get stuck. You can shore dive from there. Most of the coral heads to the right are dying, but the left is still very active.
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No problem. We are having a great time. Looks like sunday is party time if you have a boat. Thanks for the tips!
 
Jay Honeck said:
The Keys are really nice, absolutely...

...Better yet, it's Texas, not Florida.
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Perdido Key is in NW FL, on the Gulf, just west of Penscola. I like 'the Keys' as well, but they are a lot farther away from me.

I live in TX when I'm not in FL. :wink2:

Steve
 
Art VanDelay said:
I'll say it again guys cuz you're obviously not getting it - VRBO ! I just booked 18 days in September on my place - covers two months mortgage.
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I get it as a renter too. We are renting from a vrbo couple now, in Leeward Beach on Providenciales as I type this. It's definitely a commitment on their own part but I'd wager they get 50k of extra income per year from their two efficiency rentals.
 
Art VanDelay said:
I'll say it again guys cuz you're obviously not getting it - VRBO ! I just booked 18 days in September on my place - covers two months mortgage.
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That is what is making this equation work much better compared to earlier years. We only book vrbo now for family vacations. More space, kitchen, less neighbors, always unique (though can be a little Walmart if not careful)... Just beats the shorts off of corporate hotel chains.
 
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