CH A P T E R 1
1.4 Who Invests in VRP? Investing in real estate is a long-term strategy, regardless of whether you’re buying a home to live in or a vacation investment property. Life has changed for vacation property owners because it’s easier to turn a profit from vacation rentals than it has ever been before, but it is still a long-term proposition. Ideally, vacation rentals should be bought with disposable income—money you might have spent on hotels can now be invested into a rental property. A Tale of Two VRP Owners
We can learn a lot from the mistakes—and successes—of VRP owners who have gone before us. I’d like to tell you a story about two gentlemen who happened to buy properties right next door to each other, yet got a vastly different return on their investment. It begins in 2007. The first VRP owner was the CFO of a Fortune 1,000 company, a well-known retail brand. He visited a property developer’s office one day and bought four homes cash, for an average of $2.2 to $2.6 million each. (Please note, this price point isn’t standard in the industry; he was shopping at one of the highest-end VRP developments in the country at the time.) This executive’s goal was to use one of the homes and put the other three into a rental pool. Unfortunately, he did no negotiation at the time of purchase—he paid full sticker, as they say. He also looked at nothing in the homes prior to close. He didn’t see how they were built. He didn’t know about property management, or maintenance, or any of those things, and he didn’t take the time to learn. Another problem: this CFO didn’t do any of the marketing he needed to do to fill these homes once they became available for short-term rental. Instead, he just left it up to the nearby hotel that was part of the overall development, because the hotel had told him they would keep his properties rented. This unfortunate VRP investor bought at the top of the market in 2007 when all of the high-end homes on the coasts were going for 25
