CHAPTER 1: Defining Vacation Rental Property

CHAPTER 1

Defining Vacation Rental Property

THE SHORT-TERM, hotel-like booking locations known as vacation rental property are not just for vacation anymore. Now, business locations have begun off ering VRP as an alternative to business hotels. This increases the likelihood that family will travel with the business traveler. From an exotic place like Costa Rica on the peninsula of Papagayo, where you’ll fi nd the exquisite Four Seasons Resort, to beautiful Okoboji, Iowa in the American Midwest, to downtown New York City, to London, to Dubai anywhere . . . anywhere there is a need for travelers to stay for four days to one month, you will fi nd this product.

VRP owners are changing their lives for the better. In this book, you’ll learn about investors who pay $25,00 per square foot for stunning homes, but I also want you to meet modest investors who started small—sometimes very small, as in ice-fi shing-shack small—and built from there. From vacation homes to condos in Las Vegas, Paris, Rio, Nassau, this short-term rental industry has gone viral. The VRP market is expected to grow at an annual rate of 3.62%; by 2026, nearly one in individuals will have stayed in an VRP.1

Let’s look at Okoboji, a city in Dickinson County, Iowa, along the eastern shore of West Okoboji Lake in the Iowa Great Lakes region. Only 800 permanent residents call it home year-round. I got

1. https://www.statista.com/outlook/mmo/travel-tourism/vacation-rentals/united-states

WEALTH AS A VACATION

to know it as a fun place to go when I was a kid—my parents took me there each summer and rented a cabin right on the lake for a week or two.

What I saw in Okoboji is a great example of an investor who started small. This local had $40,000 or $50,000—maybe less—and he lived right there on the lake and worked in the area. He realized something important: “There’s a house for sale next door to me and all these tourists swarm here every summer. Maybe this could be a good investment.”

This particularly insightful local, we’ll call him Alan, ended up putting $5,000 down and buying the house for just $95,000.00. He rented it to other Midwesterners for four months out of the year for summer tourism, and then four additional months out of the year for ice fi shing and snowmobiling. (And for two additional months of the year to watch the leaves change, because why not?) This man took a $95,000 home and made over $50,000 per year on it.

There’s always a time of year for tourism in the Midwest. No matter how crazy the weather is, there’s always a reason that some people like visiting a lake. For example, Minnesotans and Wisconsinites love ice fi shing. At certain points during the season, a lake will fi ll up with a thousand little ice fi shing shacks. Guess what? About half of those are rented by the week—portable VRP! There are people who own and rent out 10 or 20 of them at a time, all winter long.

The opportunities in this business are everywhere.

From One Investment to An Entire Community Back to our Okoboji friend, Alan. He worked at a local factory; his original place on the lake was his family’s second home. My family went there one year in the early 1980s, and had such a nice experience we went back to Alan’s home every summer. Over the course of many years, we watched Alan buy a second home on the street, a third home on the street, and a fourth home on the street. Eventually he had accumulated 12 homes, all in a nice big cluster.

Alan didn’t work at the factory after that. Near his cluster of