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We vacation every summer in Orange Beach, Alabama and a lot of the condos there are setup like this. They come fully furnished, and people buy them, and then the property management company can rent them out when you are not using them. I'm not sure on the specifics on the financials of the property management renting the unit (how big of a cut they get, who is responsible for what, etc.) but I've heard of this arrangement before. I have no idea how the 'investors' make any money on them, but we sure do like staying in their nice condo one week a summer. We usually stay at the Caribe, where a 4 bedroom condo can sell for 800K or so. HOA dues run ~900 a month, I have no idea how these guys get a ROI at all.
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Nov 17, 2014 17:30
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| # ¿ Apr 27, 2024 10:38 |
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SiGmA_X posted:What do you pay for the rental period? Last time we went it was for 5 nights and was just under 1500 dollars plus 185 dollar service charge and taxes of about 160 bucks. All told right around 1850 dollars for 5 nights. We split that between 3 couples though so it works out great for us. The rates change during the different months though. We went the week after labor day, so it was a little less expensive. July 2015 rates for the condo we rented are 588/night. Best case scenario the owner books the entire 31 days of July, they could clear 18K gross. Assume a more reasonable 80% occupancy rate, or 25 days, you're looking at 14.7K gross. I would guess peak season for the are to be the last 2 weeks of May through the first 2 weeks of September, which is roughly 122 days long. Assume 85% occupancy and 500 a night gross, it's 48.8K in gross revenue. I'm not a real estate investor, not sure what the numbers folks look for when dealing with this stuff, but I would guess you could break even over the year as long as your unit rents well and you're not mortgaging the entire 850K purchase price.
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Dec 5, 2014 21:26
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