Owning a VRBO/AirBnb?

[goneboarding]

Not sure if this is the right forum... mods please relocate, if necessary.

DW and I are retired. Recently did the millennial thing in reverse... sold our primary residence and moved in with our daughter and her family. We are considering purchasing a property on the Gulf Coast. At some point further in the future, it will become our full time residence. But for now, we plan to use it for family visits to the beach, and VRBO/AirBnb it part of the time to cover costs.

Will this property qualify as our "primary" residence in the near term, given the plan to rent it out some of the time?
What tax and other implications need to be considered before we take the plunge?
Also, with property values being so hot at a moment, is it wise to wait, or just bite the bullet and get a property now?

Cheers!

 

[cathy63]

Will this property qualify as our "primary" residence in the near term, given the plan to rent it out some of the time?

For what purpose -- homeowners insurance, property tax exemptions, state tax, car insurance? Everyone who cares whether or not this is your primary residence will have their own criteria for determining that and they could all be different. Most of them will have a "lived there more than half the year" rule though.

 

[chassis]

To discern whether or not to do this:

1. Look into a mirror
2. Make the affirmation “I am a landlord, I want to be a landlord, and I like being a landlord."
3. Repeat the affirmation for a total of three times.
4. If your heart leaps with joy as you make the affirmation, become a landlord or a VRBO property owner. If not, don’t do it.

 

[pjigar]

To discern whether or not to do this:

1. Look into a mirror
2. Make the affirmation “I am a landlord, I want to be a landlord, and I like being a landlord.
3. Repeat the affirmation for a total of three times.
4. If your heart leaps with joy as you make the affirmation, become a landlord or a VRBO property. If not, don’t do it.

I will change it to "I want to be a long-distance landlord".

 

[tryan]

I did the same drill - in reverse. Have a vacation rental (water front lake house in the mountain) and needed a primary residence for tax, car registration and license issues.

Ended up NOT claiming it as my residence. Could have have easily claimed I was there more than 6 months. Vacation rentals in this area hit 4 months rent max. But I didn't want to prorate all the expences ... loosing more than 1/2 the deductions was a deal killer. With only half the expences deductable it would show a positive cashflow .... just more taxes to pay

 

[ivinsfan]

So in other words you know nothing about how this works and haven't read up on it either?


Did you want us to pick the house for you too? All teasing aside this works much better if you at least have a basic idea of how this works.. a little basic research goes a long and then a specific question can help you even more.


My 2 cents please buy one because VRBO has saved us a crap ton of money and given us lots of flexibility when traveling.

 

[Arizona1]

Long distance rentals are frustrating to manage. The gulf coast may get a little weather from time to time.
You should rent when you want to go.

 

[RAE]

Long distance rentals are frustrating to manage.

They can be. We have a home on the Gulf Coast that we rent out on AirBnb during the summer months, when we are not there. We spend the winter there, so it is our home at that time. We would probably not rent our home without a good local property manager (ours live about 100 yards away, so they can see our house). They keep a very close eye on things, and let us know right away if anything is amiss. We've rented for two summers now (going on our third), and have not had any serious issues. The extra income is nice, in that it pays the taxes, utilities, and we have accumulated a fund for house maintenance. So, we are satisfied with the arrangement, at least so far. YMMV.

 

[Dd852]

We do own an apartment that is rented for vacationers. The key to our staying sane has been we have it professionally marketed, cleaned and managed. Yes, that eats up half the gross all in, but it saves 99% of the hassle. And even after the covid disaster year I still have netted an average 3% / year over the years of ownership not counting capital appreciation. And we have a place in a beautiful European city to use when we can travel. But seriously - without being able to afford the professional management I wouldn’t have touched it. The potential hassles are huge and often unavoidable, from someone losing the key to another bringing in “professional company” to another disturbing the neighbors to the hot water heater leaking to, to, to, to….

 

[retire to nature]

To discern whether or not to do this:

1. Look into a mirror
2. Make the affirmation “I am a landlord, I want to be a landlord, and I like being a landlord."
3. Repeat the affirmation for a total of three times.
4. If your heart leaps with joy as you make the affirmation, become a landlord or a VRBO property owner. If not, don’t do it.

agreed

 

[NoworLater]

I’ve just found this site, and have been lurking for a few weeks, but registered to share our experience. In summary, It worked out well for us, there are a lot of variables and each situation will be different.

We bought our vacation home ~9 years ago, rented via VRBO (AirBNB never brought the renters we wanted in our home). We also never used a prop. Mgr, as we wanted all flexibility in when we wanted to go and their philosophy is “heads in beds” to make most amt of $$, which conflicted w/ our goal of making enough to defray costs and do upgrades as needed.

We also have a local duplex rental, and we do have a mgmt company for 10%, I very much disliked managing that vs I liked managing the vacation rental (it’s fun to share your vacation home w/ the right group and meeting new people), 2 different things altogether for us.

How did it work out? Great, we are retiring sometime in the next 2-3 years. The vacation home appreciated by 2x, we plan to sell primary home at retirement to fund early retirement and move to vacation home. We are happy / lucky how it turned out. Some of the things we considered in which home to buy/where:

- We knew we wanted to retire to that town and home
- We chose a town that has a great infrastructure for short term rentals, so no mgmt company needed (just hired the cleaning company and local Mtce guy)
- Picked a neighborhood that’s about 50/50 rental vs full time residents, and we’d like to live
- Choose a townhome (made mtce easier)
- Picky who we rented to, wasn’t about us getting the most $$, we did turn away a fair handful of groups.

Have fun!

 

[pdxgal]

Also, with property values being so hot at a moment, is it wise to wait, or just bite the bullet and get a property now?

There's a saying that you make money on real estate when you buy. In other words, it helps a lot to buy low. Also, markets can vary widely. For example prices in expensive urban markets have recently decreased in some cases. You need to research the area you're interested in for starters to really get a sense of the market (if you haven't already). My gut reaction would be to wait, especially since it's a discretionary purchase. I suspect there's a bit of a bubble in many areas.