After weighing all the pro’s and con’s, we finally decided to take the plunge and start 2020 off with a bang. Purchasing a vacation rental to ring in the New Year.
But in order to figure out exactly where (and what) we wanted to buy, we had to first invest a ton of time and research. There was no shortage of factors for us to consider.
We had the benefit of having kept close tabs on our broad target market over the past six years. But to help us really narrow things down we upped our game in terms of watching our desired locations, examining the current market trends, viewing a wide variety of options, actually testing out the top contender, and reading a ton about vacation rentals in general.
Must Have’s For Purchasing A Vacation Rental
The must have’s were the absolute non-negotiable’s.
We wanted the property to be close enough that we could drive to it on a regular weekend. All our research clearly told us that if a vacation property is located within 3 hours of your primary residence, usage rates sky rocket dramatically.
So we set our sights on the Okanagan Valley. My home turf, an area full of year round outdoor activities, and all within a 3-4 hour drive of home.
We also knew we had to be on the water. That was going to give us a big edge in attracting our desired renter, and set us apart from the multitude of rentals that are “walking distance” to the water. Not to mention – we want to be on the water.
An option for plugging in our car was crucial if we were going to be able to feasibly do weekend trips. So whether that meant an onsite electric charger, the ability to install one, or a Tesla Supercharger nearby, we were open to options.
3+ bedrooms came down to our desire for our own extended family to visit comfortably, and allow for multi-family renters. With three bedrooms, two smaller families could affordably rent the unit, and fit easily.
The Nice-To Haves
Family friendly was big on our desirable’s list. We want to let our kids roam around and explore, without neighbours frowning, or being irritated. We also want our property to attract families as renters. So the more family friendly the complex, the better.
Same goes for the small complex factor. Having a smaller community of people that we could get to know over the years seemed like a much better option than the properties with hundreds of units. It’s also really hard to find properties with that small community vibe, so from a renters perspective, it would be another component that would set us apart from the big condo resorts.
Space for the kid’s to run around seemed ideal. Something where they would have a chance to shed their city slicker roots, run free, and get dirty.
The Cherries On Top
While not deal breakers by any means, the cherries on top list rounded out our criteria for the perfect property for our family, and for our target renter.
First on that list was a detached cottage. There is a plethora of townhomes and condo’s flooding the market, but a detached cottage where you aren’t sharing walls with anyone? Not a lot of those to be found. The vast majority are being torn down to make way for multi-hundred unit condo/towmhome resorts.
Finding something furnished would be another lovely surprise. It would cut down heavily on the upfront costs of equipping the unit, and allow us to get it rental ready in a short amount of time. Reducing our carrying costs for an empty unit.
Pool’s and hot tub’s are high up on the desired amenities of our target renter demographic, so it was definitely something we were hoping to be able to offer. Not to mention, I like being able to choose between the pool and the beach on any given day. And a nice soak in the hot tub when the kids are off to bed also sounded pretty great. While these amenities immediately translate to a higher monthly strata cost, for us, the trade off is entirely worth it.
A boat dock and lift was the last little add-on. Mike has long been a boat fan, and while his desire to actual own one for our family ebbs and flows, the option of a lift is a nice amenity to be able to offer to renters. And a nice way to future-proof our decision when it comes to a boat. (Maybe Tesla will start working on those soon…….)
So with our list in mind, we started viewing properties with our agent. Our starting area was huge. We were looking at anything on the waterfront from the Canada/US border, all the way up to the city of Kelowna. Fortunately we had a very patient realtor.
Although that might have something to do with the fact that she is also my mom :).
More than half our target area fell outside the speculation tax zone, while the northern tip, Kelowna/West Kelowna, fell within it.
We quickly eliminated condo’s from our search. They just didn’t meet the small community, open area feel that we wanted. After all, we wanted our boys to be able to run around outside, and for us to be able to keep an eye on them, all without them having to navigate a bunch of corridors and stairways.
Townhouses quickly followed. They felt jammed in, and didn’t offer much in the way of privacy or open spaces to play.
The Perfect Place
This place checked all the boxes. 3 hours from home, detached cottage, beautifully situated on a lakefront property, with a private beach, pool, hot tub, boat dock and lift, and ample grassy space for the kids to play.
While a tad small at just 1100 square feet, the efficient layout allowed for 3 bedrooms, a patio and deck, and even an electric outlet in the driveway for old Tessy.
The one downside was that it was located on the outskirts of Kelowna, and fell squarely in the speculation tax zone. Ouch.
But after looking at everything else, this was absolutely the one.
The only problem? There was nothing on the market. And all of the recent sales within the complex had sold privately.
We decided we would book a stay at the complex on Air BnB, for two reasons:
- To really get a feel for the complex and what it was like to be there with our kids; and
- To schmooze it up with all of the current residents, and see if anyone might be thinking about selling.
While a tad expensive to pay market rates to stay in the complex, it was money well spent. I highly recommend this to anyone who is looking to purchase a vacation property.
If you can stay in the same complex, or better yet, the exact property you want to purchase, you’ll be able to see just what the day to day experience is like. Helping you identify your like’s and dislikes, and narrow down exactly what you want in a property.
From a business perspective, you’ll have a much better understanding of your guest experience, and how you can maximize the features and minimize any negatives.
Our stay turned out to be amazing. Our kids LOVED the property, and we were able to have family visit us while we were there. The whole experience reinforced that this was the right place for us. It felt like home from the minute we walked in the door.
It was also like we were 20-somethings at a singles bar the way we were handing out our numbers to existing owners left, right, and centre. Our normally introverted selves were out there making friends like no tomorrow.
The added benefit? We met some absolutely lovely people.
I’m happy to report that all the networking paid off.
Ironically, on the exact same day we found out I didn’t have cancer (yay!) we also got a heads up from one of the people we had met, letting us know that a property was coming to market.
AND – it was quite literally the perfect one for us. It was in our preferred location in the complex, the right color scheme and layout, came fully furnished, ticked off every box on our list, and best of all, it was priced well under our budget.
Let me tell you – did we ever feel like Christmas came early. No cancer, and the perfect property. All on the same day. Isn’t life crazy sometimes?
We quickly got in touch with our realtor who got an offer together ASAP (thanks Mom!)
Some back and forth and tense conversation later, we finally had an accepted offer.
Oh, and thank goodness my intense need to distract myself from my health scare had motivated us to get ready for Christmas super early. Because we literally spent the entire Christmas season buying all the extra stuff we would need to properly equip our new vacation rental.
Needless to say – we are pretty excited, and looking forward to spending a lot of quality time there with our family.
So…..Was Purchasing a Vacation Rental a Good Idea?
I think so – but I suppose only time will tell! I will say, that after spending the last two weeks up there, we have zero buyers remorse. We loved it. Our kids loved it. I was even sad when we had to leave and come home. (And I’m never sad to come home!!)
Good, bad, or ugly, I’ll write a post next year with all the gory details about our personal usage and rental income, and then we can weigh in with a solid answer on that question.
In the interim, if you want a devil’s advocate position on vacations rentals, check out Financial Samurai’s opinion here.
Wherever you fall on the vacation rental decision, there’s no doubt it’s going to be an exciting challenge for Mike and I to tackle this year.
Check back next week, and I’ll walk you through all the things we had to buy to equip our first vacation rental. And how much it all cost.
Love that you guys are using it already. May not end up being the best financial decision in terms of numbers. But you won’t be able to beat the ROI in family time and personal enjoyment.
Thanks Maria!! Yes I think it’s safe to say it’s most definitely not going to give us the highest monetary ROI 🙂 but I think we have come to the realization that we are at the stage where we need to transition beyond that.
Otherwise – what’s the point of reaching Financial Freedom?! 🙂