SID (MO) (by Richard [MI]) Jun 24, 2019 12:30 PM|
SID (MO) (by myob [GA]) Jun 24, 2019 1:52 PM
SID (MO) (by S i d [MO]) Jun 24, 2019 4:35 PM
SID (MO) (by Richard [MI]) Jun 24, 2019 5:42 PM
SID (MO) (by Robin [WI]) Jun 24, 2019 9:10 PM
SID (MO) (by BRAD 20,000 [IN]) Jun 24, 2019 10:54 PM
SID (MO) (by Richard [MI]) Jun 25, 2019 6:25 AM
SID (MO) (by Dodge [PA]) Jun 25, 2019 6:56 AM
SID (MO) (by S i d [MO]) Jun 25, 2019 9:26 AM
SID (MO) (by Oregon Woodsmoke [ID]) Jun 25, 2019 11:31 AM
SID (MO) (by Richard [MI]) Jun 25, 2019 12:23 PM
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SID (MO) (by Richard [MI]) Posted on: Jun 24, 2019 12:30 PM
I've been working on an idea here in Northern Michigan regarding vacation rentals. The really prime places like Traverse City are very expensive, like 500K+ and rent for high dollars as vacation rentals. Many regular earners are priced out as weekly rates can be $5000+
What I've seen a group of people do instead is to form a trust to buy an older place not directly in the prime area but close (20 miles about). They can get 10 or so people/friends to go in on it. The trust owns it, everyone contributes. If someone wants out, they are bought out by the others or sell their part. A caretaker (retired old codger) takes care of mowing, security, etc. and gets free housing to doing it. The people in the group take their travel trailers/campers up for the season (or store them there). They come up on weekends or for vacations.
It's far less expensive than renting or campgrounds not to mention less hasle, never full.(most campgrounds are totally booked all summer. You have to reserve a year in advance).
Property tax on a place like this is generally less than $1000/year.
I'm thinking on trying to put together a deal like this .
I value any thoughts/ input from you as you seem to have many of the same type tenants (class C).
I've considered making a deal with tenants like this: make payments without fail and they get a week at the vacation place free. --71.10.xx.xxx
SID (MO) (by myob [GA]) Posted on: Jun 24, 2019 1:52 PM
I'm not from MI or MO but I am from the world of investing. The second you said PARTNER AND THEN MULTIPLIED BY 10 --- are you crazy?
Can't get past the 500K and then mention C rentals? WHAT? C rentals people in 500K place? --99.103.xxx.xxx
SID (MO) (by S i d [MO]) Posted on: Jun 24, 2019 4:35 PM
Very interesting thought! I confess I'm feeling a bit like myob....$500K for a class C house, or is that for some kind of a mini-resort/villa? More info and detail on exactly what it is your group would be buying into.
My Class C tenants probably can't afford to go on a vacation even if I put them up in some place. The closest area we've got is Branson, MO (aka Vegas/Nashville of the Ozarks) and to do anything down there is going to run people $100 per day per person MINIMUM just for food and entertainment, unless all they do is sit beside the pool all day and drink. Not sure I'd want that.
Anyway, let's hear some more details so I can make up a better answer. ;-)
SID (MO) (by Richard [MI]) Posted on: Jun 24, 2019 5:42 PM
Sid, Looks like I did not explain clearly.
In the prime area, a place could cost 500K. If you go out about 20 miles and buy an old farm or country house, you can buy one with maybe 10 acres and an old house for under 100K.
Put about 20K down, split 10 ways and each person puts up about 2K. Payments are about 800 a month PITI. Divided by ten people, about 80 a month each. A caretaker stays there free. Maybe pays their own utilities or maybe split between the 10 people.
Vacation rents on the prime places could be $5000+ a month.Popular campgrounds are not cheap and are typically booked a year in advance.
Costs on the shared place maybe 80-100 a month each. There's plenty of space on the 10 acres and everyone can go whenever they like. No public campgrounds to worry about.
As to the opinions that partnerships always go bad, I agree that sometimes they do. If the property is held in a trust with members being basically beneficiaries, if someone causes trouble or is not happy, they can exit via a happy clause. The others buy them out at an agreed on price and they leave. If they do not leave, the other party can leave. All the paperwork Can be drawn up by a lawyer at the start.
I know of at least one arrangement set up like this. The purpose of it is to give the members a vacation place that is reasonably priced with friends, not to create a big cash flow or to sell it for a profit. --71.10.xx.xxx
SID (MO) (by Robin [WI]) Posted on: Jun 24, 2019 9:10 PM
Are you familiar with the economic principle of "The Tragedy of the Commons"?
It could work. The odds are not in your favor, but if you chose your group of friends very carefully, it might. I just wonder who the poor soul will be who gets the responsibility of collecting the money and paying the bills.... --69.243.xx.xx
SID (MO) (by BRAD 20,000 [IN]) Posted on: Jun 24, 2019 10:54 PM
Not Sid here.
I suggest an LLC or Corp would be a better format. Safer for each member and written to protect each member from what mischeif or problems the other members and their children.
Or sell club memberships to reduce your liability.
Once paid off you could stop allowing memberships and habe the place to yourself.
SID (MO) (by Richard [MI]) Posted on: Jun 25, 2019 6:25 AM
Thanks for the input everybody. --71.10.xx.xxx
SID (MO) (by Dodge [PA]) Posted on: Jun 25, 2019 6:56 AM
Many hunting cabins in central PA have group ownership. Often for generations of family. Works great with good people. --174.200.xx.xxx
SID (MO) (by S i d [MO]) Posted on: Jun 25, 2019 9:26 AM
Thanks for the clarification. I'm still not quite getting the purpose behind the vision, but that doesn't make it a bad or wrong vision. If you've got an idea on something like this to boost on-time payments, then I say GO FOR IT! I'm just not the person to give you advice on how to implement it.
One thing I can agree on is Brad's suggestion for an LLC. Much easier to set up, organize, and administer than a standard partnership, I think. --173.20.xxx.xxx
SID (MO) (by Oregon Woodsmoke [ID]) Posted on: Jun 25, 2019 11:31 AM
Is there something really attractive 20 miles from the prime area?. It would have to be a great vacation spot. Cheaper is not the only criteria for choosing a place to vacation.
Something really close? Hunting? Fishing? Canoeing? Hiking? Grocery store close by? A place to buy bait and gasoline and propane?
I suspect some expense to put in some septic tanks and maybe a well. Road maintenance?
It might work if you could get a group of ten people who are responsible about paying their bills and paying a bit into a reserve fund. --98.146.xxx.xxx
SID (MO) (by Richard [MI]) Posted on: Jun 25, 2019 12:23 PM
Here in northern Michigan, the area was settled completely by the 1920's. There is NOWHERE that is more than 20-30 miles from some town, even if it's a small town. There are thousands of lakes and many small rivers. Campsites are everywhere, HOWEVER, like you mention, sites in prime areas are expensive and booked a year in advance. Those that demand the prime spots pay for them.
All the things you mention, hinting, fishing, canoeing, hiking are everywhere. We have millions of acres of forest. My county alone is 585000 acres with 85 percent forest.
What I am looking at requires NO new septic, well or house. There are plenty of places available that already have them. Old farms, hunting cabins, etc.
I do agree that it would likely take a group of friends who are responsible. --71.10.xx.xxx
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