Second Homes & Rental Income in Western North Carolina

As ski season descends upon Asheville and the mountains, rental properties for tourists will experience increased demand. But, how much demand is enough to consider turning your second home into income? Predictably, the answer varies.

Let's look at some of the basic arithmetic if one is looking towards a vacation home as a source of revenue. MSN's Liz Pulliam Weston outlines 3 basic rules if one's goal is to actually make money from a second home:

1) Vacation homes need to be rented 15 to 17 weeks/year in most areas to break even.
2) Internet advertising is essential.
3) Owners need to cut out the middlemen.

Item #1 is an assertion that involves simple arithmetic. It derives from determining one's total obligation for ownership, the mortgage, tax, insurance, utilities, and so forth. For the vast majority of Western North Carolina properties and owners, these items, especially #1, make a vacation home as a profit center difficult to attain.

In our opinion, to think of renting a vacation home here for 105 to 120 nights/year, is pretty much something that will not just happen on its own. Instead, any would be landlords would have to turn their attention to the second rule in order to do anything more than defray the cost of ownership. The question also arises, if one would be willing to give up prime time weeks, in order to cover all costs.

Rule #2 speaks to merely one aspect of pursuing rental income and customers. We have written in the past about attracting renters to your second home, by way of certain added amenities to distinguish your home from the crowd, as well as the new wave of vacation rental websites.

Obviously, #3 represents the overhead involved if one is to be an absentee landlord. Management companies in our area can take 25% to 50% of gross rental income. If 33% were the fee involved in your particular situation, this would raise the required occupancy by renters to 20 to 26 weeks per year.

The NY Times' Amy Gunderson wrote some time back about certain tips and questions for finding a good rental management firm. For some, perhaps, do it yourself landlord or the website mr landlord will prove useful for those up to the task of eliminating those middlemen. Our own blog also addressed some common pitfalls for would be landlords.

For most owners who decide to enter the rental market, the strategy in our part of the world will not be one of profit, but instead to defray costs.

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Filed Under: Issues for Second Home Owners/Buyers