Seven years ago, I shared a story on social media about my husband’s and my first venture into the short-term vacation rental business. At the time, we owned a Gulf-front condo in Orange Beach, Ala. When we bought it, we acquired nearly $20,000 in rentals already on the books, which set us up for a great start. It was a beautiful place for us to visit and share with friends and family. The color scheme and décor were a bit gawdy in my opinion, but Dee said it had a beachy vibe. The bright colors did go well with the “pirate room,” which was a fun hideout for our younger guests.
The prior owner was full of herself, which was most evident when she offered to give me guidance on how to manage the VRBO listing, and then, with no prior notice, she reduced her direct payment to us for the pre-paid rentals to compensate for the “education.” The amount was minimal, so I didn’t push back. I admired her organizational skills though. She had posted small signs and labels throughout the house with instructions for renters … for the thermostat, washer and dryer, pantry shelves, e.g. “Plates,” “Bowls,” etc. We viewed some notes as helpful and kept them in place, but others were excessive to the point that some of our early guests found them humorous.
The property paid for itself in rentals, despite our having ridiculously high HOA dues that included a repayment schedule for our unit’s assessed portion of a small-business loan for hurricane repairs made years before we bought the property. When we sold the unit five years later, we learned a hard lesson about capital gains taxes, but still we landed in a good position financially.
Our next move was to acquire a lake property in west-central Kentucky. Although we missed having the powdery white sand of the Gulf of Mexico, the shorter drive from our Indianapolis home was a welcome change. The house was not lakefront, but we had a breathtaking lake view, a coveted boat slip, and access to the vast and scenic Nolin River Lake. We felt at home when we had a chance to visit. Most often, though, the house was used by our short-term rental guests.
I envisioned our retiring someday in that sweet Kentucky home. My laptop screensaver was a photo of the fabulous view from the upper-level master suite, which spanned the width of the home. Seeing the image brought me hope that our retirement was on the horizon.
After just two years of ownership, I was shocked when Dee told me that he wanted to sell the property and look for a replacement in Indiana. I realized the change made sense: a property up north would be closer to our families and would shorten our drive, making weekend getaways more doable. I told him my compromise was that if I had to give up the gorgeous view, then our new property must either be lakefront or have an equivalent view.
Last September, just days after we closed on the sale of our Kentucky house, we purchased our new lakefront home in northern Indiana. The house was built in 2001 and appeared to be maintained quite well. Our greatest hesitation was that the HVAC system and water heater were as old as the house. Though they still functioned, we knew we would be better off to invest in new, more efficient equipment while we both worked. The roof was original, too, and we did not want to set ourselves up to need to replace them all at once. If we had a pot of gold, we would do much more to update the home, but it really is decent. We remind ourselves that it is just a vacation rental property, for now anyway.
When we first viewed the house, we saw an opportunity to improve on the sleep space by converting the enclosed sunporch to a four-season room that doubled as a bunk space. In our first month of ownership, we installed a mini-split for heating and cooling, along with new flooring, since the original was simply wood decking, complete with creepy-crawlers that found their way through the crevices. Now, the 10x23 room holds a lake-view sitting area that occupies more than half of the space and triple bunks on the far end. Our five grandkids love the room as much as we had hoped. We bought a couple of oversized convertible chairs that open into 6-inch “mattresses,” which allows them all to take over the space when we have the rare opportunity to gather at the house together. Our biggest struggle is giving them all a fair chance to choose their bed. As hard as we try, we always have drama.
The brutal cold in January highlighted our need to make another improvement to the room: insulation. After a couple of road trips back to the lake house to meet with insulation companies, and finally opting for spray foam insulation in the ceiling and crawlspace, we are now satisfied to know the mini-split no longer heats and cools the great outdoors. We may need to install new windows in the bunk space, but for now, we are good.
We are not real estate moguls by any stretch, but I like to think we know what we are doing, at least some of the time. I wish we did not need to share our new place with short-term renters, but the investment was a wise move. Besides, if other people want to help pay the mortgage for our new future retirement property, then why would we argue?
