Q: Is vacation real estate a good investment?
A: Real estate rarely loses in the long term, especially in vacation markets. Understanding the Big Bear Lake vacation rental market is important in supporting this point. Big Bear Lake draws vacationers from five densely populated areas, Los Angeles, Orange County, San Diego, Palm Springs and Las Vegas. Proximity to these highly populated areas creates a steady flow of vacationers. You don’t have to be a millionaire to invest in a vacation rental home. Based on your current financial situation you can invest in 3, 4 or 5 star vacation rentals. There is demand for all three types of rental properties.
Q: Is now a good time to buy a Big Bear Lake vacation rental investment?
A: Any investment is a personal decision for the investor and it is the investor’s job to do sufficient research to make sure this is the right move for them. An important factor would be, are people renting vacation properties in the current market? Yes they are. There has been a socioeconomic shift in who is vacationing and where they are going to vacation which is important to understand. Families who might have gone to Aspen, Tahoe or Mammoth in 2005 are coming to Big Bear for their annual winter vacation because it’s closer and more cost effective. Families are still vacationing, they are simply downsizing their vacations. It is important to work with a vacation rental company that can educate and inform in detail the nuances of vacation rental marketing and the current economic conditions in a way that instills confidence in the investor. Always ask to see numbers.
Q: Can I buy a vacation rental that will cash flow?
A: This is a tough question to answer because everyone’s financial situation is a bit different. In addition, different vacation home buyers have different levels of interest for personal use and vacation rental location as well as other criteria, and different vacation rental companies have varying levels of dedication to marketing and managing the rental. It is important to do your homework, understand the criteria for a good revenue generator and research all the vacation rental companies in Big Bear to makes sure you are setting yourself up for the success you anticipate. Knowledge is power.
Q: How much can I expect to make in rental revenue from my vacation rental investment each year?
A: It is hard to make a sweeping statement that will apply to all homes and homeowners. That being said, vacation rental homes tend to bring in around 5-15% of the homes value in rental revenue annually. For example, a property valued at $250, 000.00 can bring in anywhere from $12, 000.00 to $37, 000.00 in annual rental revenue. Where your investment property falls depends on several factors such as location, size, amenities and personal use. It is important to work with an agent and vacation rental company that will inform and educate you on the criteria and practices that will maximize your revenue generating property.
Q: How can you predict if a market will appreciate over time?
A: Property value growth is an important consideration when buying a vacation rental because most vacation home owners are in it for the long term. You’ll earn revenue but it would but it would also be nice to know how your investment will appreciate. Your real estate agent should be able to inform you of current market conditions and how property values have increased or decreased in recent years. How does your agent do this? With real estate comparables in the market in which you are interested in buying. Your agent will also help you review property tax records and parcel data. This will enable you to examine how the taxes have increased or decreased over the years and also the changes of the value of the home or homes in the area.
Q: Is it better to buy a vacation home in a popular area of Big Bear Lake or a more remote area of Big Bear?
A: Where you buy a vacation rental investment will likely depend on your budget and your personal preference. A cabin in a more remote area may cost less but may be more difficult to rent. Revenue comps are important when trying to grasp the investment properties potential. An agent with a comprehensive understanding of the different areas and their revenue generating potential is critical to your investment success. Your real estate agent should be able to give you compelling fact based information on an area’s potential. The only way an agent will be able to do that is if they are working in close relationship with a vacation rental company that has a large inventory and allows that agent to have access to the hard numbers their vacation rental properties generate. Make sure to ask your agent if they can answer these important questions to your satisfaction. And don’t settle for answers, get actual revenue comparables for the area and property type you are interested in. Remember, this is an investment, you need to SEE the performance of a revenue generating investment property or one just like it, not just hear about what it “might” be able to do.
Q: What is the best area in Big Bear to buy a vacation rental investment property?
A: The best area is the area you and your family enjoy the most and can afford. One of the most valuable assets of a vacation rental revenue generating investment is the ability for it’s personal use by it’s owner and their friends and family. If your family prefers winter sports you will want to take a good look at the cabins close to Big Bear’s magnificent resorts. If your family likes to get out of the heat in the summer and escape to the cool mountains, you will want to look closer to the lake. Don’t forget to work your personal interests into your investment purchase. You and your family should look forward to returning to your vacation cabin every year. Also keep in mind, if you love your cabin it is highly likely that other families will love it too and want to rent it out for their vacation.