Why Vacation Homes are Bad Investments

Vacation real estate vs apartments

Buy something that produces consistent income. You want to invest in something that is dependable. Too many people have dead money invested in things that won't give a big return. Know what you're doing when it comes to real estate!

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Grant Cardone Career and Bio
TV Undercover Billionaire
Founder -  10X Movement Business Conferences Worldwide
Author -  The 10X Rule. (Plus eight more biz books)
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[brettrun]

I own two vacation homes that each provide 18-20% return on my initial investment annually. This is rental income after expenses. That does not include home appreciation and the fact that other people are paying down my mortgages. That works for me.

[troytdesigns]

Don’t buy a vacation home like that. Build a small cabin, Pinterest decorate it and instagram the hell out of it and bam. Small investment to make money.

[mtoo]

That iPhone alarm sound is triggering me

[fredso]

We've made a 2X ROI on one of our vacation homes up in the mountains in 10 years

[mohaamd_]

Though I concur, but I believe who ever purchased this property didn't necessarily have "Investment" as top priority, as much as just having a nice vacation place (Or at least that's what I'd do).
They just rent it to make passive money while the building is not in use.

[dustovshio]

agree with what warren buffet said but if your vacation rental is in a high traffic area like downtown in a city most likely it will make money. I know what you are going to say "yea but why mess around with making a couple hundred grand a year" well good question, could just be a temporary stepping stone to the next deal.

[loquist]

I wouldn't buy a vacation home like that, but there are plenty of areas where vacation homes are inexpensive and nightly rents are high. If you research and find a good area you can net more on a property each year than your initial out of pocket investment.

[bickerin]

That is a pretty big blanket statement there. If this guy bought a home that is only good for snow seasons, THAT is his bad. Get a vacation home that has both cold and hot season activities, example Lake Tahoe California. Lake Tahoe homes are booked out all spring, summer, winter, and part most of Fall.

[qjouciv]

I wish I knew you about 7 years ago when I was getting in with the heavy hitters (REITS, FUND MANAGERS).
Man, you really give away golden nuggets for free.
You seem like a crazy-cool and even funny, coach. I'm glad you're able to enjoy your family and success.
You did your research, took your lumps and kept it moving. Much respect for you.

[sunrisesunset]

If he's a hedgefund guy Im sure he'll be ok. lol

[skiidzman]

I can't entirely get behind the logic. For a middle to upper class family, if you own a $350, 000 plot of land on a river in Colorado for example - and you build 4 vacation cabins, upscale, and rent them out even at $185/night for 160 days out of the year that's still many, many more times what you would make buying a couple single family house rentals. The potential income is staggeringly good assuming everything else is in place. Hell, I stayed at a B&B 2 months back in Utah, a coast guard couple ran it, and 2 others, one in breckenridge, and another up in northern US. They retired entirely off the income made from renting them out via air B&B/other websites.


So... yeah, maybe add a disclaimer - if you are filthy rich, think bigger? I dunno man. Cut my logic in half please I am curious.

[millerab]

I agree that high end vacation rentals probably don't work, but what about other areas that are touristy year round and you can buy houses and rent them for more through airbnb, VRBO, booking and expedia and make almost double as a Vacation rental. For instance, I had a 4br/3ba apartment in Savannah GA that rented for $2200/month($1980 to me after management). After the tenants moved out, I painted the whole place and did a couple upgrades. I spent about $8, 000 to make it a little nicer, then I furnished the whole place for another $30, 000. Now after one year of having it rent as a vacation home, I made $5000/month after management fees, but before utilities. Utilities ran about $600/month on average, so in one year I pocketed pretty close to the amount of money it cost to renovate and furnish the unit. I am not saying this is the better way for every unit, but if you live in a area that the vacation rentals stay rented out and the rents are not that high, going to vacation rentals could be a nice way to bump the cash flow.

[rondj]

"Vacation homes are bad". Then he proceed to say " I'm paying, I think they wanted $150, 000 per two weeks here. Last year I tried to rent it out for 2 weeks but they dont want the deal (Of course because they might be fully booked)". Even in big cities like new york a beautiful townhouse is around $50, 000/month. Just assume a nyc townhouse rented out for the whole year VS. a vacation home rented only for atleast 3 months a year but at $150, 000/2 weeks. Which do you think is a better investment? And also investment property in that area is way cheaper than the cities he mentioned.
By the way,
The French Riviera vacation villas with 300 sunny days a year says "hello funny guy".

[northernozarkhomestead]

Sound advice, lol! With 5000 apartments all leveraged up to the eyeballs and then the Dictator said no one has to pay any rent. I'm glad i didn't to this. If i did, i would be going big on my bankruptcy watching the sheriff come to my home every day to serve new papers taking home after home after home. I hope this didn't happen to you. ill leverage 0-20% grow slow and have zero chance of property being taken even if no tenants pay any rent for 2 years.

[samgee]

ud be in idiot to rent a place for two weeks for 150k!!!

[michaeladams]

When you find the right geographic vacation rental location you'll know it! 70% occupancy in vacation stays beats 100% market rents by three to four times revenue. My portfolio is no where's near GC however $35M and growing is a sizable asset portfolio I can live with. Still love GC videos! Perhaps Smart Stays vacation rentals will tackle multi unit market rentals next!

[CommandoMaster]

Buy positive cash flow real estate in good areas.

[MultiCrash]

Man. I have mad respect of Grant on most things. He is so far off with his assessment of STR. I own 4 active soon to go live with the 5th. My cash on cash return is within the first year of each property so far. These properties kill it and stay booked 90% creating a ton of extra income.

[johnnykahuna]

This is why I love Grant. Dudes on freaking vacation with his kids and still putting out pure knowledge. Keep em coming man!

[lucasjohn]

Hey btw... How are your rentals doing? still not paying the dividends to your investors?