Where I started
Since I was young, I knew I wanted to own a home in Lake Tahoe, CA. I was from Northern California and frequently visited the area. I often had the opportunity to visit the area’s local activities and enjoyed the beautiful scenery – it is truly an amazing place to vacation.
A whirlwind of changes
As I left the bachelor life, which prolonged into my late 30s, my priorities and goals changed. By then, I married and had a baby girl – I had to change to meet the needs of my family. Around the same time, I bought a home and learned that my company of 20 years was sold to a larger, public company! That year – 2014 – was a whirlwind and incredibly emotional for a person who already struggles with anxiety and mild OCD!
As overwhelming as it was at the time, there were so many blessings around me to be thankful for. My company that sold, was partially employee-owned. Although I could not retire on my earnings, I was able to re-invest in my family’s future. I paid off the family car and began investing in our future.
An opportunity emerges
One door closed, and another opened. Through the window to the world in our living room – our television – we came to love HGTV. The glorious Matt Blashaw swinging his hammer through beautiful vacation destinations across the country. Blashaw brought people’s vacation rental dreams to a reality with some simple math graphics, and 60 minutes of start-to-finish turnkey renovation! My wife and I said, “Hey, we can certainly do something like that!” And so began our initial search for homes in the Lake Tahoe area, and the beginning of my adventure (obsession, really) into real estate investing.
When we first began our research, I did not see it as an investment, but the chance to have a nice vacation home to visit a few times a year and have other people pay for it by renting it out! With my newfound investment dollars at hand, this would be simple just like they do on the show. In fact, they even had an episode filmed in Tahoe that I thought I could use as a starting point. Of course I did not really think it would be as simple as they demonstrate on a reality TV series, but it certainly led me to believe that there was a formula that can be followed that would lead to a successful outcome, and I love formulas – I have an engineering degree.
The effect of the housing crash
This was not my first endeavor into owning real estate. After the housing crash, I was one of the unfortunate souls who ended up with a foreclosure. This was truly my first lesson in real estate, and taught me what NOT to do from a buying and mortgage loan perspective. Like many others, I was fooled into believing that a one-bedroom condominium might skyrocket to positive equity despite owing more than $300,000. I was in my early 20s, and if I could go back and smack that kid in the head I would, but hindsight is 20-20, right?
Although I had a healthy down payment ready to purchase, because of my history, I needed to get creative with financing. I learned over time that real estate investors face all kinds of challenges with financing and getting creative is truly one the pillars of successful real estate investing. My first creative lending endeavor, I asked family of course. I was fortunate enough to have a family member lend me their credit to finance my first property until I was able to qualify for conventional lending a few years later.
With my down payment, creative family financing in place and my location chosen, it was time to get started! If I didn’t demonstrate it earlier, I’m very type A personality which means I need stability, confirming data and overall just don’t like to get out of my comfort zone. Fortunately for me, I married an incredible woman who has helped me overcome those obstacles and find success.
The search is on
We viewed dozens of properties before purchasing our primary residence so I had some concerns about how long it would take us to find something that was more than two hours away – with a newborn in tow! We made two trips to Lake Tahoe, and primarily looked at fixer uppers that we felt we could add some value to and profit from (much like HGTV). The very last house on the second trip we looked at was about $100,000 more than what we wanted to buy, but it was already renovated. I was so focused on remodeling a vacation home that I completely disregarded the opportunity of a turnkey option. I reluctantly toured the home with a realtor and it was PERFECT. A three-bedroom, two-bath in a quiet, wooded neighborhood. Best of all, it was already an established vacation rental.
Reality show reality check
My wife reminded me of the money and energy involved in managing a remodel remotely. When you remodel a home, you have to follow a strict timeline to see savings. And with that, the additional $100,000 was clearly the better investment. It was springtime, and the busy summer rental season would soon kick in – if we chose a remodel, we would miss out on a lot of revenue.
Making the offer
We put in an offer, and guess what? They already had three other offers ahead of their asking price! Our hopes and dreams were shattered in one instant, but there was one last opportunity. The seller allowed each buyer to make a final offer. We asked for $10,000 over asking price, but also requested the furnishings remain. At dinner that night, we were nervous about our chances of getting the home. We thought if they only knew how much joy this property would bring our family, and how important it was to us, the seller might select our offer. With that, I wrote a polite and personal letter along with a photo of my family explaining how much we wanted the home, and the various reasons we would take it on and honor its legacy.
Two days later, the seller accepted our offer. All of a sudden, we were the new owners of a beautiful cabin in Lake Tahoe, CA!
Here are the keys – now what?
As we proceeded through escrow, my fears and insecurities transitioned from if we would be able to get the home, to what are we going to do to make this vacation rental property successful?! The television show did not tell me about county permits, Tahoe BMP (best management practices), snow removal fees, tree maintenance expenses, and so much more. I was convinced we were doomed for failure once we accounted for all of the fees and rules.
Reaching out to the Lake Tahoe rental expert
Once again, my wife was the voice of reason. She said to me, “ Listen, the former owner rented this place out for a decade successfully, why not just give him a call?” I called him; he is a firefighter in the San Francisco Bay Area. He bought the home and renovated himself. He kept the home for the same reasons we wanted to. As his children got older, and more involved in sports and activities on the weekends, he decided to sell it and pursue local investment opportunities.
He was so gracious to essentially provide me with his vacation rental blueprint. He referred me to the best contractors, booking agencies and other local vendors. He had vetted them and overcame the pain points for that home. He had evolved that property, now my property, into the best rental it could be for the most profit.
A low-maintenance investment
Two years later, our vacation rental (VR) is quietly and (almost) painlessly paying for itself. I have minimal interaction and time invested spending only one to two hours per week managing my rental remotely. With the use technology and some other tricks of the trade, our vacation home pays for itself and allows me to continuously scout for other VR opportunities to hopefully replicate my success.
Join me on this vacation rental journey
I started this blog to simply share what I have learned and to continue to learn as I expand my VR portfolio. It is my effort to bring some reality to what owning a VR is actually like, and what is involved in keeping it successful. My blog features tips and tricks for success, and pitfalls to watch out for. You can also gain some prospect ideas for new VRs to invest in. Thank you for stopping by and I hope you can join me on my vacation rental journey. I want to help you to learn and gain the confidence to start this journey as well!