Rental Home Question

[FASTFJR]

Hey Matt this ones for you

I have a buddy who along with a bunch of other family members is renting a very large home up in Pine Island. You know the kind, 12 bedrooms and baths, pool, tiki bar, all the toys etc... Anyway he sent me the link with the price. 17K for the week. I was wondering just who builds, owns these 3-4 million dollar homes? and if you have that kind of money to build a house like that why the heck are you renting it out? Is their really that big of a payoff?

[FairWeather]

The people that buy that kind of home are the ones that have a ton of $$$. Typically these homes are what we like to call "rental machines." A home that rents for $17,000 / week can do upwards of $200,000 a year in rentals which does sometimes cover the mortgage.

Just like with most people who own on the Outer Banks they feel that since they aren't using the house why not have someone else help with the mortgage payment.

Depending upon what house they are renting it would probably resale for somewhere in the 2.5 - 2.9 Million price range.

[FASTFJR]

Will I guess if your pulling in 200K a year on a home thats worth 2-3 Mill thats pretty good.

[tprice]

We have a house on Isle of Palms in SC and we rent it a good bit to friends and this covers the insurance, taxes and up keep.

This is just a good business decision and generates income instead of the house just sitting there empty for weeks at a time

[dawiggs]

These rental homes are considered Investments, therefore ALL expenses are fully tax deductable. The important number is the "after tax" cost to own the home. Cash flow to offset expenses plus you have a place to chill with family/friends when it is not rented....
Regards,