Living in Portland, I'm happy to see Mount Hood on this list. it's a great market and with an urban center like Portland so close, it is a drive to market making it more impervious to downturns in terms of rental traffic. I've stayed with Vacasa managed properties up there too. Great property management company that I'd trust my house with.
As a realtor and vacation home manager I can tell you the those cap rates are high. I tell buyers that from a cash flow perspective, they’d be better off buying a storage unit complex or a small office building. But you can’t vacation in a storage unit (I guess you could) and you also couldn’t share it with friends and family. Many buyers just want to rent it some to cover their expenses, and use it some for family vacations. Hoping to make a lot of cash flow on a vacation home is misguided. Also appreciation is never guaranteed. Hello 2008.
I am a realtor in the Okemo Valley which is topping your list. I think most investors are investing in our market as prices are good and owners enjoy utilizing a second home here as well as supplementing the overhead with great rental income. I live here and also own a home as an investment - it more than pays for itself. Yes there is work involved but owners get to enjoy the property which makes it a win/win.
What happens when your city decides that only primary owner occupied residences can be rented out for less than 30 days? And you have to be there! Best not to count on vacation rental income.
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You invest in a city that would die if it didn't have short term rentals being a big part of their economy. Like Vail, Keystone, Breckenridge, or any other major resort.
Jerry
These cap rates, even the best cap rates, are all low. Even in the best locations, these returns, given the heavy work involved in running a vacation rental, make no sense from an investment perspective.
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@Dr. Mark
On the face of it, they don't appear that great.
But the cap rate doesn't include the appreciation on the property, which can be high, and a reward when the unit is sold.
Maybe the cap rate should be compared with the dividend rate of stocks.
Don't forget, too, IRS rules related to rental property. If in a ski area, for example, you can "visit" your property to check it out, thus writing off the cost of the trip.
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What happens when there's no more snow?
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@Jim
It doesn't matter in Keystone Colorado... Two years back was the worst ski season in 15 years there. I bought my first vacation rental in that fall at the start of the season. By December it was rented for the entire season and even with a management company, I paid for the year's expenses in 4 months. I've sold that property owning it 14 months and made about 125,000 on the appreciation. I put about 10k into the unit's furnishings and lighting. I kept the furniture in the sale...
The important thing is to buy right in the right place... any of the top10 most visited ski areas are likely a good bet. I stayed within Summit County because the prices are lower there than say in Vail or Aspen. But the rents are nearly as high... at least you have a good shot at breaking even on costs riding appreciation. Summit county is built... there's no more land other than luxury home sites.
Many people have homes in secondary areas. Most anyone I know who does rarely goes there. They do not rent them out because they do not want others in their home. It is a big $ drain for the majority of people.
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@Jan
Silly then to buy one unless you INTEND to turn it into a vacation rental. It's a matter of point of view... if you're not going to use it a ton nor rent it, of course it's pricey...
But studying a market to recognize a good opportunity is key, and buying in a major resort is also important. Looking for the right rental in the right place makes all the difference.