My husband and I got a home equity line of credit a year and a half ago for the purpose of investing in a rental real estate property. We live in a state with pretty high home prices, even in this current market, so with the amount we have available to us, we would only be able to afford to buy 1 home locally to rent out. But after adding up all the extra costs we would have, the income we’d be getting from rent would only make us break even and wouldn’t be worth it.
There is a vacation town near us in the mountains that has attractions all year round, skiing, shopping, hiking, fishing, water fun, etc. And I was looking into maybe purchasing a vacation rental there. I found a property there we can afford. I called around to places that manage rentals of similar vacation homes. It seems comparable properties make between $ 28,000 – $ 29,000 a year — this has the potential of being more profitable for us than a rental home, where there is month-to-month rent.
Even after using all the funds remaining in our equity LOC, we’d still have over 50,000 of equity in our home. But I’m afraid that with things being the way they are, the funds will soon no longer be available to us because of the banking situation. We may soon get a notice, as others have that the bank won’t let us have the funds they loaned to us from our home’s equity. And with mortgage rates so low, it seems like now is a good time to jump on this opportunity.
Yet, with a vacation rental, there’s not a steady income like there would be in a rental home. And with the economy being the way it is, there is a risk that not as many people will be taking vacations here in the near future.
So, what do you think? Should we do it? Or let this opportunity pass us by, for now?