With a duplex vacation rental, you can vacation in one, rent out the other

In my last post, I weighed the rent v. buy decision for a property we would only use part-time. The property we were considering was a duplex (not pictured) in upstate New York, about 30 minutes from Albany and near a SUNY (State University of New York). While the property had enough potential that we made an appointment to visit it with a real estate agent, we ultimately passed on it. The property ended up selling, but there is another duplex in the same town still listed for sale for just under $115,000.

The numbers didn’t make sense for an investment

While the unit was just under $120,000 and was fully rented, the cash flow was break-even at best. The tenants had been there for a while, but they were on month-to-month leases so could leave at any time. One tenant had planted a garden and had children in the neighborhood school, so they were likely not a flight risk. However, the other tenant was single and unhappy about all the deferred maintenance. Their kitchen ceiling was leaking, there were broken windows, and parts of the roof and siding needed immediate replacement.

We would have to put in thousands of dollars to address the visible issues, and who knows if there was further damage (e.g., mold) due to the property not being cared for. The unhappy tenant was happy to complain and share how there were incidents of vandalism and drug use near, and sometimes directly on, the property. This rental would need a strong property manager, and a good friend in a nearby town mentioned that good vendors were hard to come by.

For a vacation property, we’ll rent rather than buy

Before seeing the property live, we thought we might want to use the property for ourselves – say, keep the happy tenant and turn the other unit into a vacation rental that we could use sometimes (like our Condo Boom in Tamarindo, Costa Rica).

Condo Boom vacation rental in Tamarindo Costa Rica

We had visited this town during a regional fair, and it seemed like there would be enough to do – several restaurants, including a comfort food diner which is a favorite type of eatery for us, proximity to a college campus, short drive to Albany, the state capital  However, upon returning, the town clearly was still in the developing stage. A number of storefronts were still For Lease. The restaurant that we remembered fondly was not as good the second time around. Our Tamarindo rental doubled in value in five years. I would be shocked if that happened here.

Besides, if we needed to rent in this town or any other, we could always use AirBNB. For longer-term rentals, a real estate investor shared a great recommendation, Furnished Finder. At current interest rates, high yield online accounts, brokerage money markets and short-term Treasuries are yielding 5%, or $6,000 per year on a $120,000 investment. That’s more than enough to cover a month or two to vacation in small town USA.

There are other US geographies we prefer for investment, vacation, or both

On the same trip to check out the upstate NY duplex, we spent a week in New Hampshire, scouting out Manchester, Nashua, Hanover, Peterborough and Concord. Scott ran a marathon in Manchester, checking off another state marathon on his quest to run a marathon in each of the 50 states. I had read a flattering article about Nashua and had heard good things about New Hampshire overall. With no state income tax, NH would be an alternative in case we wanted to leave Florida but retain the tax benefit. The cooler Northeast weather would also make NH a good climate alternative and a respite in the summer months.

As it turned out, we loved Concord and have an MLS drip coming to us for our favorite neighborhood. That said, property taxes are really high, so even if you pay cash for the purchase, your monthly carrying costs will still be high. The cold weather, while a respite from Florida heat, also means high utility bills. Maintenance will be high, as the properties are old – everything we saw was over 100 years old.

Concord is still on our radar as for investment, vacation or both. Our youngest is currently living in Decatur, GA, so that’s also on our radar especially if she stays for a few more years. She could take advantage of first-time homebuyer programs and start her own real estate journey. Or, we could buy an investment property for ourselves, have her rent from us and get a tenant that we already know, love and trust.

Our first choice is an international geography, and we have a scouting trip planned for late 2024

We’re not in a rush to buy, and even more than any of the US-based options, our first choice would be another international property. We have a scouting trip planned for later in the year to Spain and Portugal. We almost put down deposits for pre-construction developments in Costa Rica and in Panama, but ultimately opted to wait. Finally, a duplex of two 1-bed, 1-bath units in the Galway area of Ireland that came on my radar in 2022 but was quickly sold is back on the market. Could this be a sign that we need to go back to Ireland???