What do you get when you combine the strongest real estate market in the country with one of the most desirable vacation destinations in the country?
The BEST real estate investment in the country!
Five Reasons Why a North Idaho vacation rental is such a strong investment:
1) North Idaho is strongest real estate market in the country… best potential for equity gain
According to the Federal Housing Finance Agency, Idaho had the highest housing equity increase of all states at 13.35% from March 2018 to March 2019
Over the last 5 years the greater Coeur d’Alene housing market has seen an average of 11% equity gain year over year. Compare that with other real estate markets and other investment vehicles, such as the stock market, and you will find 11% per year is hard to beat!
Equity gain is one thing, how about an investment that generates passive income?
2) North Idaho is a popular four-season tourist destination allowing for strong passive income
Coeur d’Alene and Sandpoint are two of the most popular tourist destinations in the Northwest. Why? Clean, safe and fun towns full of festivities, unmatched outdoor recreation including lakes, rivers, the Panhandle National forest, Silverwood Theme Park, 5 Ski Resorts to enjoy around North Idaho.
Because of all the four-season fun North Idaho offers, it is not uncommon to see vacation rentals close to all the action booked more than 200 nights per year. So, lets do some math, 200 nights per year at $150 per night is 30K at $200 is 40K gross income. Subtract your expenses and your mortgage and chances are you will net passive income.
3) Vacation rentals hold value and increase in equity better than long term rentals
Vacation rentals improve the look and quality of neighborhoods
4) You get to use the property for your vacations
a. To maximize your tax deductions, your home must be classified as a full-time rental business. That means it’s used by you for your personal stays for less than 14 days or fewer or 10 percent or less of total annual rental days, whichever is greater. Keep in mind that days primarily spent repairing or maintaining the property don’t count toward personal use days.
5) Tax incentives
You are entitled to deduct all “ordinary and necessary” expenses to operate your rental business.
When you travel overnight for business related to your vacation rental, you can deduct expenses such as airfare, accommodations, mileage, meals, and other travel expenses. This could include activities such as:
i. Traveling to your rental property to do repairs or maintenance
ii. Learning related to your rental, such as classes, seminars, conventions
iii. Meeting with business associates who work with you in your rental business
Remember I am a retired cop not a retired CPA…so check with your accountant for the best tax advice!
Now what makes for a Killer North Idaho vacation rental:
1) Location, location, location
Close to amenities walking distance to downtown shops, dining, and festivities, trails, beaches, bike paths, etc
2) Desirable Property Features:
Sleeps 8 to 12 (ideally something a couple families can split the cost)
Unique Home characteristics
i. Turn of the century charm, log cabin, rustic farmhouse, or luxury feel
ii. Fun features like: Pool, Spa, Game Room, Media room, Spacious kitchen for entertaining, Large yards for play or events, Parking for toys (ATV trailers, boats, etc.)
3) Strong Management
Typical management companies will charge 30-35% which includes any cleaning, maintaining and advertising fees over the life of managing the property.
A good management company is going to come with a premium cost, but many owners find that this is worth it if they can continue to rent the property and take clear profits from the top.
So, there you have it…why to invest in a North Idaho vacation rentals and what to look for.
If you want more information about investing in North Idaho Real Estate contact us at LiveBetterinNorthIdaho .com we would love to be a resource for you.