Discount S/O - If you had the choice?

PA Girl · Post by **PA Girl** » Thu Oct 02, 2008 10:41 am

The discount thread got me thinking. For discussion purposes, would you do either of the following:

#1 Buy a STJ house with a mortgage knowing that you needed the rental income to pay at least part of the mortgage?

Or

#2 Buy a STJ house knowing you could pay the mortgage 100% by your normal earnings? Meaning you would only rely of rental income to pay real estate taxes and other cost of property ownership.

There was an interesting podcast on News of STJ a while back where a long-time owner talked about how the boom in property values have made a positive cash flow on a STJ rental a thing of the past.

Mr. PA Girl would try #1 if he could get away with it! PA Girl is scared of risk and would choose neither.

Xislandgirl · Post by **Xislandgirl** » Thu Oct 02, 2008 10:50 am

There are way too many variables for me to make a choice.

What would your mortgage payment be? If you are buying a million dollar home, how much would you mortgage? That would be a determining factor. If you only put down say 35% and finance the rest, unless your house was rented every week, you would not be making back enough to make a dent in your mortgage after expenses (fees, utilities, taxes, etc)

Cost of ownership is too big and too variable (wapa, water, etc) to count on rental income, in my opinion.
You pay a monthly management fee, then commission on rental, cleaning, electricity, water, supplies, pool cleaning, landscaping, exterminating, general upkeep (sheets, towels, etc) add to that taxes and you have a big bill each month.

I would have to be able to either afford the mortgage or buy the house outright

California Girl · Post by **California Girl** » Thu Oct 02, 2008 1:05 pm

If I could afford a house on STJ, I would have to be able to afford it without rental income....because I doubt I would want anyone else in my house without me being there too! LOL!

jenrale · Post by **jenrale** » Thu Oct 02, 2008 1:28 pm

CG - I agree 100%. How about this: if you could build or buy a house on STX for 25% of the cost on STJ, would you?

Xislandgirl · Post by **Xislandgirl** » Thu Oct 02, 2008 1:40 pm

jenrale wrote:CG - I agree 100%. How about this: if you could build or buy a house on STX for 25% of the cost on STJ, would you?

No. I have been to STX and while it is a beautiful Caribbean island with wonderful beaches, it is not STJ. I love STJ for all that it is and all that it isn't. STX is just not my style.

California Girl · Post by **California Girl** » Thu Oct 02, 2008 1:59 pm

jenrale wrote:CG - I agree 100%. How about this: if you could build or buy a house on STX for 25% of the cost on STJ, would you?

Most definitely! To be in the Caribbean, particularly the VI's is such a treat that I would be willing to live just about anywhere (anywhere relatively safe, that is)! No, STX is definitly not STJ, but a 1/2 hr. plane ride from STX to STJ when I want to visit is much more attractive than an 18 hr. travel day! LOL!

Bart Wailes · Post by **Bart Wailes** » Thu Oct 02, 2008 2:03 pm

In addition to all the costs mentioned before regarding owning a vacation rental house remember to add in the $12,000 a year homeowners insurance for a small house. Very hard to keep your head above water if you are counting on your rental income to pay most of your mortgage. Don't do it!

designbyroe · Post by **designbyroe** » Thu Oct 02, 2008 2:07 pm

I would have to be able to buy outright, and not count on rental income. It would have to be St. John.
I would live in the BVI's in a heartbeat to

RickG · Post by **RickG** » Thu Oct 02, 2008 2:42 pm

Good discussion. I've decided to put my investments closer to home and visit St. John for pleasure. My biggest concern is the long-term impact of fuel costs on air travel.

Cheers, RickG

California Girl · Post by **California Girl** » Thu Oct 02, 2008 2:48 pm

RickG wrote:Good discussion. I've decided to put my investments closer to home and visit St. John for pleasure. My biggest concern is the long-term impact of fuel costs on air travel.

Cheers, RickG

Oh, are we talking about reality? My bad!

sailorgirl · Post by **sailorgirl** » Thu Oct 02, 2008 3:00 pm

RickG wrote:Good discussion. I've decided to put my investments closer to home and visit St. John for pleasure. My biggest concern is the long-term impact of fuel costs on air travel.

Cheers, RickG

By the way... how is the bar coming along?

liamsaunt · Post by **liamsaunt** » Thu Oct 02, 2008 3:34 pm

I would never rely on rental income to help pay a mortgage on a second home. I would always be worried that I would not have enough!! I know some people do that to get their first house—buy a two-family and rent out half, etc. That seems like an acceptable risk to me. But for a vacation home, no way!! A vacation home is a big luxury. I would have to be able to buy the place outright.

RickG · Post by **RickG** » Thu Oct 02, 2008 5:23 pm

sailorgirl wrote:By the way... how is the bar coming along?

We, ahem, suspended fund raising this week. Back in the saddle next week. We are working on a great location that will be across from a large movie theater and have followup meeting schedule with the developer. The plan is to put a dozen different beers in front of them and not let them leave until we have the lease nailed down.

http://madfoxbrewing.com/

Cheers, RickG

mbw1024 · Post by **mbw1024** » Thu Oct 02, 2008 5:51 pm

RickG wrote:
sailorgirl wrote:By the way... how is the bar coming along?
We, ahem, suspended fund raising this week. Back in the saddle next week. We are working on a great location that will be across from a large movie theater and have followup meeting schedule with the developer. The plan is to put a dozen different beers in front of them and not let them leave until we have the lease nailed down.

http://madfoxbrewing.com/

Cheers, RickG

cool! can't wait to visit!

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