In the course of conducting real estate business at Deep Creek Lake, I'm regularly asked questions about buying and owning vacation property as an income producing investment. Here is a short intro into what you need to know to make a good buying decision.
Investment in vacation rentals at Deep Creek Lake is rarely a positive cash flow situation. Most vacation home buyers are able to supplement expenses, have it available for some personnel use and take advantage of the historical long term appreciation on these properties. How much you plan to personally use the property may dictate whether a vacation rental is right for you. Owners who realize that prime rental times should be left for renters use will realize better rental results. If your object is strictly cash flow and return on investment, I would recommend considering residential or commercial real estate investments.
It is recommended that you discuss this type of investment with a tax professional, lender and insurance agent. Tax treatment varies based upon the amount of time you intend spend at your property for personal use. Many investors use tax deferred exchanges (1031) to defer capitol gains on this type of investment. Financing for vacation rentals is typically considered a commercial use and subject to higher interest rates. Property insurance costs should also be considered as a part of your buying decision.
Homes in the Deep Creek Lake Watershed Zoning District need to be approved and licensed by the Garrett County authorities prior to renting under our TVRU (Transient Vacation Rental Unit) regulations. You can get more info on these regulations here. http://www.garrettcounty.org/PlanningLand/PlanningZoning/tvruordinance.pdf .
Expenses related to vacation rentals including management fees will typically run between 35 and 40% of the gross rents before debt service, taxes and insurance. These expenses typically include a property management fee, cleaning, linens, repairs and maintenance costs. Condo and HOA fees are not included in these expenses.
Newer construction lakefront and lake access homes near the McHenry area tend to have the best rental histories due to their proximity to the Wisp Resort. Properties that have access to a boat dock have proven to be desirable to vacation renters. Ski access properties at Wisp Resort also rent well in season. Other important amenities including fireplaces, indoor swimming pools, hot tubs, air conditioning, electronics, computers with Wi-Fi access and scenic views will help to maximize income potential. Décor can also be very important factor to increase the bottom line.
Deep Creek Lake is becoming truly a four season resort but the busiest rental market occurs during our peak summer season and ski season in the winter. Summer rentals are typically offered as full week's vacation rentals. However it is possible to rent for shorter stays when booking on short notice. Summer peak season runs from mid June until Labor Day. Winter rental are busiest during the holidays including Christmas to New Years week, Martin Luther King and presidents weekends.
If you're considering buying vacation property at Deep Creek Lake or at the Wisp Resort, it's important to due your homework, know what to expect and find a qualified REALTOR to help with your search. Every buying situation is unique.
If you have any questions regarding owning vacation rentals at Deep Creek Lake, please feel free to contact me at 301-501-0763 or email me at house4u@lnf.com.
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