“In down economy, owning a vacation home may be more business than pleasure” plus 1 more

In down economy, owning a vacation home may be more business than pleasure

Posted: 27 Aug 2010 09:00 PM PDT

Tina Lambert and her husband wanted an investment that would help them pay for their kids' college tuition someday. When he insisted on paying $49,000 for a condominium in Ocean City in 1997, she worried. But by the middle of this decade, when housing markets were in full boom, the condo's value had increased nearly fivefold. It worked out so well, they decided to buy another condo, this time for $160,000.

They rarely used either condo, but they were able to pay most of their expenses with weekly rentals of $1,500 or more on each during the summer.

Then the economic crisis hit. Renters became scarcer, so Lambert had to lower the rent. In 2007, the couple almost fully booked the condos for the summer. But last year, rental income -- which they had hoped would cover all of their expenses, or even bring in a profit -- covered only half of the annual mortgage costs.

On top of principal and interest, the properties carry other expenses: condo fees, insurance, utilities, repairs.

Finding renters has hardly been a day at the beach, either. Lambert said she has been slaving to book rentals, posting ads on Web sites such as Craigslist and Rentalo.com almost every day. A few years ago, she would have to field about 10 phone calls to get one booking, but now it takes even more effort. Sometimes she's on the phone so much that her children get annoyed, but she has to tell them to be quiet because she can't afford to hang up and lose potential renters. "It's a business we work hard at that provides very little -- if any -- pleasure at this time," Lambert said.

If you were hoping to pay off your mortgage with rental income, don't bank on it. To be sure, monthly rents have held relatively stable in many areas while the purchase price of vacation real estate has dropped. And mortgage rates are at record lows. So recent buyers may find that rental income covers a larger proportion of the ongoing costs than if they had bought the same property at 2005 or 2006 prices.

Marie Cahill, sales manager at Connor Jacobsen Realty in Bethany Beach, said that the average sales price for a single-family home in her area was $707,525, compared with $1.4 million at the market peak in 2006. Yet the average rental income for a single-family home has remained at $22,000 to $25,000 per year.

Rental income typically "would pay more of your costs now than it did five years ago, because prices have come down," Cahill said. "But it's such a gamble. And it's different every year." She said that cash the owners paid upfront for a home affects the monthly carrying costs. If they made a large down payment, the monthly mortgage would be lower, and rents would cover a larger portion of it.

Even so, rental income typically pulls in only a fraction of the costs of a vacation home, real estate agents and lenders say. And lenders are taking a hard line on using rental income to help a buyer qualify for a mortgage.

"If you're buying, you have to be prepared to qualify without counting on rent," said Jamie L. Wetzelberger, branch manager at SunTrust Mortgage in Ocean City. "That's the responsible thing to do, period."

Brett Wolf, president of Professional Mortgage Services, which provides home loans in Ocean City and Berlin, Md., said he hasn't financed a single investment property this year that counted weekly rent to help the borrower qualify.

"I haven't seen anyone come to buy property planning to pay it off with rental income," said Sherry Bezold, an agent with Century 21 New Horizon in Ocean City. She said that what a homeowner would make in a season would be enough only to cover things such as taxes, condo fees and expenses. "They wouldn't be able to use the income to cover their mortgages."

The amount of rent a homeowner can charge depends, of course, on the property and location.

"Traditionally, oceanfront has the biggest demand, but in the crazy times we've had, you just never know what to expect," said Lisa Cafferty, a broker at Coldwell Banker Seaside Realty in North Carolina's Outer Banks.

Eric Schwartz bought a house at Rehoboth Beach in August 2008 and planned to rent it out for more than 10 years. Rental income covers a little less than two-thirds of the mortgage. But that defrays some expenses -- and is in line with his expectations. "That's the price for a home," said Schwartz, who lives in Bucks County, Pa.

Because Schwartz has three children in his family, he wanted to make the place inviting to renters with families. So he put a foosball table in the dining room and equipped the house with four TVs.

The development also has family-friendly features such as pools and a tennis court. Soon after buying the place, Schwartz made a Web site that includes pictures as a way to get an edge over the competition on Craigslist.

Schwartz said he has rented out the house for every prime-season week that he made it available, this year and last.

Most people who buy vacation homes just want to use them for fun.

A survey of vacation-home buyers by the National Association of Realtors released in March shows that only about 25 percent of those who bought vacation homes last year planned to rent them out. When the survey was first done in 2002, only about 16 percent had plans to rent.

"Vacation-home buyers are looking for ways to generate a little income" in the tough economy, said Paul Bishop, vice president of research at NAR. "The second aspect is that there are more ways that vacation-home owners can market their properties."

According to the survey, 26 percent of vacation-home buyers planned to make the place their primary residence someday. Buyers' median age was 46, with a family income of $87,200.

Thirty-four percent bought a vacation home within 100 miles of their residence; 40 percent bought vacation homes more than 500 miles from home.

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What you need to know before renting an RV

Posted: 29 Aug 2010 08:34 AM PDT

A wiry guy, tanned and weather-beaten face, hands in his pockets, worn and slightly frayed plaid shirt nodded his feed-cap brim toward my rig.

"Mind if I ask you how much you pay for renting this thing?"

I didn't mind. I told him the price per week, and when his eyes got a little "oh forget it," I added that this was high season and there were ways you could rent an RV for less. He said his brother-in-law had one. He might try it some day. Then he ambled back to his semi, hopped in, and drove away

Well, that was a first – a truck driver inquiring. But after a week or so driving my rental RV out to Kentucky, up to Indiana and home, I was no longer surprised when someone approached me with that "can I ask you something" opening line. I'd had inquiries from all demographics and all had one trait in common: a sort of twinkly, edge-of-a-dream look in their eyes as they eyed my RV.

There may be something about a train, but you don't see Amtrak's passenger numbers rising steadily over the years. But there's a definite "something" about an RV that has made it an increasingly popular way to vacation. The number of RV-owning households in the U.S. is projected to rise to nearly 8.5 million — a gain of 15 percent between 2001 and 2010; RV rentals have grown even faster. Today it is a $350 million a year business.

Baby boomers account for the largest segment of RV ownership, as well as the fastest-growing segment of the market. Even in a down economy, RV rentals remain popular. For example, El Monte RV and Cruise America, two of the world's largest RV rental agencies, reported strong bookings throughout the summer, and campgrounds say they've seen an increase of 5 percent to 10 percent this year over 2009, which was a notably good year for the industry.

"In this economy, the affordability of RV vacations is especially attractive whether you rent or own," says Richard Coon, president of the Recreation Vehicle Industry Association.

When people inquired about my rental (with "CRUISE AMERICA" and the 800 number plastered all over my RV, I was a moving advertisement), their first question was always about the price. And especially in summer, prices can sound a little scary – my rental was $135 a day, plus 33 cents a mile, for a 19-foot vehicle. But an RV is a little like an all-inclusive vacation: it includes your accommodations, transportation and even your dining, once you stock up with groceries.

An RV vacation in the United States may not be exotic, but it will be different from any vacation you've ever taken. While you will be able to enjoy the convenience of taking your house with you on the road, not having to pack and unpack, not having to deal with airport hassles etc., vacationing with a rented RV comes with its own variety of decisions — and lurking potholes.

From my own experience as well as the advice of various industry experts and longtime RVers, here's the scoop on how to rent your rig:

Vacation scenario

There are two general motifs for RV vacations: a road trip or a destination-based exploration.

In the first, you'll pick up your RV and hit the road, traveling as you would in a car but using your RV as your hotel, staying in a variety of campgrounds or other overnight spots along the way. In the latter, you drive to your chosen destination, set up camp for the duration, and perhaps take day trips via shuttles or public transportation or bicycles you've brought along. You might, for example, take your RV to a national park; a lot of people rent RVs to take to weekend sporting events such as the recent NASCAR event at the Pocono Raceway in Pennsylvania, where they had campsites set up inside the track.

Remember, you can rent an RV anywhere; you can rent from a dealer close to home or from a dealer close to the place or route you want to explore. Of course, that will add the costs of flying, plus limit how much of your stuff you can take with you to use in your RV.

What to rent

There are five styles of recreational vehicles – defined, according to the Recreation Vehicle Industry Association (RVIA), as a vehicle that combines transportation and living quarters for travel and recreation purposes. For the most part, renters will have only three types to choose from:

Class A: The ones that resemble a bus stretch from 24 to 40 feet in length, built on a self-propelled vehicle chassis. They contain a kitchen, bathroom, sleeping and dining facilities, accessible to the driver's area. Living systems include electricity, heating, air conditioning, water and propane gas. Sleeps two to seven people.

Class B: The smallest, resembling a modified van. These may not have bathrooms onboard.

Class C: Medium to large, 20 to 31 feet long, using a standard van or truck cab and chassis. The living area is accessible to the driver's area with sleeping quarters above the cab. These units sleep two to six. Have fewer features, space, and privacy than Class A units, but are more economical to operate and easier to drive and park.

Make sure you have a big-enough rig. When shopping around, you'll find each size unit comes with an estimate of how many people it can sleep. You might not want to stuff your traveling companions into every nook and cranny that is considered sleeping space. Keep in mind how much comfort and privacy you'll need.

My 19-foot RV could have slept four, for instance, with a bed over the cab and the one you made by converting the table and seating benches into a double. Yes, four could have slept, but four adults cooking, walking around, dressing and trying to store all our stuff in the rig would probably have led to a fistfight.

A big question first-timers have is: "Do you need any special skills to drive one?" Rental companies say no, and you don't need a trucker's license, to be sure. But these vehicles do take some practice. The Class B and C models are most like driving a car. But the longer the rig, the more you'll need to keep in mind clearance when making turns. The Class C's are usually equipped with sensors in the rear that beep as you get close to something behind you, beeping more frantically as collision becomes more imminent. They also come with good mirrors on both passenger and driver sides; mine was also equipped with convex mirrors below the normal ones, for extra-wide-angle views of approaching traffic.

Because of their length, the Class A models have rear blind spots, but they come with small video cameras so you can see what's going on behind you. Class A models may come equipped with air brakes, like trucks, which involve some getting used to.

Despite the technology, most RVs aren't going to get more than 10 or 12 miles per gallon. Be aware that older models will probably get less than that. Ask how old the vehicle is before renting.

Also make sure you know what kind of gasoline it takes. Many rentals use diesel fuel, which may give them better gas mileage, but diesel costs more per gallon and may not be easily available during your trip.

Rental prices are usually quoted per day or per week. You may get a mileage allowance per day or per week – say, 100 miles a day or 500 a week. Or you might have to pay for each mile traveled – 33 to 39 cents being the going rate, I found.

Rentals are usually assumed to be round trip, returning to the same place you rented. If you want to return to another location, you'll pay for the convenience: $300 or more. One exception is in fall or spring, when rental companies are moving the bulk of their fleet to areas of greater demand; in fall, for instance, that would be to the Southwest. Then, along with the cheaper prices that come with off season, companies may waive the one-way fee.

Other expenses

You can bring your own household items or rent one of the kits offered by most rental companies, which come with linens, pillows, silverware and plates etc. They generally run about $100 per person. If you're traveling by plane to your rig, these can be an especially good option.

If you're driving your car to your rental location, ask about storing your car while you're driving the RV. You may be able to park on their property; find out about the cost (at my Cruise America location in Harleysville, it was $10 a day) and the security system.

Generator: If you aren't near a source of electricity, you can run your generator to keep the electrical system going. Usually you'll have to pay extra for generator use ($3 an hour or more), and the generator also requires fuel.

Other transportation: I didn't try to tow a smaller vehicle, but think about doing so if you want to get around at your destination. Or consider bringing bicycles or, if they're offered, renting them from the RV company.

The systems

On renting day, you'll be introduced to your rig and its various systems:

* Electrical — lights, refrigerator, water pump, power for plugged-in items like laptops, TVs, microwave.

* Plumbing — toilet.

* Fresh water — sinks, shower (don't drink the water, use bottled).

* Propane — to run the stove and refrigerator when not plugged in.

Toilet tanks needs to be emptied during the trip; water and propane tanks will need replenishing. Upon returning the RV, tanks will need to be empty or full, depending on their state when you left the rental agency.

It's all sort of confusing, but each valve, outside storage area and switch is labeled to help you remember what to do. There should also be a detailed, easily understandable manual on board.

Campgrounds are set up to make life easy for RVers, with flat campsites and all hookups in one place. Here's where you can plug into an electrical source (your main consideration, usually, as then you can use the air conditioner and lights without using a generator); hook your hose up to fresh water so you don't deplete your water tanks; and attach your sewer line so your own "black water" tanks aren't used. Before you leave, you can also fill up your fresh water, dump your black water, and in many cases fill your propane tanks.

Make sure you know, before you leave, what type of electrical hookup you need. I was baffled the first night when asked if I needed a 30- or 60-amp plug.

Where to go

There are more than 16,000 public and privately owned campgrounds. And if you're really stuck, you can also stop for the night in a Walmart parking lot or a rest stop on a highway.

Many privately owned RV parks and campgrounds are near popular destinations, along major tourist routes and even in cities. They also come with activities to keep everyone in the family happy, with facilities ranging from swimming pools and playgrounds to game rooms and miniature golf. Most also have convenience stores with basics from macaroni and cheese to s'mores fixings.

Some of the luxury resorts even have tennis courts, golf courses and health spas.

Facilities at public campgrounds tend to be simple but offer great scenic beauty. Public lands are popular for hiking, white-water rafting and cycling.

Trip planning

Bring along a GPS: Not only will it help get you where you want to go, but often will show you the nearest campgrounds

Cruise America gives renters a copy of the KOA campground directory, as well as a membership in KOA that entitles you to discounts when you camp at a KOA site. Also consider investing in a Woodalls Campground Directory for the area you're visiting.

During the summer high season, make reservations in advance when going to popular sites like national parks.

E-mail: schensul@northjersey.com

A wiry guy, tanned and weather-beaten face, hands in his pockets, worn and slightly frayed plaid shirt nodded his feed-cap brim toward my rig.

The writer rented a 19-foot-long RV for her road trip to Kentucky and Indiana. No special training is required to drive one, just practice.

PHOTOS BY JILL SCHENSUL/STAFF

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The writer rented a 19-foot-long RV for her road trip to Kentucky and Indiana. No special training is required to drive one, just practice.

"Mind if I ask you how much you pay for renting this thing?"

More about motorhomes

* Check out the Recreational Vehicle Industry Association, rvia.org, as well as its consumer site, gorving.com. You can also find an RV rental dealer through the site.

* The Recreational Vehicle Rental Association has a dealer locator on its site as well, www.rvra.org.

* Cruise America, the largest rental agency, has videos about renting an RV on its website, cruiseamerica.com.

* Attend an RV show. You'll learn more than you ever thought there was to learn at one of these events, where neophytes as well as old-timers are welcome. Show dates and locations are searchable at rvia.org.

* Affinity, the country's largest provider of outdoor clubs, services and events for the RV market, has a variety of information, publications and how-to's on its website, affinitygroup.com.

— Jill Schensul

"In this economy, the affordability of RV vacations is especially attractive whether you rent or own," says Richard Coon, president of the Recreation Vehicle Industry Association.

From my own experience as well as the advice of various industry experts and longtime RVers, here's the scoop on how to rent your rig:

Vacation scenario

There are two general motifs for RV vacations: a road trip or a destination-based exploration.

Vacation Rentals

Sunday, August 29, 2010