<p>Some families are renting out, for the summer, their multimillion-dollar homes in the Hamptons and roughing it in trailer parks to make big bucks.
[Newest</a> Trend: Well-To-Do Hamptons Residents Go ?Glamping? In Trailer Park « CBS New York](<a href=“http://newyork.cbslocal.com/2013/05/30/newest-trend-well-to-do-hamptons-residents-go-glamping-in-a-trailer-park/]Newest”>Newest Trend: Well-To-Do Hamptons Residents Go 'Glamping' In A Trailer Park - CBS New York)</p>
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<p>What a tough economy</p>
<p>Well…they WILL have to pay taxes on that rental income! My guess is they are staying in high end camping areas!</p>
<p>What exactly is your problem with this? It’s supply and demand. If the rents generated are that high I can guarantee you the cost of the land and property taxes are commiserate, making return on capital negligible. If they’re the cheapest ‘multi million dollar homes’ (2 mil), 50k - 2800 trailer rent means <2.5% return gross, and I can guarantee you negative net.</p>
<p>You can beat that with 30yr treasuries without the possibility of someone trashing your house. Anyone doing this to ‘pay for college’ isn’t going to be rich for long. I don’t really understand the point of this post.</p>
<p>Sounds like a good idea to me.</p>
<p>That’s almost automatic for big beach houses in the Cape May area. Many of the summer rentals are owned by people who live in the houses 9 or 10 months of the year, then rent out during the summer and live inland somewhere cheap. We rented a house for many years (for a week) and knew the owners ( relatives of a relative). The wife made extra money during the summer working as a housemaid in a local motel. Renting out the big house was, as far as I understood, a major part of their income for the year.</p>
<p>Rexximus…folks rent their houses out dealing with that demand issue. During the Olympics, we knew several families who rented their houses…ditto Super Bowl towns, etc. </p>
<p>People do this…why knock their decision so much?</p>
<p>garland, I know there are some similar sorts of things here in southern California. Another style I know for homes near both schools and vacation areas is to rent to the students during the school year, then convert to daily/monthly over the summer months. One of my friends had a rental right on the boardwalk in Newport Beach with a dedicated parking spot this way (so jealous ;_; ).</p>
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<p>So their property taxes plus insurance are more than $288,000 a year?</p>
<p>@Rexximus, why so hostile?</p>
<p>I have no problem with this concept-- I think it is brilliant! I posted it to let other CC’ers in the know.</p>
<p>Yep, lots of folks in Aiken and N. Augusta SC (and Augusta GA) rent out homes to golfers and fans for Masters.</p>
<p>My dad lives a stone’s throw from Pinehurst, NC. Whenever the US Open comes to Pinehurst he rents his house. 2014 looks good - Men’s and Women’s US Opens back to back weeks. :)</p>
<p>Edited to add - he’s not rich.</p>
<p>GMTplus, sorry, I thought the tone conveyed derision, especially the ‘tough economy’ tagline. I didn’t mean to come off hostile, just responding to the attitude I thought was in the thread. My apologies for the misunderstanding.</p>
<p>RacinReaver, not sure where you got 288k for prop and insurance. With my calc it’d only have to be 47800, which is very possible with prop taxes, insurance, and depreciation. I also assumed they didn’t rent it out anymore than those two months. The point isnt the model, its that the return on equity is minimal at best.</p>
<p>Charlotte, NC uptown condo rentals for the week of the DNC were absurd- friends with a 2bdr directly across from the main arena got 6k for the week for a whole news crew to stay in.</p>
<p>The thing is about return on investment, is that you are assuming that the only purpose of the house is for this income. But it’s their home the rest of the time. So any income generated is pure gravy, whether or not it covers a year’s worth of costs.</p>
<p>Rexx, if the house is worth $2000k and property taxes are ~1.5% then the total for the year would be $30k. That works out to $5k for the two months they’d be renting out. Add in their mortgage at about $18k for two months, and you’re still in the black by a considerable amount.</p>
<p>This is the private version of the hotel business mode… Rooms in any college town during graduation will be triple or more of their normal ‘boring week’ rates. Good for them.</p>
<p>What’s different about the “glamping” story, compared to just letting your home out for a sports event, is that these folk are prepared to “get close to nature” for an extended period of time.</p>
<p>I wish them blue skies.</p>
<p>People in Saratoga Springs do this during 6 week track season. I wish I lived closer - I’d do it in a heartbeat.</p>
<p>Not to beleaguer the point RacinReaver, but you’re actually proving my point. You are not in the black by a considerable amount at all considering the size of the investment. I strongly disagree that 50k would service even the maintenence, depreciation, and insurance on a 2 million dollar house, but even if you made 50k pure profit that’s still not making you any richer. You’d make more money dumping all of that capital into treasury bonds.</p>
<p>The point is no one would allocate capital to these as investment properties- they are first and foremost luxury goods. You may lose less money by renting them out during the prime summer months, but people forget how much work goes into renting and that its notoriously hard to deduct expenses from rental income.</p>
<p>Not saying people don’t rent these, just saying it’s an incredibly inefficient allocation. Retail is notoriously terrible with real estate investments and typically only makes money on capital appreciation. </p>
<p>If you’re renting out your 2 million dollar 2nd home during prime summer months, I’d argue you’re more than likely in a cash flow crunch and trying to avoid having to liquidate.</p>
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<p>But you wouldn’t have that capital without renting out the house. The primary residence is not a venture intended to regularly generate income and the mortgage/maintenance and insurance are monthly expenses. The 47.2K ( 50K-2.8K for rental) gross is money that would not have been earned otherwise.</p>
<p>If they secure cash transactions, no taxes to Uncle Sam.</p>
<p>1.5% tax rate is kind of low.</p>
<p>Many residents around my kid’s college rent out their homes during the graduation week. A 3-4 bedroom home on the lake could get 3-5K for a week.</p>