Singing Pig

I was tempted, a couple of years ago, to buy a 'vacation rental' property in Clermont, near Orlando. A very nice property, with the usual "within 15 mins of Disney" guff. It was bloody nice too, and seemed to represent magnificent value when compared with what it would cost if the property was in Blighty.

However, for whatever reason, I decided not to go for it. And, in hindsight, am I glad!? The property I pined for, a dirty great big 5 bed detached bungalow with pool, air con, double garage, bangs, whistles and everything, which would have cost me $400,000 (about £220,000) 18 months ago is now begging for people to take pity on it, at just $250,000. Ouch.

BUT, I'm not one who panics at falling house prices, as with everything else, it will probably be worth a million dollars in 15 years - we investors look long term, right? What I'm worried about is being able to rent it out, and having looked at 'vacation rental' websites, everyone has got shedloads of availability. So clearly, the 'vacation rental' market, has been just as overstated as the 'capital appreciation' market has in those parts.

It doesn't help that neighbourhoods in the US of A are 'zoned', meaning that you may only rent out properties for holiday purposes in certain areas; others tend to have minimum rental stipulations of 7 months, and others say that you may not rent your house out at all. This has the effect of pushing prices up in 'vacation rental' areas, as us property-hungry limeys snap up these houses thinking that, not only are they cheap, but they will also make us rich by having other people wanting to rent the house for their holidays, and giving us the additional benefit of never having to pay for a holiday ever again! The result has been that properties in holiday zones are roughly twice the price of homes in equally nice residential areas nearby.

Clearly the promise of the property being able to pay for itself is rarely the case. I looked on a Florida Villa website last night, and I can rent virtually anywhere I want, when I want. All the landlords I emailed, have emailed me back within minutes virtually begging me to take theirs. I might bung some silly offers in...

But I digress - I tend to go to Florida every 1 to 2 years. I can't help it - I love the place, and think it's amazing when the natives ask me what it's like living in London, how the Queen is these days, or if I know Mark from Birming-haaaaam. And being a seasoned property investor, I hate the idea of putting my hard-earned into someone else's pocket - as does everyone else, judging by the abundance of availability! So, I have an idea...

Would I get away with the following...?

   > If I - along with, say, three other parties (for arguments' sake, my dad, my uncle, and a mate) all decided to buy a property together in a residential area (ie not zoned for vacation rental), and decided amongst ourselves that, we were simply going to take it in turns to stay there, would we get away with it? The advantages are that the bills are split four ways, thus cutting the cost of ownership, and we could simply work out amongst ourselves when we were going to use the property. We would probably get four months of use out of the property this way alone.

   > If we decided to 'allow' a mate to stay at the property, who 'dropped' us a few quid for the privilege, can we be stopped from doing this? After all, we're not renting the property out - we're simply letting our mate live in it.

Can we be stopped from doing this, and who else does it? 

What say you?

Wiganer I've lived and worked in Clermont. All sub-divisons are zoned (RES, STR etc), All the ones that are designated RES will alow long term lets say a month or more. The real trouble is that the USA is very highly regulated and if you were to appear to be flouting any rules (especialy ones regarding occupancy) in a RES area you neigbours would soon report it to the HOA (Home Owners Association). Then they and a host of statutary agencies would be down on you like a ton of bricks.

Fair point, and thanks for your reply.

I'm not overly bothered about achieving rental income, and more interested in buying somewhere amongst family members that we can all use. So we're not renting it out, but it's not our primary residence either.

How do they tend to view that?