How it works: One of Michael Martin’s clients in Denver bought two luxury recreational vehicles to rent to Airbnb customers. They’re in a trailer park just outside the city, and the client is a model host; he leaves maps of the city, puts in fresh flowers and makes himself available by phone or text.
In the winter, the client moves the vehicles to Vail, Colorado, home of the popular ski resort.
The client bought two Grand Design Solitude Fifth Wheel vehicles for $70,000 each. He is financing 80% of the purchase at 4% simple interest (a type of interest applied to automobile and short-term loans).
Upside: Denver is booming, and demand for accommodations is high.
After adding the $14,000 down payment to the annual financing costs per unit and dividing that number by the net annual income of approximately $37,000, the client achieved a return on his investment of about 48%, according to Martin.
Risks: The RVS are not appreciable assets, and if there is a market downturn, there is no guarantee of rental income. What’s more, the client’s business depends on Airbnb, which could mandate a reduction in rates. “His fate is in someone else’s hands,” Martin says.