Thinking of getting into Vacation Rental business-Miat42

Ocean city, Maryland is about 3 hour drive from DC metro region. Thisis one of the best beach resort town with lots of nightlife, surfingand everything. It's kinda like Santa Cruz near Bay area. In myopinion, Ocean city is only better. Despite more than 150% rise inprice in the past 5-6 years, houses in the resort area are stillrelatively affordable. You can buy a 1800 sqft near new house about 5min to the beach boardwalk for around $350K. You can buy a 3000 sqftbrand new house from Toll brother for about $450K. Although it's notcheap in absolute terms, but compared to pricing in other areas, it'sstill affordable.

What makes me interested is the potential of cash flow. For exmaple, Ican rent the $450K house out on a weekly basis to vacationers for about$2300 per week in the peak season from June to August, thenproportionally reduce the rental rate as it shift out of the peakseason. See this listing I just found:

http://www.homeaway.com/USA/Maryland/vacation-house-Ocean-City/p157554.htm

They has already pre-rented fully 8 weeks. As times go up, I think theowner will continue to have the rest of the available weeks filled up.I added up the week income. All the owner has to do is to rent out thespring to fall weeks, then the total year's mortgage payment will besatisfied. The owner can let the house sit idle for the off-peak time,or rent it to occasional visitors. I feel that the cash flow formula isbeatiful. By the end of the vacation season. I am confident that thisowner will most probably earn positive income after deducting themortgage.

Further studying the demographic trend, I find that near-beach resortproperties will continue to be in high demand due to increasedpopulation and baby boomer retiring wave. Therefore, price appreciationwill continue to outpace normal areas.