Monthly Archives: November 2015

Owning a Vacation Rental is Hard Work

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Olivia Beach Clan We’ve been so busy managing our Olivia Beach Camp Cabins (check out our new website!) that we’ve barely written about running our family business, even though it obviously impacts our family finances.

Sometimes when I tell people that I manage our beach cabins for my “day job,” I get this sense that they think it’s an easy job. It’s mostly a fun and flexible job, but it’s also a LOT of work. We are still happy to own our family beach cabins, but the daily reality of owning a vacation rental has been way more hands-on, and sometimes challenging, than we ever anticipated.

So, there’s a lot of backstory to share:

  • Kevin and I had always had the dream of owning a beach house. We set up an account dedicated to saving toward a beach house, even though we never actually saved much.
  • Miel and I had become inspired by tiny affordable cabins, and drafted a project plan before we ever had a penny to invest in it.
  • We received a family inheritance nearly four years ago after our father had passed away. We wanted to invest our inheritance in a legacy project that would benefit our whole family for generations to come.
  • We tried our best to do our due diligence before building the beach cabins (although I wish we had read this article about how expensive vacation rentals can actually be), but our initial projections did not match our actual expenses. Utilities, Jacuzzi maintenance, and HOA dues are far more than we ever budgeted for (more on that very soon…).
  • We also chose to go with an ambitious 15 year mortgage. The good news is that the cabins will be fully paid by the time we turn fifty, but it makes cash flow situation tight today.
  • In hindsight, I think Miel and I had two different intentions when investing. I wanted a place to put my money so that I would invest instead of waste it on immediate family “needs.” Miel wanted to invest the bare minimum, and then be able to continue investing elsewhere. I realized recently that I had intended to continue invest money into the cabins for the first five years, but Miel had thought we would be breaking even financially by now.
  • Fast forward three years into business, and we’ve learned a lot.
  • A year ago we took over the full-time management of the cabins. In the first month of managing them, Miel brought in more money that the rental management agency had earned us from January-July…and that was with fall bookings. (Although this fall has been comparatively quite for guests and we’ve decided to bring our winter rates back down).
  • Owning a family business is a LOT of work. We are workaholics enough that we usually don’t mind working overtime, but getting interrupted at dinner by guests can take it’s toll. I realized that we need to find a better balance when our son recently didn’t want to go to the cabins, because he didn’t want to be “put to work” (On the last trip Miel took our kids and worked on the landscaping, laying 33 bags of mulch, plus extra projects…so I can kind of see why he was reluctant). Guests may think every is just fine when they arrive, but all we see are projects that need to get done…some maintenance, but mostly final tweaks to finalize our vision. Last time we were there for three days and managed a fifteen trip to the beach, but even with all work, we are grateful for our visits.
  • Communication is key, especially when you live with your business partners. Our experience has shown us that you need to have a balance when talking business with family. It’s not healthy to constantly talk about business matters, but you don’t want to forget important updates or ignore hard discussions. We have a family business meeting at least quarterly, and Miel and I are checking in at least weekly. We are continually looking for ways to improve our business systems, and good communication is essential.

I’ll be posting more very soon about our current financial realities, but I felt like I needed to share more of the backstory first.

What are the realities of living your dream?

Darcy (and Miel)

Creating a Living Trust

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pen estate planning living trust Sustainable family finances

As I get my financial and legal affairs in order, I’ve also taken the plunge and created my own living trust. This came about over the course of the last year or so, considering how I would want assets to be passed down to Clark and others. With my divorce, I’ve also had other legal changes that need to be recognized and dealt with (deeds changing over, moving bank accounts, finalizing taxes, etc), so the timing seemed right to deal with such matters.

What is a living trust?

A living trust is essentially your estate. This makes it clear what your requested asset allocation would be in the event of your death. It is also a way to avoid probate and make things easier for your family and ensure that your wishes are honored and that your family is planned for.

It has been helpful for me to consider how I would want my finances to be dealt with, and what I would want to go to various folks. Of course, we all want to live to a ripe old age, but planning for the possibility of death is essential to not only yourself, but also your family.

Life changes, plan for it to

I also have an interesting situation of wrapping this process up with a new partner. I started this process last December. In fact, between the time of making the appointment to talk about creating a living trust, and having the conversation with my lawyer, things had shifted in my life to the extent that I asked about how to plan for the possibility of a divorce. Now, as I end the process, I find myself in a new relationship that I see myself being in for the long term. I would have been planning for the possibility of such a relationship, but actually having the different scenarios in front of you is a bit different.

Avoid Taxes

The other reason to have a living trust is to help plan for avoidance of taxes. Luckily with the estate taxes as they are, and the number of people that I would leave various assets to, it would be unlikely for any of my benefactors to face taxes unless I have considerably more than I have today (which is hopefully the case).

Grow Up and Plan for Death

It definitely feels like I have my big girl pants on when planning for my trust. I created my first will when I left to Afghanistan in 2007, but articulating my wishes and looking at my finances in more details has been a helpful process. Similar to my views on a prenuptial agreement, I find it very helpful to have a plan for what you’d like things to look like in various situation or scenarios. What might change over the next ten to twenty years? It’s good to be prepared.

A big thanks to Lori Beight at Cascade Legal Planning for her help in setting up my trust.

Do you have a will or a living trust? Please leave us a comment to share about your process.

Be well,

Miel

 

Manifesting Our Dream Homes

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The listing photo for our San Rafael home.

The listing photo for our San Rafael home.

I actually wrote this a full year ago (before we sold our Portland house, and bought our dream home in Astoria), but never posted it. I think I must have been too scared to believe, since it really didn’t feel possible at the time. Yet, before I share about manifesting our newest dream home, I thought I should finally post about our first experiences:

Our first dream home was a simple northwest-style cottage with cedar siding, hardwoods and plenty of lovely vintage windows. Before starting our search, we made up our wish list. The house matched it perfectly. It had just been flipped, so interior didn’t need much work, and we were able to focus our energy on designing and implementing my permaculture plan. We really wanted to be close to a park, and our place was so close to Arbor Lodge Park that I could watch dogs frolic as I washed the dishes. It was the perfect size for a couple, but as soon as I had Kieran, we suddenly felt cramped…for good reason; his nursery had previously been my closet.

So, we started to house hunt. We looked at just one home that we fell in love with, which had almost an identical layout as our current home…our Realtor could hardly believe how similar the two homes were. But we quickly realized that we couldn’t afford what we wanted…de ja vu to my recent experience of feeling a big financial gap.

By another year later, we did both save and grow our income enough to afford the house we really wanted. It’s good to remember how I manifested it to begin with. I’ve told the story to plenty of friends about how when we were house shopping we had found a descent place in the Beaumont neighborhood near many friends, but the yard was tiny, the layout wasn’t great, and the kitchen was atrocious (think pink tiles with inset electric burners!). So, one night as I was debating whether I could manage a full kitchen remodel, I decided that I needed to envision what it would look like. In my mind I created an open floor plan with a butcher block island in the center, open white cabinets, stainless steel appliances, pantry space, and a cozy kitchen nook. Then I painted it purple and smiled as I drifted to sleep…

Then, just as we accepted a fantastic offer on our first home, I found the listing. Touring the house felt like a dream come true, as I checked off all the details on our wish list, including my perfect purple kitchen.

We’ve lived in our lovely 1904 Victorian for six years now, moving in when I was pregnant with Makenna. Kieran was a chubby faced toddler when we moved in. Our family has literally grown here with peaceful home birth memories for both of my daughters. It feels like home in the best of ways, and it is a sentimental place for me.

Lately our home no longer feels like my current dream home, even though I kind of nudge myself to be grateful for all the beauty and comfort that surrounds me. I’m simply ready to manifest a new dream home.

So, my first step is coming up a detailed list of my new dream home…then feeling the joy inside…then keeping the faith that we will be able to make the leap.

Do you live in your dream home? Do you believe in manifesting one?

Darcy