Written by Stephen Ondich
A while ago, I had a crazy idea to buy a vacation home close to Acadia National Park, on the coast of Maine. Although our family loves Maine, I really love Maine. However, there were a few sticking points. The primary issue was that we live 3000 miles away and weren’t going to be there often. How could we justify a purchase like that?
Acadia Adjacent ↵
The distance from Acadia National Park to Milbridge, Maine is 43.1 miles.
Milbridge is Acadia Adjacent!
My Acadia Vacation Home Credentials
I am not a realtor, real estate guru, house flipper or anything like that. I am just a guy from California who wanted a family vacation home on the coast of Maine. This is our story.
Who Wants to Buy a Home Near Acadia?
First off, I wrote this post specifically for people who want a place of their own near the coolest National Park ever but are unsure whether it makes sense. If you are a trust fund baby or hedge fund manager, just go for it. This post is really about the financial considerations of making a (sort-of) luxury purchase from a middle-class perspective. To that end, I’m making a few assumptions.
- You’re looking for a second home
- The budget is around $50,000-$250,000
- Coming up with a 20% down payment is OK but the ongoing monthly mortgage payments are a concern.
- You are OK with renting out your house when you’re not there.
How We Found Maine
Back in 2013, our family caught Maine fever while on vacation. It was our first time in Maine. We went to see the Fall colors. In short, we enjoyed the people every bit as much as scenery. Our route took us mostly inland from Portland up into Oxford County. One night we stopped in a small town and joined a high school pep rally marching through town. It was homecoming weekend. The pre-football game parade culminated in a field where a huge bonfire was lit. It was so inviting and unlike anything we experience in suburban California.
Ironically, we didn’t even make it to Acadia that trip. However, I wanted to go back to Vacation Land as soon as possible. Next time, we would visit the coast.
Then, a thought.
Could we actually buy a vacation home near Acadia National Park?
The short answer was yes. However, the better question:
Justifying the Vacation Home
After that first Maine trip, I wanted a place of our own on the coast. Maybe we could bring the dogs! My wife thought the idea was nice but that not practical. Her points were valid.
- We lived far away
- How often could we actually enjoy it?
- Making mortgage payments on a property that we don’t get to enjoy often is a bummer.
- Who is going to take care of our vacation home when we’re not there?
- If we buy a Maine home does that mean every family vacation means a trip to Maine?
Why Acadia National Park?
Most of the ideas below are applicable to homes in all coastal areas of Maine. However, I am focusing on areas in the vicinity of Acadia National Park for a few reasons.
- People come from all over the world to visit Acadia National Park. It is a big tourist draw.
- There are still relatively inexpensive coastal homes available.
- It is an ideal place to connect with nature while staying on grid. I still have to work when I’m in Maine so WiFi is a must.
The Ideal Acadia Area Vacation Home
From our perspective, the ideal vacation house has these features:
1) Close to Acadia National Park.
2) Waterfront location.
In truth, Maine has lots of great homes on and off the water. However, being on the water is a huge draw for the vacation crowd.
One thing to note about Maine coastal properties is that there is often a large price discrepancy between on-the-water and just-off- the-water homes. Look for homes that have a picturesque water view but are not actually on the water. There are no shoreland taxes imposed on water view homes, just waterfront homes.
Shoreland taxes
Maine has a higher tax rate for properties that sit on a shoreline. That doesn’t just mean oceanfront, it could be on the bay, river, even a stream or creek. The rate is the same regardless of the body of water. This is another reason why I prefer oceanfront. If you are paying extra taxes for a spot on the water, at least make it a scenic one. This way it will draw for renters. Conversely, a small creek will give you taxes without the view.
3) Newer Construction
(by Maine standards). Originally, when we started looking for an Acadia adjacent vacation home we found a circa 1900’s farmhouse. The idea of owning a charming turn-of-the-century historic farmhouse sounds appealing but it can really be a can of worms if you rush in blind. Unfortunately, homes of that era were often built to no particular standard. In the decades since, families moved in and out, some adding-on some tearing down. Often the result is a mishmash patchwork of unorthodox construction. Forget about energy efficiency. In my experience, if you come across a well restored farmhouse it will be every bit as expensive as new construction. The 1900 farmhouse that we almost bought failed a septic inspection. Cost to fix? Approximately $30,000.
There can be decades of deferred maintenance in many “historic” homes on the market. We chose to stick with newer construction to limit our exposure to these issues.
4) Low year-round population with seasonal spikes from tourism.
This typically results in low housing costs and high rental incomes. Basically, you get the benefit of being in a rural area when buying and the benefit of tourist traffic when renting.
Portland does not meet this criteria because it has both short term and long term housing demand. Thus, it’s an expensive place to live. Many communities adjacent to Acadia National Park fit this profile.
Pull up a map of Acadia National Park. Starting at Mount Desert Island follow the coast line north and you’ll start to see communities that are that fit the profile:
- Gouldsboro
- Steuben
- Milbridge
- Sorrento
- Harrington
- Addison
- Jonesport
- Roque Bluffs
Generally speaking waterfront prices fall the further north you venture from Acadia. However, the scenery is every bit as beautiful, in my opinion.
Finding an Acadia Realtor From Out of Town
We ended up with a fantastic realtor but we took a lot of twists and turns to find her.
I started out by asking our local California realtor to help us on a house hunt in Maine. We quickly realized that would not work because he was not licensed in Maine nor did he know anything about the market around Acadia National Park. Not a good fit.
Google to the Rescue
Next, we Googled for realtors in and around Acadia. Most were not responsive to our inquiries. I now realize that Maine realtors get many cold calls from out state information seekers. Investing time and effort on an out of town client is a bit of a leap of faith.
Then, we tried a two-pronged approach. We would actually do the house hunting ourselves on Realtor.com then try to enlist a buyer’s agent to represent us on the house that we already found. I thought this was a slam-dunk easy arrangement for an agent to agree to.
One Interested Realtor
Finally, one agent called me back. She was very pleasant and chatty. However, she spent the next 2 1/2 weeks claiming the listing agent was unresponsive.
Suspicious, I called the listing agent directly. She picked up on my first attempt. I explained I was interested in one of her listings but our agent was unable to reach her. The listing agent said she had not been contacted by anyone.
The Hail Mary
Figured the listing agent would be glad to represent both the buyer and seller, I made the offer (In additional to apparently doing no work, the previous agent never emailed the client/agent agreement for us to sign. Thus, I had no qualms about changing course). I was willing to risk a potential conflict of interest by having dual representation. I just wanted to make this happen. The agent said she was not comfortable representing both seller and buyer but directed me to an associate who would represent us. That is how we found our realtor.
Our Vacation Home In Milbridge
We found our home in the quite coastal community of Milbridge. It’s about 30 miles to the Mount Desert Island entrance to Acadia National Park. We are closer to the Schoodic entrance but that is a blog post for another day.
Milbridge checked all the boxes for us
- On the Bay
- 2005 construction
- Three bedroom two bath
- Spectacular coastal views from the kitchen and bedroom
- Wireless Internet
- Low local population
- Stores and restaurants in town
- Acadia Adjacent, as I like to say
The Magic Formula
Find a place that will generate enough income in your absence to pay for it’s year-round operating costs and subsidize your trips.
There is nothing really magic about this formula. In my opinion the reason why more people don’t do this is they are justifiably concerned about constantly paying out of cost for a place that they don’t use much. If you own the place, take vacations, pay for all the operating expenses and still have money left over, it’s a no-brainer, right?
Will the Vacation House Pay for Itself?
Below is a breakdown of the critical calculation that we used to decide whether or not to buy our vacation home.
Assumption:
Rental season runs from June 1 through October 31.
1) Go to a site like AirBnb or Homeaway and find 3 homes like the one you are considering: similar size, style, amenities and location.
Look for properties that are pretty booked up for June-September. There are some listings where asking rates are wishful thinking instead of reality. You want places that are actually renting. Add up the total of the asking rents for all three properties from June 1- October 31 for each property. If any dates are blocked out just guess based on the surrounding dates. This will give you a total potential rent for 3 houses based on every date between June 1-October 31 being filled,
2) Divide by three to get an average of the three homes.
3) Multiply this number times .75 to adjust for vacancies.
4) Take this result and multiply times .70 to adjust for expenses, utilities and management fees.
This number is your Estimated Net Income.
5) Go to a mortgage calculator and plug in the price and your down payment on your vacation house.
6) Increase this figure by 15% to account for taxes and insurance.
7) Multiply this number x 12 because mortgage payments go on all year.
This is your Yearly Mortgage Estimate.
The calculation
Take your projected net income for the year and subtract the projected yearly mortgage expense. If that number is positive, congratulations your property should pay for itself.
If Expenses Exceed Income
If your calculation is negative you have a few options:
- Proceed anyway. Maybe it’s a manageable deficit.
- Lower your offer. Make the home fit your budget.
- Walk away. Maybe it’s not a good fit.
- Refigure your income/expense calculations based on anticipated improvements (higher market rents, longer rental season, etc.). Be careful doing this.
Use conservative numbers.
For the purposes of decision making, don’t assume top dollar rent, lowest market interest-rates or inexpensive property management. I am conservative by nature and would rather base my decision off average figures.
After Purchasing Your Acadia Home
After purchasing, do everything in your power to manage the home as efficiently as possible, get the highest rents and the lowest mortgage rate, etc.
Get Higher Rents
You can add to your rental income by raising rental rates based on holidays and special events. For example, Labor Day weekend, Fourth of July weekends typically bring in twice the rent of a non-holiday weekend. I’m shocked at the number of hosts who set one weekly rate for the entire summer.
Make hay while the sun shines!
Additionally, there are other things you can do to generate even more rent like adding amenities, upgrading the home, adding insulation, etc. Again, these are all great things to consider once you are up and running. However, for evaluation purposes, I would leave these off the table.
More Out of Pocket Costs?
One thing to keep in mind is that ordinary repairs are covered by the expense ratio we calculated above but things like roof replacement, plumbing updates, cabinetry, etc. are not.
How To Find A Property Manager
Here is the easy way to find a property manager. Look for a house that already has a property manager and ask if they’ll continue to do it. More often than not, managers assume they are losing their job once the property sells.
Easy to Say Yes
Because they already know the property well it’s easy for them to say yes. Also, you will have a good idea of how they will perform based on their track record under the seller. However, occasionally poor management is the reason that the property is for sale in the first place. If management is just OK, you may want to you keep them in place at first for the sake of continuity while you search for a better option.
Changing Management
For example, we bought our home in Milbridge with the idea of maintaining the current management company. However, when we asked for projections on rent it they gave us very low numbers. I was shocked. Going back through their records, I noticed the vacancy had been very high last few years.
Uh-oh.
I thought our home was super cool and very rent-able yet an experienced management company is forecasting an 80% vacancy rate.
Full Panic Mode
Fortunately, their bad news forced my hand. I decided to hire a local day-to-day manager but market the property myself on Airbnb. I wasn’t sure how it would go. I told my wife everything would be fine but inside I was really nervous.
Necessity is the Mother of Invention
I created an AirBnb listing before we actually closed on the property in order to get a jump start on the summer rentals. To my surprise we received bookings quickly. Ultimately, we had a 95% occupancy rate from the day we took ownership through the day we closed for the winter on October 31.
Winterizing Your Home
Unless you are in a ski area, winter guests are sporadic between the end of October through May 31. Unless your home has an ultra efficient heating set-up, you’re often money head by winterizing (shutting down) your home during this time. Basically, this means that your clear the water from your pipes so you can shut off the heat without fear of your pipes freezing.
It’s not a terribly complicated process but one you want done correctly. Plumbers charge $150-$250 for this service.
You can read a step by step breakdown of the process here.
Using AirBnb to Market Your Home
There are lots of great online tutorials for AirBnb hosting. Here are some of the reasons why I love using it market our home.
- Very inexpensive fees (at least right now). Web-based disruptors like AirBnB have a history of keeping fees low to gobble up marketshare. All bets are off once they transition into the profit maximizing phase. I think we’re good for a couple more years, though. Stay tuned.
- Great customized digital marketing tools. You can market your home to your liking. Load dozens of pictures, set your own pricing, etc.
- Exposure. AirBnb gets way more exposure and traffic than regional property management websites.
Your Home’s #1 Fan
No one will promote/market your Maine vacation property with as much enthusiasm as you will. Assuming you are a little bit tech savvy and really want to do this, give AirBnb a shot. Just sign on, find the listings that appeal to you as a traveler and then create one that is similar for your own property.
Be accurate.
If you promote your property as a five-star resort and it’s not, you will get killed on reviews which are the lifeblood of the AirBnb host.
Take good pictures. If you can’t do this, hire someone to do it. Do not sully your home listing with amateur looking pictures, poor lighting, dull subject matter, etc.
Be accurate but definitely put your property in the best light.
Questions?
If you’re on the fence and want more info on anything, feel free to ask in the comments below.
Heidi
20 Mar 2019Thanks for the inspiration.
Nancy
27 Mar 2019We also live in CA and fell in love with the midcoast. Bought a house across the street from the harbor, with incredible water views, in Rockport in 2017. One thing you didn’t touch on is what you do with the house between October and June. The first year, we kept the house heated to keep the pipes from freezing. We spent a ton. This past year, we decided to have the system drained, which means the heat stays off. We will definitely do that each year going forward until we move there permanently in about 4 years.
Stephen
27 Mar 2019My original plan was to rent year round. However, when we saw how much it costs to keep the heat on 24/7, we changed our mind. We winterized the 1st week of November and are leaving it closed down till the first week of May. Unless you’re in a ski area, it’s too difficult to attract enough renters to off-set the utilities, in my opinion – Steve
Juliet
29 Mar 2019It looks beautiful there! I might have to set aside a reservation sometime in the future.
Stephen
29 Mar 2019I’ll be there May 1-4 to open for the season. If you, Dean and the kids want to come, you can stay there.
I can add one person to my Southwest companion pass free so it would only cost you 3 Southwest tickets and a rental car. You can do you own thing while you’re there.
Let me know if you want more details.
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Carmen
10 Jul 2019Hi, Thank so much for the information. How expensive is heating oil? Do they offer natural gas
Services ? Looking into Jonesport but I wonder how much the area flood? How much demand during winter are for AIRBNB? I really appreciate your post.
Stephen
10 Jul 2019Hi Carmen – Thanks for commenting.
– We have electric heating which is relatively expensive to use but we don’t use it too much in season.
– Jonesport is a quiet area with lots of great waterfront/waterview locations. It’s a little light on stores/restaurants but nonetheless very scenic. I have not heard much about flooding issues.
– There’s is very little winter-demand for Airbnb on the coast in Washington County unless you are in a ski area. Most people look to maximize rental income in-season and just close up for winter. The heating/utility bills will likely exceed any rental income.
Let me know if you have any other questions!
Thanks- Steve
Carmen
11 Jul 2019Hi Stephen, thanks so much for getting back. We love small towns. When we go to the big cities in 30 minutes we are wondering why we are here?
My idea was to rent during winter and use it during summer months for the family. I did check on AIRBNB to see if any homes have been book no luck . Perhaps I want to see if the cat have 5 legs. May have to rent during summers to make enough for property taxes. Incredible high taxes by the water.
Today I was researching for utilities companies to have better understanding of the enormous financial craziness I am planing to undertake. Yes I am the one taking the risk. My husband no so much.
I am just in the planning process. Do you know if there a forum in Maine for AiRBNB host . Is Bangor airport the closer to Jonesport? We may visit next weekend to get a real feel of the area pending the homes are still available. Have the guess been respectful of your home? Does your town have any regulations that you must meet before starting your rental? Whom clean your home after each rental? I have so much to learn. Just taking baby steps. Thanks
Stephen
11 Jul 2019When I was in the planning stages, I also figured we would rent in the winter. However, to rent during the winter you need a local tenant. Unless you’re in a ski area, all of the seasonal visitors are gone. Also, keep in mind that to keep a place open in winter, you need the heat running all the time because you aren’t winterized, not just when you have a tenant. Otherwise, you risk frozen pipes. Basically, you locked into very high utility bills while your rental income prospects are not good.
If you’re on AirBnB, look at the availability calendars of homes in Jonesboro and surrounding areas. For the most part, they’re all closed by mid-September. It’s not that they wouldn’t love more income, it just does not pencil out, in my experience.
You may have better luck just opening up th early and late parts of the summer for tenants while you keep the other weeks for yourself.
Bangor is the closest airport to Jonesport.
For the most part, people have been very respectful of our home. My theory is that it’s not a “party” kind of destination where people go to get crazy like Las Vegas. Most of our guest are adults with families looking for a quiet get away.
There are a few people in town where we’re at who do house cleaning. I’m sure Jonesboro has local cleaners, as well. You should look for a local property manager to help with check-ins and check-outs.
Most towns in Maine appreciate their seasonal tourist traffic and are very laid back. I’ve not run into any issues with regulations or problems with full time residents.
Do you live close to Jonesboro or are you coming for out of state?
Carmen
12 Jul 2019I will be coming from out of state NC. Every time I have looked for homes in Maine have been in Washington County Lubec, Robinston and now Jonesport. I love fishing villages. I guess living in SA GA near Tybee memories will stay alive. Just to busy place specialy summer season. Listen to you mentioning all the expenses that I will inquire with management, cleaning,
Yard maintenance plus utilities I better set prices that I won’t loose.
I remember the first time I rented an Airbnb we paid rent, cleaning and management plus all the taxes available. So the key I guess will be to make sure maintenance won’t come out of the rental.
I am glad you have been able to set everything on track and decided to share your adventure with the rest of all. Well if I get a place there will let you know. Good luck to you and your family.
Stephen
12 Jul 2019Sounds good. Good luck on your search!
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Donna Schmidt
5 Aug 2020Hi Stephen. I’m a year late in reading this, but it is very good information for me, as I am going up to Maine in a couple of weeks, and I plan on looking at homes to purchase. I agree on the age of the home. As tempting as it is, I question the infrastructure of a “charming” home. I just don’t want any headaches from long distance. Question – Are the home prices just as reasonable if you go South of Acadia? I have a feeling not, but thought I’d ask. Also, I hear what you’re saying about the wisdom of winterizing your home, but that would exclude visits to Maine during the Winter holidays – something to think about. I lived in Portland for a few years and have visited back there many times. To me, it’s the most beautiful state in the country (sorry California). You just can’t beat the rugged coastline and the Maniacs! Thanks again for your advise.
Stephen
7 Aug 2020Hi Donna – Generally speaking, coastal Maine is more expensive the further south you go. It’s all relative, of course.
Maine has a lot of older homes (late 1800’s-early 1900’s) plus, unlike many other states, Maine no contractor’s license board (something I did not realize until recently). Anyone can be a contractor/home-builder. Accordingly, repairs run the gamut from completely unacceptable to 100% fine.
We love Maine, too, and can’t wait to get back!
Thanks for commenting.
Steve