STR, LTR, or fix/flip?

Realtor · Charleston, SC · Member since 2021 · 170 posts · 58 votes

Hey BP family!

I am a Realtor in the San Diego area looking to transition primarily into the investment space.

I am interested in STR, LTR, and fix/flips. I am open to long distance investing. Long term, I would like to manage a large multifamily portfolio. As I begin this journey, I am wondering-which niche you all recommend as the lowest onramp/barrier to entry? I want to make sure I am being as efficient as I can be in identifying a niche as a get started. Any advice would be appreciated.

Thank you!

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Zach LemasterBusiness Member

Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes

@Lindsey Johnson

N Michigan is a great area for cash flow. I'm sure you could be successful with a STR in the right spot, but that is more of a unique niche. I think a LTR that has potential for STR use is a really well versed investment. Maybe start looking in the area you know right around the college? Fix & Flip is a full time job, with high risk. Not to discourage you from that, but I would say get an easy win in with a rental to become comfortable with the area, and then maybe take that leap when you are ready. This would be my advice.

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Chris Tarpey
Investor · Jacksonville, NC · Member since 2018 · 193 posts · 107 votes
4y
Hey!
We've only just got into Airbnb recently but have seen huge returns. We were actually able to use the arbitrage method where we signed a long term lease on some apartment units of a friend/investor. He got the stable leases he needs to refinance and we were able to acquire 3 Airbnb apartments for the cost of furnishing ($3k/unit). We rent these units for $600/month each from him plus utilities and they took in over $4k last month!
Very low barrier to entry..I'm sure you've seen the social media side of arbitrage and making money on Airbnb by renting and then furnishing very high end and nice apartments/homes... but find the niche that works for you!
2 Reply
Lindsey Johnson
OP
Realtor · Charleston, SC · Member since 2021 · 170 posts · 58 votes
4y
@Chris Tarpey Hey Chris, Yes I have looked into arbitrage. Seems like a great strategy to get started in. Only thing I don't love about it is that you don't get the long term appreciation and tax benefits of actually owning the property. But then again you don't have the liability of owning either.. So I can see it being a super useful strategy! What market are you in?
0 Reply
Mo Karim
Real Estate Agent · Dallas, TX · Member since 2020 · 164 posts · 80 votes
4y
I'd look at midwest for LTRs. It's a great market. I invest in Missouri and Oklahoma.
Dallas is a good market for STRs but you'd have to look at regulations in towns (Dallas is big). Run your numbers in airdna.com.
1 Reply
Ricardo Hidalgo
Real Estate Agent · Member since 2019 · 569 posts · 257 votes
4y
Quote from @Lindsey Johnson:

Hey BP family!

I am a Realtor in the San Diego area looking to transition primarily into the investment space.
I am interested in STR, LTR, and fix/flips. I am open to long distance investing. Long term, I would like to manage a large multifamily portfolio. As I begin this journey, I am wondering-which niche you all recommend as the lowest onramp/barrier to entry? I want to make sure I am being as efficient as I can be in identifying a niche as a get started. Any advice would be appreciated.
Thank you!

I invest in the Navarre to Panama City Beach area.
With our flips we are making over 30% cash on cash return conservatively after all expenses with 4-8 week completion.
With new builds we are looking to buy 3-5 lots to pass zoning and try to complete builds in 5-7 months with 40-60% cash on cash return.
Long term rentals are very safe in our area to rehab, refi and hold for 15% COC return
Short term rentals are awesome when you can renovate them, self manage and push over 25% com return with 35% plus equity position
1 Reply
Lindsey Johnson
OP
Realtor · Charleston, SC · Member since 2021 · 170 posts · 58 votes
4y
@Mo Karim Thank you for the advice! Do you do mostly single family LTRs or multifamily too?
0 Reply
Lindsey Johnson
OP
Realtor · Charleston, SC · Member since 2021 · 170 posts · 58 votes
4y
@Ricardo Hidalgo Sounds like a home run!! How long have you been in that market?
0 Reply
Mo Karim
Real Estate Agent · Dallas, TX · Member since 2020 · 164 posts · 80 votes
4y
Quote from @Lindsey Johnson:

@Mo Karim Thank you for the advice! Do you do mostly single family LTRs or multifamily too?

Strictly multi
0 Reply
Ricardo Hidalgo
Real Estate Agent · Member since 2019 · 569 posts · 257 votes
4y
Quote from @Lindsey Johnson:

@Ricardo Hidalgo Sounds like a home run!! How long have you been in that market?

3.5 years selling real estate but I've lived here for over 15 years.
1 Reply
Lindsey Johnson
OP
Realtor · Charleston, SC · Member since 2021 · 170 posts · 58 votes
4y
@Ricardo Hidalgo Sounds like a very productive 3.5 years. Keep killing it brother! Thanks for the insight.
0 Reply
Ricardo Hidalgo
Real Estate Agent · Member since 2019 · 569 posts · 257 votes
4y
Quote from @Lindsey Johnson:

@Ricardo Hidalgo Sounds like a very productive 3.5 years. Keep killing it brother! Thanks for the insight.

My pleasure. Always here to help!
0 Reply
Walter Correia
Lender · Charlotte, NC · Member since 2015 · 124 posts · 22 votes
4y
Lindsey,
Whatever your goal is, financing is an important piece since all lenders are different. I can help you in the lending aspect when ready. Connect and reach out.
0 Reply
Joshuam R.
Rental Property Investor · FL · Member since 2016 · 271 posts · 92 votes
4y
If you are able to, do one of each, at the same time or within a year spread out. Then you will know what works and you are going to love enjoying doing. Every investor in every niche love their niches. Some love swimming at the beach, some love swimming at the springs, some love swimming at the pool, at the end all 3 are getting wet.
Best wishes good luck.
1 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
4y
Quote from @Lindsey Johnson:

Hey BP family!

I am a Realtor in the San Diego area looking to transition primarily into the investment space.
I am interested in STR, LTR, and fix/flips. I am open to long distance investing. Long term, I would like to manage a large multifamily portfolio. As I begin this journey, I am wondering-which niche you all recommend as the lowest onramp/barrier to entry? I want to make sure I am being as efficient as I can be in identifying a niche as a get started. Any advice would be appreciated.
Thank you!

Since you are in San Diego and a realtor you must use your energy where you have the most competitive advantage: STR.

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Lindsey Johnson
OP
Realtor · Charleston, SC · Member since 2021 · 170 posts · 58 votes
4y
Quote from @Joshuam R.:

If you are able to, do one of each, at the same time or within a year spread out. Then you will know what works and you are going to love enjoying doing. Every investor in every niche love their niches. Some love swimming at the beach, some love swimming at the springs, some love swimming at the pool, at the end all 3 are getting wet.
Best wishes good luck.

Response of the day. So good. Thank you. I will put this into practice!
1 Reply
Lindsey Johnson
OP
Realtor · Charleston, SC · Member since 2021 · 170 posts · 58 votes
4y
@Carlos Ptriawan Great insight! Question though, why do you view STRs as the most competitive advantage?
1 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
4y
Quote from @Lindsey Johnson:

@Carlos Ptriawan Great insight! Question though, why do you view STRs as the most competitive advantage?

Because it's San Diego, a tourist destination.
In CA it's only possible to do flip and STR.
0 Reply
Zachary Beach
Specialist · Los Angeles, CA · Member since 2018 · 291 posts · 231 votes
4y
@Lindsey Johnson as someone that has LTR's STR's and flips properties.
Flipping is the most risk if you are using high interest balloon type debt in particular. If done right it’s the most profitable but the least tax favored.
LTR’s assuming you are doing all three correctly it makes the lowest return but it’s the easiest to find good passive management for and to get conventional loans for. (For the most part)
STR's are like LTR's but with cash flow on higher quality properties often in better appreciating markets. That extra potential cash flow however is dependent on a lot of work being done and done well. Probably 50% plus of STR's don't out preform LTR's in cash flow after all the cost are counted correctly.
My wife and I have a property manager for our LTR’s and they cashflow and have had huge appreciation but we couldn’t buy them at current prices and cashflow and the return on equity isn’t amazing.
I have a contractor or project manager I like and trust do flips so that's very helpful. I also have a good eye for design, if you don't have someone on your team with good style flips and STR's are not for you.I get loans for 60-90% of the cost for my flips but it's pretty expensive and stressful even on amazing deals with tons of equity. Again by far the riskiest.
As for STR's we couldn't find a PM that was good at actually getting top revenue. So we decided to self manage our properties. We (my wife mostly) crushed it and had the number 1 highest property for its guest count by revenue and probably profit in a market of over a thousand properties just in its category. Over 6k total but it was a good amount of work and we were constantly on call. So we created a management company systemized it created amazing policy and outsourced the day to day operations so that we could get the cashflow and have it be semi passive and not be constantly on call. STR's are now my favorite of the three and the only one of the three I'm really planning to do a lot more of.
LTR's can't compete cashflow wise plus it's more risky in land lord unfriendly places. Flips require a great deal plus they are more risky and stressful where as STR's I can just plug into my system and profit without having to worry if the market will soften or if we get a long delay with substantial negative cashflow.
2 Reply
Eliott Elias
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
4y
LTR is the best way to go to be as passive as possible. Of course you can hire property managers and be passive for STR but you're prone to more hands on stuff
0 Reply
Lindsey Johnson
OP
Realtor · Charleston, SC · Member since 2021 · 170 posts · 58 votes
4y
@Eliott Elias Good word man, thank you!
Are you running this strategy in Austin?
0 Reply
Lindsey Johnson
OP
Realtor · Charleston, SC · Member since 2021 · 170 posts · 58 votes
4y
@Carlos Ptriawan Got it. Of course if you get the right deal, an LTR can work. Many of my peers are renters simply because it is so expensive to own here. Just might be more of a buy and hold for minor cash flow immediately, tax benefits, and appreciation in the long term. Still not a bad place to park your money in real estate. Of course, all of this is dependent upon getting the right deal. Thank you for the insight!
1 Reply
Nicholas Coulter
Real Estate Agent · Southern California · Member since 2019 · 681 posts · 281 votes
4y
@Lindsey Johnson I am looking to do a duplex HH with short term rentals down in SD. I think I can cover 80% of the mortgage with just one unit rented out as long as I owner occupy the other unit!
1 Reply
Zach LemasterBusiness Member
Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes
4y
@Lindsey Johnson
Which markets are you considering? I think that will determine the strategy that is right in each market. Generally LTR is the path of least resistance in many markets, then STR, lastly would be F/F.
[email protected]800-311-6781 Podcast Guest on Show How to Get 10%+ Off Your Next Real Estate Deal Right Now
Rent To Retirement5334 Reviews
Website View Page
8 Reply
Lindsey Johnson
OP
Realtor · Charleston, SC · Member since 2021 · 170 posts · 58 votes
4y
@Zachary Beach Such valuable knowledge, man. Thank you so much.
Is your portfolio in San Diego? Or are you in other markets as well?
0 Reply
Joshua MessingerBusiness Member
Property Manager · Poconos, PA · Member since 2020 · 443 posts · 264 votes
4y
Hey @Lindsey Johnson!
I would recommend considering the BRRRR method based on what you are looking to get into. Saying this I would recommend looking into the midwest and northeast regions for value add multi-family deals. Frequently I have been seeing more of these deals come onto the market in the PA area.
Would love to talk more and dial in on your strategy. If you ever need anything don't hesitate to reach out!

-
Josh
[email protected]484-986-5012
1 Reply
Zachary Beach
Specialist · Los Angeles, CA · Member since 2018 · 291 posts · 231 votes
4y
@Lindsey Johnson my LTR's are out of state my STR's are in big bear and I have done flips in a few places around the LA area.
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