Out of state Airbnb investing?

Rental Property Investor · Saratoga Springs, UT · Member since 2020 · 22 posts · 7 votes

Does anyone have experience with out of state Airbnb investing? I’d love to chat and pick your brain a little bit! I’m in Utah and am looking at getting my first out of state property

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Jonathan GreeneBusiness Member

Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes

If that's your first investment, an OOS STR is a bit risky because of the management aspects. Your entire profit funnel is guided by your launch strategy and the cost for a good STR property manager is not what most people expect. It will run 15-20% and they may not share your same vision. With Airbnb, it's advisable to try one closer to you first that you can help manage, if not do it all, just so you can know on-site how much work it is.

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Will Fraser
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
4y
Hey @Parker Larsen! I have a few clients that do OOS short term rentals and I would say from their experience that expectations and the quality of the manager are two guiding factors in their experience.
Side note: I'll be in Sandy on the 12th for the REIA meeting . . . do you go to those?
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Parker Larsen
OP
Rental Property Investor · Saratoga Springs, UT · Member since 2020 · 22 posts · 7 votes
4y
@Will Fraser thanks for the insight! I’ve been planning on going to one of those soon. I’d love to chat!
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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
4y
If that's your first investment, an OOS STR is a bit risky because of the management aspects. Your entire profit funnel is guided by your launch strategy and the cost for a good STR property manager is not what most people expect. It will run 15-20% and they may not share your same vision. With Airbnb, it's advisable to try one closer to you first that you can help manage, if not do it all, just so you can know on-site how much work it is.
[email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
Zen and the Art of Real Estate Investing59 Reviews
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Evan Polaski
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
4y
@Parker Larsen, not sure what your budget is for management, but I agree with Jonathan, although have seen more come in around 25%. I have a friend that manages Airbnbs in Phoenix. She is selective as to the properties she will take on, since it is her name and brand behind everything. but in conversations with her, here are things I would look for both in property and management company:
Management company:
They should require that they be involved in initial setup. My friend has gotten to point that she mandates the mattress, sheets, toilet paper, towels, etc. This is all goes experience and she doesn't want her name or rating to be hurt because an owner wants to save $20/mo buying hard toilet paper. I am sure there is more to spell out, but this struck me as interesting, and from the start shows she cares about this business, which extends throughout her day to day management.
Cleaning crew is imperative. I have been to an airbnb with hardwoods and luxury vinyl throughout. Kicked shoes off when I got there and unpacked in socks: my socks were black. My in-laws and self ended up buying a swiffer and mopping the floors ourselves. While I believe my sister-in-law that booked ended up leaving a positive review, she did message the host and let them know. This was a very nice cabin in Gatlinburg that cost 500/night, but even if it was a $50/night place, these places need to be cleaned, and well.
Property:
She generally wants 1 full bath per bedroom. There are exceptions, but her point is: responsible adults don't want to share a bathroom with 8 of their friends. College kids will. She does not pack in beds and heads, because in her experience that draws partiers.
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y
What's wrong with Utah? I hear it is a beautiful state with good regulations and reasonable prices. Not clear why a person from Utah would feel the need to invest OOS?
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Parker Larsen
OP
Rental Property Investor · Saratoga Springs, UT · Member since 2020 · 22 posts · 7 votes
4y
@Bruce Woodruff Main reason being it’s difficult to cash flow in Utah, inventory is low, and prices are super high.
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Parker Larsen
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Rental Property Investor · Saratoga Springs, UT · Member since 2020 · 22 posts · 7 votes
4y
@Jonathan Greene The home I’m living in now will turn into an investment property in the next year or so. It just seems like the barrier for entry is lower out of Utah. Utah real estate prices are extremely high and aren’t ideal for short term rentals at the moment
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Parker Larsen
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Rental Property Investor · Saratoga Springs, UT · Member since 2020 · 22 posts · 7 votes
4y
@Evan Polaski This is really helpful, thank you!!
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Ryan MoyerBusiness Member
Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 993 posts · 1k+ votes
4y
Originally posted by @Bruce Woodruff:
What's wrong with Utah? I hear it is a beautiful state with good regulations and reasonable prices. Not clear why a person from Utah would feel the need to invest OOS?

I'm not sure where you heard the regulations are good in Utah. It is extremely heavily regulated and several of the good markets forbid self management.

Moab is basically impossible to get a permit. St George you pay $800k for a condo that does $60k gross and requires you to use a pre-selected property manager that takes 30% of gross. Near the ski resorts will cost millions with gross revenue in the 5 figures. And SLC proper cracks down more and more every day.

There is opportunity in rural Utah (I have one that does well), but that presents a whole new set of challenges as there often aren't reliable cleaners or handymen (or stores) nearby. I'm very lucky to have found a cleaner/handyman that are husband/wife and I treat them like royalty. Otherwise it's usually weeks to get someone out there to fix anything, if you can even find a cleaner.

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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y
@Ryan Moyer I remember a discussion on here about Washington County a while back. Lots of areas of interest there where a STR could work. I assumed the whole state was amenable to STRs (especially with it being a conservative state). If not, I stand corrected......
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Emily Howlett
Real Estate Agent · Arlington, VA · Member since 2017 · 98 posts · 50 votes
4y
I've done out of state investing with AirBnB, and currently in the process of setting up a second property. It really depends on what markets you're looking in, local regulations, etc, but you could totally self-manage and be fine. It's actually not that painful once you get a team in place (cleaner, handyman, utilities, etc) and your airbnb systems set up. I'd be happy to connect and provide my experience so far!
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Ryan MoyerBusiness Member
Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 993 posts · 1k+ votes
4y
Originally posted by @Bruce Woodruff:
@Ryan Moyer I remember a discussion on here about Washington County a while back. Lots of areas of interest there where a STR could work. I assumed the whole state was amenable to STRs (especially with it being a conservative state). If not, I stand corrected......

Washington County is very tough. I vacation a ton down there and would love to own (and spent months trying to find a way to buy) but found it better to buy elsewhere and use the income from the other place to pay for a nice vacation there.

In St George STRs are illegal except in designated neighborhoods, and those designated neighborhoods have a PM attached to them that you have to use that takes 30% gross off the top. The numbers don't work there for investors as there are more than enough people that want a legitimate vacation home there and are willing to buy at prices where the STR income won't even break even, and they are just looking to subsidize their costs with it.

Hurricane is awesome but they only give out new STR permits when someone lets their old STR permit expire. They estimate the wait list for a permit if you apply today to be around 10-15 years. You can very very rarely find a house that goes on the market with an STR permit, but you can expect it to cost double what it will appraise for and it won't come near making the income to justify that as an investment.

Toquerville requires you to be a permanent resident of the city to operate an STR in the city.

La Verkin is the only place that is really doable. House must be at least a year old (no new builds) and they limit the number of STR permits per area of the city, so you are restricted to very small areas of the city that occasionally become available and you have to hope there is a home for sale in that area when it happens.

Other than that you're basically stuck looking for a unicorn. Like when we were looking a 3br home happened to become available in St George that was zoned commercial as its zoning had never changed when the neighbordhood changed, but that's obviously a super rare occurrence.

They are actually building an awesome new resort area called desert color that has a GIANT shared lagoon that is super cool, and they have an area in there dedicated to STRs. But you're looking at paying a cool million for a 3br condo in there that rents for $300 a night with 50% occupancy and a 30% forced PM that you cannot opt out of. Awesome place to vacation, but there's few "investments" to be had there unless you stumble upon something truly fortunate.
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Dan Thomas
Rental Property Investor · Bow, NH · Member since 2016 · 216 posts · 185 votes
4y
@Parker Larsen
I'm not out of state but I am 3.5 hours away. Last night I got a call at 10pm that the toilet wasn't working. I'm fortunate to have picked a good pm to work with. He dropped what he was doing to go fix it. I was stressing alittle as I don't want my guests to have a bad experience but I would really be stressing if my pm didn't answer his phone or decided it could wait till morning. My point is you must have a great PM and a great cleaning person. You won't run your out of state business successfully without them. Turns out in my situation at -10 pipes like to freeze.
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Nick Rutkowski
Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
4y
@Parker Larsen
As long as you have a good system in place you can mitigate your risks. I would find a cleaning company to clean. You could self manage from OOS but it’s a bit tricky. You could get locks that pair up to your phone to send individual codes to each guest, use door bell cameras and be responsive. 90% of being a good host is responsiveness to guests - inquires, problems and general communication.
It’s a lot of active work and moving parts, your basically running a small hotel. Keep that in mind when choosing your first one. Good management will save you headaches, you should do it yourself and learn your system. Once you get that down then hire a manager. Good luck dude, there’s much money to be made in STRs.
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David M Trapani
Rental Property Investor · Franklin, TN · Member since 2019 · 160 posts · 125 votes
4y
If you select a growing area and have reliable boots on the ground (cleaning and maintenance) you can successfully self-manage & operate on the STR platforms. This can be done from your laptop or cellphone app. Saves the sometimes 20%-25% management fees. On the other hand, if times at a premium (i.e. heavy work schedule), it may be best to hire local property management.
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Jimmy Woodard
Walnut Creek, CA · Member since 2020 · 285 posts · 318 votes
4y
@Parker Larsen I've invested out of state in an STR. Feel free to DM me if you want to discuss how to self-manage without giving up 25-40% of your gross revenue to a management company.
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Joseph Bafia
Investor · Raleigh, NC · Member since 2019 · 314 posts · 280 votes
4y
We have several STRs and self-manage them all from a distance without a PM. We live in NC and our furthest is in CA. We have a great housekeeper & handyman and a system that allows us to navigate everything from home. Agree with @Jimmy Woodard that you can keep much of the 25-40%.
Now that's not to say you cant make money using a PM, but if you're just managing a couple of properties then whether they are 1 hour away or 20 hours away, the process is the same (at least for us)
Happy to help answer anything else.
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Anthony Nunez
Real Estate Broker · NY · Member since 2021 · 21 posts · 18 votes
4y
Does anybody here AirBnB in NY? What have been some pros/cons in the experience? Do you also AirBnB in other states? How does NY compare?
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Will Fraser
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
4y
Originally posted by @Parker Larsen:
@Bruce Woodruff Main reason being it’s difficult to cash flow in Utah, inventory is low, and prices are super high.

Exactly right! While resort pricing across the US is fairly standard, you can find WAYYYYYY better ConC return and with the right operator you can do well.
However, like all investment types that involve a counter-party, it all comes down to the operator and their integrity and excellence (or lack thereof)
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Will Fraser
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
4y
Originally posted by @Parker Larsen:
@Will Fraser thanks for the insight! I’ve been planning on going to one of those soon. I’d love to chat!

Right on! I'll be at the main monthly meeting on Wednesday in your neck of the woods!
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Andrew HoganPro Member
Rental Property Investor · Indianapolis, IN · Member since 2016 · 560 posts · 463 votes
4y
@Parker Larsen I'd also recommend researching "Airbnb arbitrage" that allows you to get into the biz with less startup capital. You could bundle up 10 deals and sell them to a bigger fish :)

I grew up in West Jordan, UT btw. happy to chat with a fellow Utahn
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Dan Maciejewski
Realtor · PInellas County Largo, FL · Member since 2016 · 902 posts · 810 votes
4y
It's definitely doable. I have a lot of clients that are doing very well with vacation rentals / AirBNB / short term rentals.
You do want to have an idea of your vision of what you want your place to look like and your ideal guests. Then you can choose a manager that shares that. Or you communicate it to an experienced agent (one that deals with short term rentals) and they can guide you a bit.
Doing anything long-distance is riskier than in your backyard. There's less opportunity for you to experience your property and fix things before they become issues. And that could even be things like the landscaping needs to be better on the east side, to the A/C drips a bit when the humidity is high. But, a good manager get good reviews and the guests should feel more free to talk to them and share their experiences. Guest Satisfaction Scores are a very important metric to track in a STR.
A good manager will have good cleaners, too. Cleanliness is second only to location. If you look at negative reviews, almost all of them will mention cleanliness in some form. If you self-manage, you will need to find great cleaners, and I would be my own inspector until I trust their inspectors.
I am in a very transient / tourist-driven market here in Pinellas / Tampa Bay and my partner has been in hotel management for decades, so we can tell you all about how guests think and what they expect. Cleanliness is number 1 once they are in the property!
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Alex BekezaBusiness Member
Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
4y
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