Just Launched Our First Vacation Rental Property

General Landlording & Rental Properties
11yFollow

Just Launched Our First Vacation Rental Property

Gary Ennis
Rental Property Investor · Austin, TX · Member since 2014 · 127 posts · 55 votes

A while back, my wife and I decided to rehab one of our long-term rentals in central Austin and convert it to a short-term vacation rental. After months and months of work, our first vacation rental property is now up and running! 

VRBO Listing #685434

We've had two parties stay with us so far, and both have left sparkling reviews. And we've got a couple bookings for South by Southwest next week. We're looking forward to settling into our new roles in the hospitality industry (we're self-managing), and tweaking amenities/rates to generate maximum revenue from the property going forward. Exciting stuff!

3Reply
475 views

Most Popular Reply

Chris S.
Los Angeles, CA · Member since 2015 · 10 posts · 3 votes
11y

@Jon Klaus I frequently rent an airstream in Palm Springs that is on a SFR lot. The airstream is far enough from the home for privacy.

A big attraction of short term vacation rentals is the option to stay in a unique space like an airstream, a treehouse, a boat, etc. next to location, the kitsch factor is a huge selling point.  If you google "airstream AIRBNB" most of the listing have 100+ positive reviews. 

1Reply
See this reply in the discussion

80 Replies

Jump to latestLatest
  • Chris S.
    Los Angeles, CA · Member since 2015 · 10 posts · 3 votes
    11y

    @Jon Klaus I frequently rent an airstream in Palm Springs that is on a SFR lot. The airstream is far enough from the home for privacy.

    A big attraction of short term vacation rentals is the option to stay in a unique space like an airstream, a treehouse, a boat, etc. next to location, the kitsch factor is a huge selling point.  If you google "airstream AIRBNB" most of the listing have 100+ positive reviews. 

    1Reply
  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    11y

    I'm sure I'm crazy, but I'm kicking around the idea of a rental RV park with all Airstreams.

    0Reply
  • Gary Ennis
    OP
    Rental Property Investor · Austin, TX · Member since 2014 · 127 posts · 55 votes
    11y
    Originally posted by @John Thedford:

    @Gary Ennis

    if I may ask what was your purchase price? The one I am considering is 300K, would need about 10K in minor rehab. Taxes would be VERY high...probably in the $6000 range. If I set it up as VRBO we would have all the usual, taxes, insurance, maintenance, electric, yard, pool care, etc.  I suspect if we listed with a company that manages VRBO that their cut would make a HUGE difference in our net profit.

    The house is currently worth about $325K. Un-rehabbed it might go for $260Kish. We got it for considerably less than that, since we bought it several years ago, before the Austin market really caught fire. But of course we spent about $50K rehabbing it, and another $12K or so furnishing it (we went relatively high-end). 

    It is a matter of running the numbers to determine whether a prospective property will be profitable as a vacation rental. I can't remember who it was, @J. Martin perhaps, but someone has posted a spreadsheet to the BP Fileplace that they use to calculate the return on a VR property. 

    You are correct - a property management firm will take a huge chunk, likely 25-40% of rental revenue, which could eat up most/all profits. 

    0Reply
  • Gary Ennis
    OP
    Rental Property Investor · Austin, TX · Member since 2014 · 127 posts · 55 votes
    11y
    Originally posted by @Jon Klaus:

    "Reinli St - wow! We are currently rehabbing our house on Broadview about three blocks away, which will become our second vacation rental property when it launches in late August. Is the property a commercial building? As far as I know there's only one little house left on Reinli; the rest are apartments or office space. "

    Day care center, I think you can figure out which property.

    What do you think about putting a vintage Airstream trailer in the back yard so you have 2 short term units?  I used AirBnB to stay in one about 2 miles southeast of you.  I also have a 31" 1976 Airstream Sovereign Land Yacht, but not really using it yet.

    Yup - I know exactly which one. 

    You are reading my mind regarding the Airstream idea. After being inspired by Liz Lambert's El Cosmico property in Marfa, we were actually kicking around the idea of buying some land in East Austin and installing 5-6 restored vintage Airstream trailers to rent out as VRs, with a common area and perhaps some type of arrangement for occasional live music. 

    There's no way to get an Airstream into the back yard of our first VR. However, the property that we're currently rehabbing has great possibilities. We just came back from taking measurements over there, and found that we've got a pretty much perfect spot for one, and a way to get it back there. We're definitely going to move forward on this. Thanks for igniting the idea!

    1Reply
  • Ashley Jackson
    Wholesaler · Columbia, SC · Member since 2015 · 123 posts · 15 votes
    11y

    @Gary Ennis, congrats!

    0Reply
  • Gary Ennis
    OP
    Rental Property Investor · Austin, TX · Member since 2014 · 127 posts · 55 votes
    11y

    @Ashley Jackson thanks!

    1Reply
  • Vincent Crane
    Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes
    11y

    Congrats, there's several podcasts on vacation rentals that might help you outsource and streamline things

    0Reply
  • Gary Ennis
    OP
    Rental Property Investor · Austin, TX · Member since 2014 · 127 posts · 55 votes
    11y

    I'm a fan of Heather Bayer's Vacation Rental Success podcast. Would love to hear about any others that folks have found useful.

    0Reply
  • Lynn Burson
    Real Estate Investor · Houston, TX · Member since 2014 · 75 posts · 22 votes
    11y

    @Gary Ennis

    Congrats on the place!  VRs in the right place, price,... can do quite well. They just have a higher cost of business than a SFR.

    The hospitality component is something most people underestimate when starting but I see the listing of restaurants, bars, venues... you guys provided.

    The returns are higher but more work with turnover/furnishings involved (most of which can be somewhat automated).  I would think ABNB would boost occupancy sans fees?

    0Reply
  • Gary Ennis
    OP
    Rental Property Investor · Austin, TX · Member since 2014 · 127 posts · 55 votes
    11y

    @Lynn Burson AirBnB has definitely helped to boost occupancy, but they do charge a 3% fee for each booking. 

    0Reply
  • Aaron Thivierge
    Investor · Jacksonville, FL · Member since 2014 · 172 posts · 73 votes
    11y

    I couldn't believe the photos and the price and all the positive reviews. Way to think outside the box on this STR vs. SFH. I hope this model is reproduce-able for you. Did you design the furnishings and accessories? They are so hip and fabulous! I can see how you'd draw a diverse crowd from the young family to college girls reunion to the over 55 community. Very tastefully done. Now you've got my wheels turning. Congratulations, and thanks for shaing with the BP community!

    0Reply
  • Gary Ennis
    OP
    Rental Property Investor · Austin, TX · Member since 2014 · 127 posts · 55 votes
    11y

    @Aaron Thivierge thanks very much for the kudos. My wife and I selected all the furnishings and designed the look and feel of the property - although she is our Head Designer. It's the part of this business that we have the most fun with. 

    0Reply
  • Andrey Y.
    Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
    11y
    Originally posted by @Gary Ennis:

    A while back, my wife and I decided to rehab one of our long-term rentals in central Austin and convert it to a short-term vacation rental. After months and months of work, our first vacation rental property is now up and running! 

    VRBO Listing #685434

    We've had two parties stay with us so far, and both have left sparkling reviews. And we've got a couple bookings for South by Southwest next week. We're looking forward to settling into our new roles in the hospitality industry (we're self-managing), and tweaking amenities/rates to generate maximum revenue from the property going forward. Exciting stuff!

     Congrats. The unit looks splendid. How are you handling bath towels and sheets, does the cleaning fee/person take care of washing and replacing those?

    0Reply
  • Account Closed
    Las Vegas, NV · Member since 2015 · 84 posts · 8 votes
    11y

    You need higher occupancy!  get it done.  nice property rehab.

    0Reply
  • Nancy Brook
    Investor, Realtor, Writer, Podcaster · Billings, MT · Member since 2013 · 175 posts · 97 votes
    11y

    I have one apartment, one condo and one house we vacation rent. I may add another condo here shortly. I self manage two through VRBO and hire a cleaning service for one. The other I have a property manager for because the fees are too expensive for maid service in the area--more than a full property manager. 

    Wishing you continued success!

    0Reply
  • Maggie Tasseron
    Investor · Palm Desert, CA · Member since 2015 · 215 posts · 64 votes
    11y

    Hi Gary: The house is beautiful; you really stayed true to the Mid-Century motif. I was wondering if you opened the space up and put in a beam or was it already open?

    Thanks, Maggie

    0Reply
  • Kurt Traynor
    Investor · Moseley, VA · Member since 2015 · 145 posts · 60 votes
    11y

    Nice work @Gary Ennis, light and bright...  Good luck, looking to get involved with vacation homes here on the Gulf Coast of FL soon

    0Reply
  • Kevin Yoo
    San Diego, CA · Member since 2008 · 301 posts · 108 votes
    11y

    @Gary Ennis

    Gary,

    I read your post and was very intrigued as you are essentially changing the value of the property by its use. However, what is missing in all this discussion are the numbers. If you would not mind, I would like to know what your ROI, CoC, CAP rate, Expenses/Income, Gross Income, NOI, etc. were before you converted this home and what they are now. I am assuming you did this because it is performing financially better as a short term rental as opposed to long term rental. Thanks for educating us in advance.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    @Kevin Yoo

      I think the location of one of these properties is critical to success..

    I was toying with it  for one of my new constructions on the Oregon coast... and my past CFO has one on the ORegon coast and what it does for her is pay's for the mortgage and upkeep.. and then they get to use it a few weeks out of the year.. 

    But I suspect if you have a prime location in a prime vacation spot you can do well.  management fee's generally run 30 to 40% of gross revenue.. then you have your regular expense's...

    When I lived at Silverado CC in Napa Valley the resort relies on the private owner condo's as there over night accommodation's so folks buy those and they are run like a hotel.. and again its usually break even at best.. however  about every 5 years to stay in the hotel program they require you to completely update your condo.. new furniture beds etc etc. So this can run thousands of course...

    But that's all I know of this... I am sure like I said some who  have prime spots do very well.

    I hear the Airbnb  stuff works good in the inner city type areas.. but again I don't know I would personally never stay in one...

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Kevin Yoo
    San Diego, CA · Member since 2008 · 301 posts · 108 votes
    11y

    @Jay Hinrichs

    The short-term rental is not for every property. But for desirable places like Austin, it may make financial sense to do this as oppose to long-term rentals where the numbers do not pencil out.

    I was also under the impression that short-term rentals at best break even. But I am hearing that this is no longer the case. I would be very interested in knowing if @Gary Ennisis having such success in Austin.

    Essentially, this technique is no different than subdividing land which is what you do. You are simply subdividing time and hopefully making more money than if you sell it whole.

    1Reply
  • Gary Ennis
    OP
    Rental Property Investor · Austin, TX · Member since 2014 · 127 posts · 55 votes
    11y
    Originally posted by @Andrey Y.:

     Congrats. The unit looks splendid. How are you handling bath towels and sheets, does the cleaning fee/person take care of washing and replacing those?

    Our cleaning team takes care of laundering the linens; we handle replacing any missing/damaged linens.

    0Reply
  • Gary Ennis
    OP
    Rental Property Investor · Austin, TX · Member since 2014 · 127 posts · 55 votes
    11y
    Originally posted by @Kevin Yoo:

    @Gary Ennis

    Gary,

    I read your post and was very intrigued as you are essentially changing the value of the property by its use. However, what is missing in all this discussion are the numbers. If you would not mind, I would like to know what your ROI, CoC, CAP rate, Expenses/Income, Gross Income, NOI, etc. were before you converted this home and what they are now. I am assuming you did this because it is performing financially better as a short term rental as opposed to long term rental. Thanks for educating us in advance.

    Kevin,

    Thanks for your interest. That's a deeper dive than I am able to provide here. What I can say is that cash flow has increased by about $700/month since the property transitioned from a long-term rental to a STR.

    0Reply
  • Kevin Yoo
    San Diego, CA · Member since 2008 · 301 posts · 108 votes
    11y

    @Gary Ennis

    As I suspected, short-term rental can actually out perform a long-term rental financially. It can, however, take a lot time by the nature of frequent turn over. The strategy is good for properties in desirable such as Austin and can take and cash-flow poor property into a reasonably good one. 

    I like the idea very much. Since you plan to do this more, let me know if you ever need a cash partner. I would like to pursue this avenue of RE investing with you.

    0Reply
  • Gary Ennis
    OP
    Rental Property Investor · Austin, TX · Member since 2014 · 127 posts · 55 votes
    11y

    @Kevin Yoo will send you a private message.

    0Reply
  • Kelly B.
    Investor · Wausau, WI · Member since 2014 · 115 posts · 26 votes
    11y

    Deleted, problems with browser

    @Gary Ennis

    @Gary Ennis

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free