Need to spend $4 Mil on STRs ASAP

34 Replies

An investor friend is selling his business and will have around $4 million to acquire properties, mostly limited to Opportunity Zones. Obviously a tax deferral + investment play. It will all be invested in STR with the aim to refinance next year and do it again. I am brought in to locate, set up, and remotely manage.

We have a few ideas and options, but how would you start? Which market(s) would you go in?

Looking forward to connecting with more people as well. So many great things have come from networking here on BP!

If I had 4 mil to do this I’d want to give it to someone that didn’t have to ask these questions. 

Why opportunity zones? What you need to look for are vacation zones.

Search this forum. Read everything. 

I would recommend your friend put that money into syndications and maybe give a small chunk to you. 

Of course it’s highly likely I’m missing something and you’re extremely experienced. Just seems if that was the case you wouldn’t have to ask something as simple as what market. 

Hey @Bryce Clark , opportunity zones are meant for investments to improve conditions in an area. They are not vacation rental areas for the most part as @Luke Carl said.

Read the forum. There is a ton of info on here about various locations to invest.

Some people have more money that brains.  Not making any reference to OP.

There are a few OZ's in my neck of the woods that may be suitable for what you're trying to do. Some are just distal to trendy areas and others are already completely surrounded by gentrification. It would need to be a redevelopment play as you would need to create desirability on these particular blocks, which are currently economically distressed by definition of being opportunity zones. You aren't trying to beat the end of the year deadline are you (for the investment to have been held for 5 years by 2026 in order to qualify for the 10% basis step up and gain exclusion)?

Originally posted by @Gabriela Rezende :

Well, the forum has so much information, and there's so many different strategies you can go for with that amount. If it were me as a remote manager I would start looking into areas that offer the best ROI/tax breaks or that work with your goals. Once locations are determined, I would then find RE agents that specialize in STR so that they can help guide you through the different rules/legislations, refer loyal/local cleaning companies, handy man referrals, and can get you informed on the best way to get set up for success in that area. If you would like options in Colorado; I'd be more than happy to connect & help. I can break down different strategies & demonstrate numbers on various investment properties/ previous clients so you can evaluate your Colorado options or hopefully gain some clarity to what your next steps are. Have a great one!

@Steve K.

Thanks, Boulder is not an area we have looked at yet, but good to know there may be some options- will look for sure.

There are OZ areas all over the country in great vacation market destinations. Sevierville, Port St Joe, St Augustine, Broken Bow, etc.

Thank you to those who attempted to help here rather than those just making assumptions. Could have been my fault for not including all the context of my experience for everybody here- I was just trying to keep the original post concise.

Rather than ask why opportunity zones...why STRs?  the guy sold his business and wants to defer taxes this is why QOZ.  I agree with you on syndication.  Why not do QOZ syndication....and forget about STRs.

Originally posted by @Luke Carl :

If I had 4 mil to do this I’d want to give it to someone that didn’t have to ask these questions. 

Why opportunity zones? What you need to look for are vacation zones.

Search this forum. Read everything. 

I would recommend your friend put that money into syndications and maybe give a small chunk to you. 

Of course it’s highly likely I’m missing something and you’re extremely experienced. Just seems if that was the case you wouldn’t have to ask something as simple as what market. 

@Bryce Clark I also agree with the syndication suggestions here. I do like STRs, but nothing can hold a candle to syndications in terms of passiveness. Maybe even diversify and do both.

You could fairly easily net your buddy $240,000/yr cash flow on that sum(this is very conservative), show a paper loss on that sum yearly, plus benefit from forced appreciation that will likely outpace the speculative appreciation in most markets; all while barely lifting a finger.

Of course you’d no longer be managing that large sum, but I’m sure something could be arranged for your mutual benefit.

I remember seeing some cabins on Loopnet that might total close to that somewhere on Lake Conroe. Not at all sure about the OZ though. Conroe is probably not an OZ.  But if I just had to have STRs and an OZ I would look to multi lake front property. Maybe a marina if they are sadists and like to work themselves to the bone. 

I'm just spitballing here though. I have no expierence as of yet in STRs.  I almost got into it and still may. This is just my opinion. 

Oh yeah, I did see another in North Arkansas that was very beautiful. Also on LN I believe. Had a heated indoor fishing pier that I would want just for myself. 

@Bryce Clark  

There are niche areas of real estate that might satisfy that requirement. For example, medical real estate in opportunity zones (i.e. Hospice, Personal Care Homes, Assisted Living Facilities). But, the stringent requirement of being in a particular type of area will restrict you significantly. Of course, you are searching across the country so that might not be as difficult for you as I am imagining.  

Originally posted by @Bryce Clark :

An investor friend is selling his business and will have around $4 million to acquire properties, mostly limited to Opportunity Zones. Obviously a tax deferral + investment play. It will all be invested in STR with the aim to refinance next year and do it again. I am brought in to locate, set up, and remotely manage.

We have a few ideas and options, but how would you start? Which market(s) would you go in?

Looking forward to connecting with more people as well. So many great things have come from networking here on BP!

 Hi Bryce.

My Sedona STR investment clients are seeing 15-25% cash flow + huge appreciation. 2022 appreciation is forecasted at 25-35%, based on record low supply and high demand.