Short Term Rental Master Lease
Where do I look to find the people that are looking to do master lease "arbitrage" on short term rentals. I bought a property and and rehabbed the property with the intention of doing Short Term Rental. This issue is we went way over budget and do not have the money to furnish or much reserve at this point. We could flip the property right now and make triple digits but I would rather hang on to the property for many years and keep building a portfolio of rentals.
Any advice on where to find experienced people that are looking for master lease properties would be much appreciated.
Brett, what is a 'master lease'? Are you referring to rental arbitrage? If so, would you be willing to agree to renting the place for X number of years and possibly buying the contents when you're ready to take it back? It could be a great way to get out of your sticky situation. Where is the property located?
More details about the property and location
Property is located in Richardson, TX 4 bed, 3 bath, and media room with pool. In a highly desirable area of Canyon Creek near 75 and 190.
Originally posted by @Felicia Lucco:Brett, what is a 'master lease'? Are you referring to rental arbitrage? If so, would you be willing to agree to renting the place for X number of years and possibly buying the contents when you're ready to take it back? It could be a great way to get out of your sticky situation. Where is the property located?
Yes, we are willing to look at those options, depending on how long X is and Price/Value of contents.
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#1 Short-Term & Vacation Rental Discussions Contributor
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You should be able to demand a higher rental rate in exchange for a longer lease.
Hope you can find someone with money who will be able to furnish it.
@Felicia Lucco are you interested or have someone interested in this?
@Brett Smith
Master leases are a commercial lease. You’re thinking a typical residential lease allowing subleasing. How nice is this house? If it’s class A or B you could rent the furniture. If it’s class C, go to a second hand store and buy the furniture. Remember, it’s a rental so you don’t have to go ham on it.
@ Brett Smith you should be able to set up a Master:triple net lease long term where leasee pays taxes, insurance and interior maintenance. Management company also pays for furnishings. Build in lease escalators for every 3-5 years. With a 20-30 year lease you should be able to obtain an initial 10% ( x property value) annual lease income. If you refinance and pull out any excess equity above 25% you will earn a 20% ROI using a 4.5% 30 year loan.
@Nick Rutkowski never go cheap on furniture. STVR customers expect the best. Anything of mediocre quality will result in poor reviews.
Yes, Brett. I am interested if the numbers work with me renting and running an Airbnb. Sent you a connection request. I'll check out the area in the meantime.
@Todd Goedeke
I disagree, all of my STRs have second hand furniture and no complaints from my guests. Never once gotten a bad review for my furniture. I think the only thing I’ll buy brand new are TVs.
@Brett Smith Hey man! Would love to connect with you. We have a bunch of short term rentals and a few in Richardson just south of Campbell and North of Arapaho. Please text me at 214-769-8729 or give me a quick call!
Hey @Brett Smith - I'm sending a you connection request. I'm in Richardson and have a couple clients in North Dallas/Collin County area looking for STRs. I also know the Canyon Creek area well, and would definitely be interested if the numbers work out. Let's chat!
Nick, I think it all depends on the house, area, target audience, etc. No matter what, it needs to be CLEAN and COMFORTABLE. I've heard one 'rule of thumb' from Avery Carl: plan on about $10K per bedroom (that includes your kitchen, living room, etc.)
@Felicia Lucco
I half agree with that rule of thumb because of what you said, location and house. Even if I owned a nicer house, I still would go the second hand route. There’s plenty of well maintained furniture people give away or sell cheaper than retail.
To add on to your comment about clean and comfortable. Host responsiveness is up there too. A good stay consists of being clean, comfortable, responsive.
@Richard Helppie-Schmieder
I have the property listed as a LTR right now but will to look at arbitrage.
https://apps.realtor.com/mUAZ/a7264505
@Ashley Hust
I have the property listed as a LTR but interested in doing arbitrage
https://apps.realtor.com/mUAZ/a7264505
@Nick RutkowskiI specifically said STVRs, I m not referring to non vacation STRs. I also said don’t furnish with cheap furniture. I never said secondhand furniture should not be used.
Vacationers don t want to pay $300/nt and up to stay at a place that does not have good quality furniture in good condition. Part of running a good STVR business is replacing furniture on a regular basis similar to what good hotels do.
@Felicia Lucco that $10k number is distorted. It may cost 10k to furnish a one bedroom STVR but it does not cost 2x-5x depending upon how many additional bedrooms you have.
That 10k number can be reduced by buying high quality second hand bedroom furniture(not mattresses) from 4-5 star hotels doing room liquidations.
@Todd Goedeke
Gotcha. I agree with you, depending on how nice the house is would determine the quality of furniture.