Short-Term & Vacation Rental Discussions

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Nicole Demos
  • New to Real Estate
  • Beacon, NY
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STR Property Calculation and Offering Over Asking

Nicole Demos
  • New to Real Estate
  • Beacon, NY
Posted Jul 13 2022, 20:06

Hello BP! I am a newbie still trying to get my first accepted offer. I'm in the Catskill region of NY hoping to purchase a property for STR. I've put in several offers but nothing has been accepted. I'm putting in an offer on another property (final and best due at the end of the week) and would love some input! Here is the info and my estimations:

Property: 2 bd/1 bath cottage and 1 loft/1 bath tiny house on 1 acre, both turn key

Asking: 390K

Taxes: 5K/year

Utilities: 500/month

Grass/snow: 400/month

Insurance: 1K/year

Occupancy: 61%

Rental rate: $200/night and $100/night (looking at other properties they may rent for 250 and 200/night but I’m being conservative)

Down payment: 10%

I’ve been doing calculations with pretty conservative numbers. I can offer even up to 460K and it can still cash flow, but it’s been difficult for me to tell at what point the offer is too high. It’s a unique property making it difficult to find comps and I’m not sure what it will appraise for either. I have offered well above asking in the past. I had the highest offer but was asked if I could pay the potential appraisal difference in cash, which I could not. It’s possible the property appraised for more than my offer and I missed out on the deal because of this unknown. For this reason I am hesitant to offer too high again, even if the numbers work.  

I appreciate any and all responses! Thanks!

Upstate New York, New York

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Chris Seveney#2 House Hacking Contributor
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Chris Seveney#2 House Hacking Contributor
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Replied Jul 13 2022, 20:17

@Nicole Demos

What would you get for rent if you could no longer Airbnb the property?

What were the Airbnb occupancy rates from 2015-2019?

Those are two factors I would look at as well as last two years will not be the norm in STR occupancy rates and always potential for jurisdiction to not allow Airbnb

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Nicole Demos
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  • Beacon, NY
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Nicole Demos
  • New to Real Estate
  • Beacon, NY
Replied Jul 13 2022, 20:20

Thanks that’s great advice! This town does have laws in place for Airbnb. You do not have to live at the property to rent and you have to apply for a permit. This was a long term rental before so I’ll have to find those exact numbers. 

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John Underwood#5 All Forums Contributor
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  • Greer, SC
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John Underwood#5 All Forums Contributor
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Replied Jul 13 2022, 20:33

I would always put in standard contingencies: appraisal, financing, inspection.

$400 per month to mow the grass? Must be a huge yard!

Make sure the numbers work and don't overpay, there will always be other properties. 

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John Underwood#5 All Forums Contributor
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John Underwood#5 All Forums Contributor
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Replied Jul 13 2022, 20:37

I also like to use "$1000 over highest offer not to exceed $xxxxx.

This keeps you from being way higher than the next highest offer. Some realtors will not like it because they are not used to seeing it but they work for you.

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John Carbone#5 Short-Term & Vacation Rental Discussions Contributor
  • Rental Property Investor
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John Carbone#5 Short-Term & Vacation Rental Discussions Contributor
  • Rental Property Investor
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Replied Jul 13 2022, 22:12

Have you verified that you can rent both units separately? Some places with multiple dwellings only allow one structure to be rented. You mention there is a permit you need, is that for the whole property or would you need two permits (and would they allow that)

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Jeremy H.
  • Rental Property Investor
  • Lafayette, LA
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Jeremy H.
  • Rental Property Investor
  • Lafayette, LA
Replied Jul 14 2022, 01:34
Quote from @John Underwood:

I also like to use "$1000 over highest offer not to exceed $xxxxx.

This keeps you from being way higher than the next highest offer. Some realtors will not like it because they are not used to seeing it but they work for you.


This is ok - but it's like playing cards and showing your hand. They can just run you up to your maximum price since they already know what you are willing to pay. If you're comfortable with that max price, might as well just offer it first and instead put a 24hr or end of day expiration on your offer (you can always put in a new one, but give them something solid to think about and they might just accept it right off the bat because it's expiring and they don't know if it'll come back). A few thousand will come out in the wash when it's financed over 30 years anyways so it doesn't hurt anything. 

If you're comfortable with your returns I typically offer 5-10k over asking (if it's an awesome property) - this is on 100-150k properties. I put in 5-10 offers a week and occasionally one will be good and I'll get a little emotional and I'll give them a solid offer but make it expire soon. I don't have time to think about one property for days. Take it or leave it, because I'll be making 5-10 offers the next week once again regardless on if I get this one property or not. 

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Samantha Cash
  • Rental Property Investor
  • Catskill, NY
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Samantha Cash
  • Rental Property Investor
  • Catskill, NY
Replied Jul 14 2022, 05:53

These numbers do sound conservative from what you list. Do you include capex and maintenance? And if sewer and water is private are you accounting for extra there? Those problems tend to be expensive if they happen. The biggest risk I see is the occupancy rate since I’m assuming it wouldn’t work as an LTR even at asking. Admittedly I haven’t looked into STRs that much, but if it was me, I would want to know how low occupancy could go and still cashflow or breakeven. I’m honestly a little surprised to hear that you put in an offer over asking and it wasn’t accepted. In Greene County at least I haven’t heard about things going for way over asking this season as much as the last two. Admittedly I’m not looking at things that are recently updated turnkey, so that could be the difference. Still, I think there’s truth in the saying “you make your money when you buy” and it sounds like maybe you made the right move by not trying to pay more than appraised value.

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Bruce Woodruff#3 All Forums Contributor
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Bruce Woodruff#3 All Forums Contributor
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Replied Jul 14 2022, 07:14

@Nicole Demos The only thing that matters here is: does the property make enough $$profit to make the sales numbers ok for you? I'd be careful offering too high just to get any property. As @John Underwood said, there will always be other places for you. Always.