Short-Term & Vacation Rental Discussions

User Stats

83
Posts
30
Votes
Sean Starkey
  • Rental Property Investor
  • Huntington Beach
30
Votes |
83
Posts

Looking to get my second property!

Sean Starkey
  • Rental Property Investor
  • Huntington Beach
Posted Aug 1 2022, 06:29

Here is my situation and if anyone can help that would be awesome. 
we bought our primary residence in Huntington Beach then got a HELOC on that property to buy a short term rental in yucca valley near Joshua tree national park. It is doing good and getting all positive reviews but we aren't cash flowing yet. I have 30k left in reserves and I just spoke to a lender to try and get my next STR but my DTI is too high and he said I will need a partner to get it done. He also said I could wait until my taxes come back to show that my yucca STR makes money but I don't want to wait. I want to get my next house now. He also said I could do a DSCR loan but rate is 8% and 2.85 points. If anyone could help that would be great I really want to get that next property and the next and the next and the next….

Orange County, California

User Stats

367
Posts
298
Votes
Replied Aug 7 2022, 10:28
Quote from @Sean Starkey:
Quote from @Eddie Sati:

can you drop a link to your Yucca Valley rental? Been looking out there for 2 years now and thinking to switch towards Crestline/Cedarpines area instead possibly due to saturation.

https://www.airbnb.com/h/casac...

Great property with lots of character and all of the outdoor living elements I would expect (mature desert trees/plants, hammocks, shade, hot tub). A pool would put it over the top (Captain Obvious here, I know lol) but not sure what the cost for that is nowadays. 

Yes- I was surprised to see how low your rates were, especially looking ahead towards the winter months. 

User Stats

83
Posts
30
Votes
Sean Starkey
  • Rental Property Investor
  • Huntington Beach
30
Votes |
83
Posts
Sean Starkey
  • Rental Property Investor
  • Huntington Beach
Replied Aug 8 2022, 12:17
Quote from @Jonathan W.:
Quote from @Sean Starkey:
Quote from @Eddie Sati:

can you drop a link to your Yucca Valley rental? Been looking out there for 2 years now and thinking to switch towards Crestline/Cedarpines area instead possibly due to saturation.

https://www.airbnb.com/h/casac...

Great property with lots of character and all of the outdoor living elements I would expect (mature desert trees/plants, hammocks, shade, hot tub). A pool would put it over the top (Captain Obvious here, I know lol) but not sure what the cost for that is nowadays. 

Yes- I was surprised to see how low your rates were, especially looking ahead towards the winter months. 


 Can you give me any tips as to what prices I should be at for each month?

Thanks!!

User Stats

367
Posts
298
Votes
Replied Aug 8 2022, 17:17

@Sean Starkey I don’t have specific numbers but I would recommend seeing what your neighbors are charging 

User Stats

83
Posts
30
Votes
Sean Starkey
  • Rental Property Investor
  • Huntington Beach
30
Votes |
83
Posts
Sean Starkey
  • Rental Property Investor
  • Huntington Beach
Replied Aug 8 2022, 19:01
Quote from @Jonathan W.:

@Sean Starkey I don’t have specific numbers but I would recommend seeing what your neighbors are charging 


 Yes I have been doing that but I will re assess tonight!! Thank you!

User Stats

171
Posts
128
Votes
William Anderson
  • Rental Property Investor
  • Mississippi Gulf Coast
128
Votes |
171
Posts
William Anderson
  • Rental Property Investor
  • Mississippi Gulf Coast
Replied Aug 9 2022, 16:20

Consider getting your first one to cashflow first.  Experience operating STRs will help with financing in the future.  Financial organizations will discount 25% of gross so if yours is not cash flowing with 75% of gross, it's a drain.

Could be several reasons.  You paid too much, you are not charging enough, the size/type of property is not ideal for the location, etc.  If you do not have your website to help market, set one up.  Continue to use ABB and VRBO along with your website.  Write good blog articles on your site to draw traffic.

Set a time, if the property does not improve with all of your changes, sell it and move on.  Look at it this way, the earlier you get your mistake (if it is one) behind you the better. 

User Stats

235
Posts
212
Votes
Jason Kudo
  • Real Estate Agent
  • Pasadena, CA
212
Votes |
235
Posts
Jason Kudo
  • Real Estate Agent
  • Pasadena, CA
Replied Aug 10 2022, 12:26
Quote from @Sean Starkey:

Here is my situation and if anyone can help that would be awesome. 
we bought our primary residence in Huntington Beach then got a HELOC on that property to buy a short term rental in yucca valley near Joshua tree national park. It is doing good and getting all positive reviews but we aren't cash flowing yet. I have 30k left in reserves and I just spoke to a lender to try and get my next STR but my DTI is too high and he said I will need a partner to get it done. He also said I could wait until my taxes come back to show that my yucca STR makes money but I don't want to wait. I want to get my next house now. He also said I could do a DSCR loan but rate is 8% and 2.85 points. If anyone could help that would be great I really want to get that next property and the next and the next and the next….

When you say your current STR is doing good and getting all positive reviews but isn't cash flowing, what metrics are you using to assess that it's doing good? Are you concerned at all that your current STR isn't cash-flowing and do you know why it isn't cash flowing?

User Stats

83
Posts
30
Votes
Sean Starkey
  • Rental Property Investor
  • Huntington Beach
30
Votes |
83
Posts
Sean Starkey
  • Rental Property Investor
  • Huntington Beach
Replied Aug 10 2022, 19:49
Quote from @Jason Kudo:
Quote from @Sean Starkey:

Here is my situation and if anyone can help that would be awesome. 
we bought our primary residence in Huntington Beach then got a HELOC on that property to buy a short term rental in yucca valley near Joshua tree national park. It is doing good and getting all positive reviews but we aren't cash flowing yet. I have 30k left in reserves and I just spoke to a lender to try and get my next STR but my DTI is too high and he said I will need a partner to get it done. He also said I could wait until my taxes come back to show that my yucca STR makes money but I don't want to wait. I want to get my next house now. He also said I could do a DSCR loan but rate is 8% and 2.85 points. If anyone could help that would be great I really want to get that next property and the next and the next and the next….

When you say your current STR is doing good and getting all positive reviews but isn't cash flowing, what metrics are you using to assess that it's doing good? Are you concerned at all that your current STR isn't cash-flowing and do you know why it isn't cash flowing?

Hi! Yea I was asking too low of a nightly rate because I was new and wanted to get reviews but now it actually is cash flowing. I actually went back and upped my prices and I am still getting bookings!

User Stats

171
Posts
128
Votes
William Anderson
  • Rental Property Investor
  • Mississippi Gulf Coast
128
Votes |
171
Posts
William Anderson
  • Rental Property Investor
  • Mississippi Gulf Coast
Replied Aug 11 2022, 07:06

Sean,   you have found what many have discovered, the price is not always the reason why people rent or do not rent STRs.  It's the marketing, luck, and lots of other factors too.  An example:  I own a townhome, one of four near the beach.  We would put it up for about $300 per night.  The person who owns the other three has him at various rates testing the waters.  One is at $250, the other at $350, and the other at $425.  He has found that they all rent at about the same occupancy.  They are all identical in size, bedrooms, etc. decor is just slightly different.  

Log In or Sign Up to Reply