BEST AREAS FOR STR's!?!?!?
Realtor · Erie · Member since 2022 · 194 posts · 88 votes
BEST AREAS FOR STR's!?!?!?
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Realtor · Branson, MO · Member since 2018 · 274 posts · 283 votes
4yI'll copy / paste from a former thread I replied to a year and a half ago with some updates.
I answered this question and analyzed vacation rentals almost every day for a few years in my former job. Based on that experience I would consider the following places to look.
My personal top picks:
top 3 investor markets - Pigeon Forge/Gatlinburg, TN; Poconos, PA; Branson MO (I own here and I'm a realtor here).
Then the rest:
Hot Springs, AR.
Broken Bow, OK
Destin, FL
Cape Coral, FL.
Blue Ridge, GA.
Phoenix Metro, AZ
I personally plan to own in the above mentioned areas
Honorable Mentions:
Hilton Head, SC
Myrtle Beach, SC
Massanutten, VA
Killington or Southern, VT by ski areas
Granby/Grand Lake, CO
Lake Travis or Lake Granbury TX
Lake Havasu City
Cocoa Beach, FL
Traverse City, MI
Black Hills, SD
Island Park, ID
77 Replies
- Real Estate Agent · Tampa Florida · Member since 2013 · 630 posts · 303 votes4y
Quote from @Mya Toohey:
@Brandon Elliot
Tampa, Clearwater, St Pete, I can find Great ones with 20-50% COC conventional 20-25% cash down.
What is your email?! I only send 100% nightly allowable STRs, with these numbers, the numbers come from AirDNA and have general costs and 6.25% interest rate and my 15% management fee included. Depending on Insurance and property tax in area, there are a few variables, it all just about evens out within 2-3% of my COC%. The point is, I only show you ones that have these numbers, and you can get exact numbers and still feel good about the investment. Do you like Duplexes?
- Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes4y
@Brandon Elliott
Fingerlakes Region in NY. I’m buying a glampsite with 4 RVs making 200/night, 70k for the season (Apr-Oct). I can put 6 more RVs on the site doubling my revenue. I’ve chosen the Fingerlakes because it’s a tourist destination in Upstate NY. (Wine Country) I do little market research because I know the market and I’ve ran Airbnb’s in this area for years.
- Real Estate Agent · Philadelphia, PA · Member since 2022 · 58 posts · 40 votes4y
Hey Brandon, I haven't seen it posted on here yet but Philly is a great Real Estate friendly market with a good level of tourism. I think it doesn't quite get the respect it deserves in terms of being a big named destination city in the US.
My wife and I moved out here from Colorado (Longmont) because how beautiful the seasons are and the endless amount of history in a city like Philadelphia. Its easy access to other travel destinations on the East coast also make it an ideal place to visit and live.
- Seems like a lot of these opinions are from those who are not in CA. I lived there for the last 15 years + and still operate STRs there (and LTRs). Yes, there are some things to watch out for, and I suppose for someone who is unfamiliar with the area it might be best to stay out. However, there are many savvy investors who know how to navigate the regs and are making an absolute killing. No matter how you feel about CA, there's no denying that successful investors in CA are generally making more than investors almost anywhere else in the US.
Quote from @Michael Baum:
There is just no way I would try and do anything in CA. I hear what @Jason Kudo is saying but it is like navigating a mine field but it is constantly changing. You never know when a city or county will just ban STR altogether. I wouldn't want to live with that kind of uncertainty.
- 4yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
I am not going to disagree with you @Greg R.. If you are in CA have a ton of local knowledge, are involved in the scene in order to keep the regs sane, then you can succeed. I have never denied that you can make money in CA.
I have none of that knowledge. I am not there. I have no reliable way to navigate a turbulent STR scene so I tell people who are in the same boat as me the same thing.
- 4yJared HottleBusiness MemberReal Estate Agent · Cedar falls IA Waterloo, IA · Member since 2020 · 902 posts · 549 votes
Midwest markets scare me a bit as they are not destination type places to stay. However that being said I had a similar experience in Omaha when I travelled there for a weekend. Seems like demand was high and supply was low. Price seemed high for what we got so maybe there is something there. Also, those midtier markets may not be bad as likely the zoning and use ordinances have probably not expanded to address short-term rentals.
Jared Hottle Real Estate59 Reviews @Jared Hottle I have an STR in a non-destination type of place (not in CA), and it's pretty successful. I wouldn't be upset if it were doing better but I'm at about 15-17% COC. From what I can tell a majority of people travel for non-leisure reasons. Visiting family, a funeral, graduation, traveling for work, etc., etc.
- Real Estate Agent · Pasadena, CA · Member since 2017 · 276 posts · 255 votes4y
Quote from @Michael Baum:
I am not going to disagree with you @Greg R.. If you are in CA have a ton of local knowledge, are involved in the scene in order to keep the regs sane, then you can succeed. I have never denied that you can make money in CA.
I have none of that knowledge. I am not there. I have no reliable way to navigate a turbulent STR scene so I tell people who are in the same boat as me the same thing.
LOL. But you are giving advice on things you have zero knowledge of. I have helped SEVERAL BiggerPockets members purchase properties in Southern California and helped them get up and running and they are doing well. Injecting FUD (fear, uncertainty, doubt) without knowledge to back it up is irresponsible. If you don't know then you find someone to work with who does know or at the very least reach out to someone who does know to educate yourself.
- 4yTravis TimmonsPro MemberRental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
Supply is up, but there are still loads of underserved markets out there. We got our first STR off of the ground and listed in July and will do 70-80k in gross revenue on a $299k purchase + $50-55k in renovations and furnishing. We have 43k of completed and future gross bookings as of today. That will slow down drastically as we go into the slow season. We expect $30-35k in year 1 net cash flow after expenses and PITI. It was a 5 Bed, 2.5 bath, cosmetic fixer. It took A LOT of sweat, time, money, and stress to get ready. It also took some guts and a very cooperative wife to buy a fixer 2200 miles away from my primary residence.
Our process to pick a market was looking at National Park sites and their visitation numbers (link below). We then did some basic market research to find an entry point to get into that market along with STR regulations. Really just the best combination of visitation numbers and low cost housing in an STR friendly area...nothing earth shattering. We also are National Park junkies and have been to 32 of the big 63 National Parks as a family. We have some domain expertise in this area. Our customers are families traveling to a National Park. We know how to kill it with that crowd.
Outside of statistical research, we found SO many airbnb and vrbo listings in the area that are absolute dog vomit properties that had, and continue to have, full calendars at good nightly rates. If you pull the trigger and do this, find some comps that both do well and are inferior to what you will create/take to market. You'll need that encouragement when you are in the "man, I hope this works, we're spending so much money and stressed out" phase.
The two markets that we eventually landed on were Acadia National Park (ME) and Pictured Rocks National Lakeshore (MI). Both are hard to get to but are absolutely underserved and affordable. You have to do your own research to find an underserved market. You also have to actually cut a check and do the work, which is easier said than done.
- 4yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Gratz on your success @Jason Kudo. I calls em like I sees em. CA is tricky and again, you have local knowledge and put it to use.
Now put down the numbers. Several means more than one. So give us 2.
Purchase price, locality, expenses, nightly rates, occupancy etc. All the stuff that goes into a good STR. 3rd party "I know a guy" stuff is fine, but nothing tells the truth like numbers.
I get it that you sell properties. You have a vested interest in keeping things looking positive. That is fine, but I don't. I just read everything. City and county rules to help other members etc.
I don't see it as FUD. I see it as pointing out risks. A lot of new folk come in and ask questions with a very positive attitude and that is great, but I am not going to blow sunshine up their wazoo's to make them feel good. I want them to have some basis for research. I am expecting they will take what I say with a grain of salt and do their own research. Just like with your advice.
- Investor · Member since 2021 · 34 posts · 19 votes4y
Quote from @Michael Baum:
Gratz on your success @Jason Kudo. I calls em like I sees em. CA is tricky and again, you have local knowledge and put it to use.
Now put down the numbers. Several means more than one. So give us 2.
Purchase price, locality, expenses, nightly rates, occupancy etc. All the stuff that goes into a good STR. 3rd party "I know a guy" stuff is fine, but nothing tells the truth like numbers.
I get it that you sell properties. You have a vested interest in keeping things looking positive. That is fine, but I don't. I just read everything. City and county rules to help other members etc.
I don't see it as FUD. I see it as pointing out risks. A lot of new folk come in and ask questions with a very positive attitude and that is great, but I am not going to blow sunshine up their wazoo's to make them feel good. I want them to have some basis for research. I am expecting they will take what I say with a grain of salt and do their own research. Just like with your advice.
Now it’s a party🥳
- Realtor · OK · Member since 2020 · 139 posts · 165 votes4yI may be biased because I was stationed in Omaha for five years but I loved that downtown area. You have the following major events most people don't think about:
Quote from @Jared Hottle:
Midwest markets scare me a bit as they are not destination type places to stay. However that being said I had a similar experience in Omaha when I travelled there for a weekend. Seems like demand was high and supply was low. Price seemed high for what we got so maybe there is something there. Also, those midtier markets may not be bad as likely the zoning and use ordinances have probably not expanded to address short-term rentals.
1. Annual Berkshire Hathaway Share Holders Meeting
2. College World Series
3. Major Concert Venue at the Downtown Center
4. Major Hub for business conferences due to its central location in the midwest
5. The downtown area is going through a revitalization aka gentrification in North Omaha that was known for high crime low income
6. Midtown area is expanding as well with big outdoor events like Octoberfest
7. Creighton University basketball is a big attraction downtown
Those are just some of the things that made Omaha so much fun and there was always something to do between spring to fall. I will admit during the winter its pretty slow but there are still concerts with big headliners attracting people from other nearby metro areas and states. The only other place I can think of thats close to offering what Omaha has is the Power and Light district in Kansas City Missouri. - Investor · Papillion, NE · Member since 2014 · 197 posts · 74 votes4y
I'm an investor/agent in Omaha. I'd love to chat with someone if they want to know more about the Omaha market and provide me more details on how to start STR investing. All of my portfolio is long term, but would love to diversify a few properties. Let me know!
- 4yPeter MckernanBusiness MemberResidential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
There are a lot of highs and lows in any area, there are many people that make it huge in any state that you look at for investments and many different ways. As you grow and put more time and effort into the place you want to invest the better you get, there are billionaires that do only California and there are some that only do NY. The best thing to do is actually pick some areas, narrow the areas then dive deep in those areas after you know the background and all. There is no better way that actually taking action, and there are reason people do not go into some areas and others going into other areas.
Some people love STRs and some people hate them, it really depends on your view of life and how to manage your portfolio and stress. All-in-all, the local, state and federal governments could ban anything they want that is why it's good to know that areas, the politics and ins-and-outs of those areas. You need to be well versed and put that time and effort into those things to be successful, most people do 1-5 hours of research, or better yet just say yeah that would be cool after hearing someone else doing the work and then they dive in and get burned.
Research, research, analysis then jump in!! Does not matter the area, it's how you build the knowledge to capitalize in that area and how you navigate it are the ways to be wealthy in real estate in hard areas.
The McKernan Group4.958 Reviews - 4yJoshua MessingerBusiness MemberProperty Manager · Poconos, PA · Member since 2020 · 443 posts · 264 votes
Would most likely be better to answer these questions over a call! But, my team and I are invested in the Poconos, PA mainly right now and we aim for a 20% CoC return at least, or a payback period of less than 3-4 years.
The ROI on STRs can really vary depending on the area, given that STRs rent out based on the community they are in you could really go anywhere and potentially make a deal out of something!
I'd love to talk more about the areas you've looked into so far! Feel free to reach out whenever!
-
Josh
Quote from @Michael Baum:
There is just no way I would try and do anything in CA. I hear what @Jason Kudo is saying but it is like navigating a mine field but it is constantly changing. You never know when a city or county will just ban STR altogether. I wouldn't want to live with that kind of uncertainty.
I'd argue that there's less certainty in areas without any restrictions (yet), because there's no way of knowing what the restrictions will be or if there will be an outright ban in the near future. Following the trend over the past decade, regulations started in major cities and vacation destinations (not just in CA, the first city was NYC) then spread around the world to many other smaller cities and rural areas. The remaining places that don't have any regulations in place yet could very well have them soon, but it's harder to know that than to deal with places that already have them, where at least you know what they are going in. Definitely still worth researching any potential changes to the rules, but at least there's a regulatory body to talk to about it. Places with existing regulations are also less likely to ban STR's altogether, or they would have done that when the rules were first considered. In cases where regulations have turned into moratoriums, existing STR's have mostly been grandfathered in and allowed to continue operating, they just stop issuing new permits. In areas with nothing in place (yet), all bets are off.
- 4yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
The bottom line is there is no way to know what any area will do. In my area STR's are wide open. The population is very low and relies on tourist dollars in addition to logging. I am not worried at all that they will ban STR's. Might as well just stop taxing as the result will be the same. A dead town.
Joshua Tree, Big Bear Lake all look awesome for STR and a great place to visit and right here on BP there are people doing well in those areas. I can't argue with that. It's just too much risk for me.
I am not saying you or Jason is wrong. I am saying that you have to go in with your eyes open. The last thing I want is someone staying for 7 days who won't leave. The laws in CA are VASTLY in favor of tenants. Too much risk IMHO. That is just what it is, opinion. People need to do their own due diligence and make the decision for themselves.
@Brandon Elliott-Pandey I'd probably still take the triplex in CO over a SFH in Omaha. Appreciation potential probably a lot higher, principle pay down/ increased equity probably a lot more significant, vacancy rate probably lower here in a down economy, rents probably increasing faster, easier to rent as an LTR if the STR thing is no longer viable, etc. Lot's of factors to consider besides just the net profit over the past 12 months.
- Real Estate Agent · Pasadena, CA · Member since 2017 · 276 posts · 255 votes4y
Quote from @Michael Baum:
Gratz on your success @Jason Kudo. I calls em like I sees em. CA is tricky and again, you have local knowledge and put it to use.
Now put down the numbers. Several means more than one. So give us 2.
Purchase price, locality, expenses, nightly rates, occupancy etc. All the stuff that goes into a good STR. 3rd party "I know a guy" stuff is fine, but nothing tells the truth like numbers.
I get it that you sell properties. You have a vested interest in keeping things looking positive. That is fine, but I don't. I just read everything. City and county rules to help other members etc.
I don't see it as FUD. I see it as pointing out risks. A lot of new folk come in and ask questions with a very positive attitude and that is great, but I am not going to blow sunshine up their wazoo's to make them feel good. I want them to have some basis for research. I am expecting they will take what I say with a grain of salt and do their own research. Just like with your advice.
Sounds a little like you are implying that I'm shady but I'll assume the best and ask you what would be more beneficial for me: selling a property or establishing a lifelong relationship with an investor who purchases multiple properties with me over the course of said investor's career? Obviously the latter so how would I go about establishing such a relationship? By "keeping things looking positive" and "blowing sunshine up their wazoos to make them feel good" or talking about things as they are, good, bad, or elsewhere along that spectrum? Obviously the latter would build trust that lays the foundation for a lifelong relationship.
I have several BiggerPockets clients and I'm not at liberty to disclose confidential client information, even anonymously. Sales are public information and if someone were so inclined to dig, that someone could put 2+2 together and I won't risk that to appease your doubts.
It is FUD when you speak in general terms without providing specifics to back it up and especially when you say "I have none of that knowledge".
You did mention that if you have a ton of local knowledge, are involved in the scene, and keeping up on regs, you can succeed. You do realize that this is true wherever one decides to setup shop and not specific to Southern California, yes?
- Lender · Auburn, AL · Member since 2018 · 67 posts · 35 votes4y
Lake Martin, Dadeville, AL
- 4yMike D'ArrigoPro MemberTurn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
Quote from @Jared Hottle:
Midwest markets scare me a bit as they are not destination type places to stay. However that being said I had a similar experience in Omaha when I travelled there for a weekend. Seems like demand was high and supply was low. Price seemed high for what we got so maybe there is something there. Also, those midtier markets may not be bad as likely the zoning and use ordinances have probably not expanded to address short-term rentals.
Jared, the fact that the Midwest markets are not resort/vaction destinations is a plus in my opinion. Those markets get all of the attention because they are sexier and more glamorous but they are also oversatured and very seasonal in addition to having shorter stays. It doesn't matter why people are visiting. People use STR's for a lot of reasons. Any market that has a high number of visitors can be good for STR. Kansas City as an example gets 35M visitors a year that spend $1.4B on lodging compared to Lahaina, HI which gets 2M or Davenport Fl that gets 5.2M.
- 4yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Hey @Jason Kudo, I am not implying anything. If I thought you were shady, I would call it out.
I would bet 1/2 the people on Bigger Pockets are real estate professionals of some kind. Agents, Realtors, lenders, wholesalers etc. I don't begrudge anyone on here offering up their services. If I were someone who made a living off real estate, whether financing it or selling it, I would be here too.
Like I have said before and I will say again. I am not against anyone investing in CA nor am I against you at all. All I do is call out the difficulties that can crop up in CA. Yes many of those things can happen anywhere, but seem to happen more often and to greater detriment in CA.
What I have is the internet. What I have is common sense. I combine those 2 and come up with a picture of what it is like in many (not all) areas in CA that could be problematic. I research area that might be interesting for us, but many have problems that I am just not willing to deal with.
Anyways, this has gone on long enough IMHO, no reason to continue this part of the discussion. Good luck and thanks!
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes4y
Try Killeen Texas, the influx from the military demands short term housing
Quote from @Jason Kudo:
Quote from @Michael Baum:
I am not going to disagree with you @Greg R.. If you are in CA have a ton of local knowledge, are involved in the scene in order to keep the regs sane, then you can succeed. I have never denied that you can make money in CA.
I have none of that knowledge. I am not there. I have no reliable way to navigate a turbulent STR scene so I tell people who are in the same boat as me the same thing.
LOL. But you are giving advice on things you have zero knowledge of. I have helped SEVERAL BiggerPockets members purchase properties in Southern California and helped them get up and running and they are doing well. Injecting FUD (fear, uncertainty, doubt) without knowledge to back it up is irresponsible. If you don't know then you find someone to work with who does know or at the very least reach out to someone who does know to educate yourself.
California is a big state with many jurisdictions, and generalizing for the entire state is problematic. However, the reality is many jurisdictions in CA have added anti STR regulations.
I have 2 STRs in San Diego, that first became STRs in 1999. Due to a new quota system I have to enter a lottery to potentially keep these as STRs.
Numerous CA jurisdictions have restricted STRs and there have been bills proposed at the state level to regulate/restrict STRs.
I therefore question that he has zero knowledge. He may be applying issues with STRs in some jurisdictions to the entire state which may be inappropriate. However, he is not wrong in various CA jurisdictions passing regulations to limit or restrict STRs.
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