How to find a market?

Question

I’ve been struggling to find an STR market to buy my first STR as every market I like either doesn’t allow STRs or has a waiting list for permits due to all permits being occupied. My question is, with how many cities there are across the US, what puts a city on your radar and how are you looking for markets that aren’t extremely saturated?

Jacob St. Martin · Answer

Hello Dylan, this is a tricky question. I agree with what others have said, that often vacation markets are the place to look but there are opportunities in other places too! For instance I invest in Charlottesville VA which has demand driven by the University of Virginia, Monticello, Virginia wine country, and the Shenandoah national park. While Charlottesville is not a traditional vacation market, it has demand coming from different industries.

Regarding STR laws, you will just have to keep looking for places where you can make it work but sometimes regulations can be a good thing. For instance, in Charlottesville there are some regulations that make it difficult but if you can make it work then the supply is much lower and thus the ADR and occupancy rates are crazy here! I am actually working on an STR deal here right now where I am looking for a partner. If you are interested or if there are any other questions I can answer for you definitely reach out!

Lyndsay Zwirlein · Answer

Your budget will dictate this to some extent too. I had a client buy for $250k this Fall in a popular vacation market in Ohio (Hocking Hills). Whereas a big beachfront home in FL or pool cabin in the smokies could cost $1mm. Start looking in places you love like others said and cost of entry can guide you from there.

Brooklyn McCarty · Answer

You’re looking in the wrong markets!

Look for true vacation markets. Regional, drivable markets. Short Term Rental, long Term Wealth is a good book for beginners in STR. Avery Carl is the author. She talks about picking markets and so much more.

Michael Baum · Answer

Hey @Dylan Brown, if you can live without the winter sports stuff then PCB seems like a perfect spot to get started.

I have chatted with Avery Carl quite a bit and helped with the moderation of the STR Bootcamp (another one is coming up in Feb if you are interested!) so I think you could chat in depth with @January Johnson on the possibilities of that area.

Personally I would concentrate on SFHs myself.

Plus she has the coolest name on the site. :)

Leslie Anne Morris · Answer

I look only at vacation markets that have some sort of draw for multiple different types of travelers.  I've tested 3 markets so far, and decided to go all in on the Smoky Mountains.

January Johnson · Answer

Your price range will get you anything you want in PCB as far as property types:  Condos, townhomes, or SFRs.  Condos do require 25% down, but townhomes finance like single family and you can do a second home/vacation loan on those.

Michael Baum · Answer

Hey @Dylan Brown, what areas are you interested in? We don't look at cities specifically. Especially large metros like Nashville etc. Too much risk of banning them altogether.

Like @Brooklyn McCarty said, we look only in vacation areas with strong STR presence and common sense rules.

The bottom line is what are you looking for?

Dan Maciejewski · Answer

This is the easiest route, and the one that a lot of people use for their first few purchases.  It also has the advantage of you not starting your education on the area from scratch.  You should know the draw already, and know the area a bit.  That way you should know what neighborhoods you do and do not want to buy in.

Plus, you can use it as your vacation house, if it makes sense.

Jacob Gomes · Answer

You want to look at how attractive the city is throughout the year. How many pro sports are there? How many cities are in a 4 hour drive of that market, making the destination doable for a weekend getaway? Are there companies moving there that will need corporate rentals?

You also want to take into account supply dynamics. For instance, I operate in Nashville, TN. All of the residential airbnbs that are in the market now will eventually get taken out of rotation due to the zoning. So you pick one up that has conforming zone codes, you're in the clear and can bank on great long term appreciation.

How to find a market?

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