STR Woes... am i panicking or is there a solution?
Member since 2021 · 28 posts · 8 votes
I bought my first investment property in Greeley, Colorado and have been using it as an STR since that will give me the best returns. In order to get into the property, I used a HELOC from my primary property and a conventional loan for the rest. At the moment, the payments on my HELOC are fairly high as they are interest AND principal (something I did not clarify from the beginning as I would've preferred interest only). Because of this and a fairly high interest rate on the mortgage, we have to make about $2400 per month on the property to break even. This could very well be a bad analyzing job by me as my first investment but I am slightly panicking because it has been very slow this month with Airbnb/VRBO. December we were booked full and now we are not. Am I just panicking or does anyone have any creative options to making this payment any lower, more manageable? Even if it means waiting a few months. Anything helps!!!
Once you start selling cheap, you get cheap guests. They end up destroying your place, trying to get refunds for nothing and complain about everything.
I don't agree with it being mostly about undercutting the competition. It is more about creating a great space with great amenities and building a great reputation.
Hi @Tamera Muniz
I lived in Denver for 24 years. I'm curious why you picked Greeley for an STR. Not really much of a draw there.
My experience with STR is that it has to be in a location that people want to go to and there has to be a draw. I knew a lot of people in Denver and they all made fun of Greeley for it being a cow town in the middle of nowhere.
With STR you have to have the "wow" factor. Think about when you travel what you are looking for and use that for your starting point. For me, a good rule of thumb for buying an STR is have multiple exit strategies. If you buy a property with the intention of doing STR, run the numbers like it is an LTR. If you can cover your costs as a LTR, then that is a vaild exit strategy. The STR should make more money, but if it doesn't, turn it into an LTR and cover your costs. That would be a good option in a college town.
Hopefully some of that helps. I wish you the best!
I probably would have bought in Breckenridge or Steamboat. Janurary (and much of the rest of the year due to amazing out door activities) is booked solid for huge rates due to it being located next to amazing ski resorts. You'll always want to research areas where demand is high before getting into a low demand area. You might want to think about selling and getting a property in one of these more desirable locations. Remember if you find your self in a hole, stop digging.
Greeley is a good rental market as a whole and has had really good appreciation over the past few years (with lots of energy, health care and meat packing jobs, it's a growth market and the university has over 12,000 students and 2,000 employees). However, it's not a vacation destination or great STR market per se. Did you check out demand by looking at other nearby STR's to see how booked up they are, or Airdna for occupancy rates? Needing to make $2,400/month just for debt coverage leads me to believe that you're way over-leveraged on this property, and will have negative cash flow as an LTR or with less than perfect occupancy as an STR. Can you aggressively pay down that HELOC? How do the numbers look without the HELOC payment? If it's near the school maybe you could cater to students and rent by the room?
I probably would have bought in Breckenridge or Steamboat. Janurary (and much of the rest of the year due to amazing out door activities) is booked solid for huge rates due to it being located next to amazing ski resorts. You'll always want to research areas where demand is high before getting into a low demand area. You might want to think about selling and getting a property in one of these more desirable locations. Remember if you find your self in a hole, stop digging.
There's really no comparison between these two very expensive luxury markets and Greeley. Sure demand is higher for STR's up in the mountains, but prices are also much, much higher. Median home price in Greeley is currently ~$400k and there are still a few detached homes for sale under $200k there, while Breckenridge and Steamboat are more like median $1.2M with very little inventory under $1M even for attached. Breck and Steamboat have been absolutely insane markets over the past few years, two of the craziest seller's markets in the whole country. Breck in particular has also been severely restricting new STR's recently (last I checked the waiting list was 80 units long to get a permit, permits can only be issued in certain areas that are also among the most expensive parts of town, and the annual regulatory fee just went up from $400/yr. per room to almost $800/ room among other new rules and regs). Steamboat doesn't have as many regulatory issues but STR competition has really picked up and there is basically no inventory to purchase. So the barrier to entry is super high for Breck and Steamboat. I'm guessing the choice to pick Greeley over these two very expensive markets was budget and property availability related. Greeley has been a really good investment market over the past few years.
I probably would have bought in Breckenridge or Steamboat. Janurary (and much of the rest of the year due to amazing out door activities) is booked solid for huge rates due to it being located next to amazing ski resorts. You'll always want to research areas where demand is high before getting into a low demand area. You might want to think about selling and getting a property in one of these more desirable locations. Remember if you find your self in a hole, stop digging.
There's really no comparison between these two very expensive luxury markets and Greeley. Sure demand is higher for STR's up in the mountains, but prices are also much, much higher. Median home price in Greeley is currently ~$400k and there are still a few detached homes for sale under $200k there, while Breckenridge and Steamboat are more like median $1.2M with very little inventory under $1M even for attached. Breck and Steamboat have been absolutely insane markets over the past few years, two of the craziest seller's markets in the whole country. Breck in particular has also been severely restricting new STR's recently (last I checked the waiting list was 80 units long to get a permit, permits can only be issued in certain areas that are also among the most expensive parts of town, and the annual regulatory fee just went up from $400/yr. per room to almost $800/ room among other new rules and regs). Steamboat doesn't have as many regulatory issues but STR competition has really picked up and there is basically no inventory to purchase. So the barrier to entry is super high for Breck and Steamboat. I'm guessing the choice to pick Greeley over these two very expensive markets was budget and property availability related. Greeley has been a really good investment market over the past few years.
I think my general philosophy remains pretty valid. Breck and Stem aren't the only high demand options, although there are a few under the 500k price point. I am just saying when you gather together with your kids for the big family vacation talk and say "GUESS WHAT KIDS! You know how we talked about Disney World, Hawaii or Lake Tahoe for our big winter vacation options?" The kids on the edges of their seats with bated breath reply "Yea Daddy?", with ear to ear smiles. Then Daddy replies, "WE GOING TO GREENLY!!" Apart from the many crickets you now notice that will have to be professionally exterminated, now you have to worry about paying for professional mental health therapy and rehab when they're older as well. So just maybe suggesting that a STR in Greenly would have a lower demand and would be better for that LTR. Unless of course you're way over levered, which in that case you should definitely sell. :)
Looking at AirDNA, Jan and Feb are the slowest months in Greeley with a 46% occupancy rate. July is the most in-demand month with an 84% occupancy rate. Annually, Greeley has a 70% occupancy which is fantastic. If you can ride out Jan/Feb, you should see a nice bump in March.
Maybe student housing for UNC.
Congrats on your first investment! You're a step ahead of me.
I'm a little familiar with Greeley. $2400 does seem aggressive. With the hospital in Greeley and one close by Loveland I might consider trying to marker to travel nurses. They often have a generous housing stipend. Some try to pad their income by going cheap, but many also are willing to pay for a higher end property.
There is FurnishedFinder.com, and a few travel nurse housing Facebook pages that might be of help to you.
Good luck!
While you decide what to do in a big picture way, I recommend that you get into the weeds on improving your position.
Look at your photos. Are they clear, inviting, and tell a story?
Are all of your captions filled out with SEO wording: for example, do you allow dogs...show that. Do you have a King bed, a search term used by guests...show that and put the word King bed in your descriptions. Do you tick as many boxes as you can on amenities? Lobster pot, hammock and all, I have 'em. I want to tick boxes over on AirBnb.
Your competition. How does their pricing look? Don't race to the bottom, or follow those who do...but set your pricing in this slow month as your competition has set theirs.
Are you on AirBnb and VRBO? Any others, such as Booking (I personally don't like, but they attract a lot of eyeballs to a property)? Does the local hospital draw from your area? Are your days wide open to accept visitors for events, such as local football games?
I probably would have bought in Breckenridge or Steamboat. Janurary (and much of the rest of the year due to amazing out door activities) is booked solid for huge rates due to it being located next to amazing ski resorts. You'll always want to research areas where demand is high before getting into a low demand area. You might want to think about selling and getting a property in one of these more desirable locations. Remember if you find your self in a hole, stop digging.
There's really no comparison between these two very expensive luxury markets and Greeley. Sure demand is higher for STR's up in the mountains, but prices are also much, much higher. Median home price in Greeley is currently ~$400k and there are still a few detached homes for sale under $200k there, while Breckenridge and Steamboat are more like median $1.2M with very little inventory under $1M even for attached. Breck and Steamboat have been absolutely insane markets over the past few years, two of the craziest seller's markets in the whole country. Breck in particular has also been severely restricting new STR's recently (last I checked the waiting list was 80 units long to get a permit, permits can only be issued in certain areas that are also among the most expensive parts of town, and the annual regulatory fee just went up from $400/yr. per room to almost $800/ room among other new rules and regs). Steamboat doesn't have as many regulatory issues but STR competition has really picked up and there is basically no inventory to purchase. So the barrier to entry is super high for Breck and Steamboat. I'm guessing the choice to pick Greeley over these two very expensive markets was budget and property availability related. Greeley has been a really good investment market over the past few years.
I think my general philosophy remains pretty valid. Breck and Stem aren't the only high demand options, although there are a few under the 500k price point. I am just saying when you gather together with your kids for the big family vacation talk and say "GUESS WHAT KIDS! You know how we talked about Disney World, Hawaii or Lake Tahoe for our big winter vacation options?" The kids on the edges of their seats with bated breath reply "Yea Daddy?", with ear to ear smiles. Then Daddy replies, "WE GOING TO GREENLY!!" Apart from the many crickets you now notice that will have to be professionally exterminated, now you have to worry about paying for professional mental health therapy and rehab when they're older as well. So just maybe suggesting that a STR in Greenly would have a lower demand and would be better for that LTR. Unless of course you're way over levered, which in that case you should definitely sell. :)
I see what you're saying but surprisingly Greeley has better occupancy rate than both Breck and Steamboat (which have off-seasons with few visitors). From Airdna:
Breck annualized STR occupancy rate: 68%
Steamboat: 50%
Greeley: 70%
Airbnb is working through some issues with complaints on bookings. Specifically if a property is $100/night and you book 3 nights it comes out to $450000 instead of $300. Due to cleaning fees, taxes, other fees. They are working on a more accuratte way to show the nightly rate and this has been a big issue with Airbnb especially as of recently.
You are in a slow period of the year
You are in a time in the STR market where things are slow due to the market cycle. If you are in it for the long term which I imagine you are, then the current market cycle shouldn't worry you/or bother you.
You are also a new listing. As you collect reviews and operate longer you are going to rank higher in the searches and you are going to get more bookings.