Diverse STR locations

[Patrick J. Mayo]

I'm new to real estate. My rookie brain would like to pick 3-5 areas to purchase STRs that compliment each other so that one area is cash flowing when the other is not. Like a summer beach house and a winter cabin. Is anyone using this strategy? Personally I'd love to have STRs on the Gulf Coast, near ski resorts, and a few other spots. I'd love to visit them with my family during the off season as well. If this has merit... what would be a good combination of locations? Thanks.

[V.G Jason]

Quote from @Patrick J. Mayo:

I'm new to real estate. My rookie brain would like to pick 3-5 areas to purchase STRs that compliment each other so that one area is cash flowing when the other is not. Like a summer beach house and a winter cabin. Is anyone using this strategy? Personally I'd love to have STRs on the Gulf Coast, near ski resorts, and a few other spots. I'd love to visit them with my family during the off season as well. If this has merit... what would be a good combination of locations? Thanks.

 I'm a big believer in this approach. I'm going with 1 year round, two seasonal(winter one and summer one). And taking it from there, haven't done one yet. Want to do 1 or 2 this year but mainly focusing on LTRs.

Hawaii is my first target, if I can make that work. Ideally, the trio would be Hawaii, Scottsdale, and West Palm Beach. Scottsdale may be getting too played up for a winter-focus one, but I'm having a hard time finding an alternative one. WPB has a strong winter sometimes too, much like Miami. So maybe that one will pay off more than just a summer one. And I can do something like WPB and Hilton Head(summer focus).

[Ryan Moyer]

It all depends on your goals, risk vs reward, etc.

Diversifying is generally safer, but you'll probably miss out on the potential for huge instant rewards like the people who bought 5-10 cabins in the Smokies pre-2022 and now swim in money like Scrooge McDuck.

Diversifying less also has the advantage of having more streamlined systems/workers.  You communicate with and train 1 or 2 cleaners, handymen, etc instead of 10 different ones.  And since you provide a lot of business they are more likely to prioritize you than if you just had 1 property with them.

On the flipside, my wife and I's goal has always been to get 12 STRs scattered around the country by the time the kids are out of the house, at which point we'll move around living in each place one month at a time.   A month on the beach, then a month in the mountains, etc.

[Michael Baum]

I like this approach as well @Patrick J. Mayo. Our place is seasonal, April - Oct and maybe Thanksgiving and Christmas/New Years.

We would like to find a place that has a wider appeal, not necessarily winter only. There are places that offer 10 months a year occupancy but they can be expensive.

[Brooklyn McCarty]

I think this is a good school of thought, we also do this and it is nice to have those mountain places cash flowing in the off season of the beach. 

we have two properties in The Smokies. There’s not really any seasonality there anymore. A couple months out do the year are slow and a great time for some updates and to visit. Like January/February, beginning of May, September. 

We also own in Gulf Shores, AL. This property is non stop from spring break really to the first week of October. Then October-March bookings are just sprinkled in there and we call it luck if we get any. 

I think it’s a great strategy to have. We have bought all our places with Avery Carls team, The Short Term Shop. They operate in over a dozen true vacation markets. Ranging from beach to mountains to ski towns. They also teach you how to run and manage your property after you close on the deal for free. 

[Leslie Anne Morris]

I tried this but ended up changing my mind and selling in under a year. Didn’t like the quality of the guests mostly and it was fairly seasonal. Went all in on Smoky Mountains. 

[Cole Schlack]

Quote from @Patrick J. Mayo:

I'm new to real estate. My rookie brain would like to pick 3-5 areas to purchase STRs that compliment each other so that one area is cash flowing when the other is not. Like a summer beach house and a winter cabin. Is anyone using this strategy? Personally I'd love to have STRs on the Gulf Coast, near ski resorts, and a few other spots. I'd love to visit them with my family during the off season as well. If this has merit... what would be a good combination of locations? Thanks.

 I have done it, its true you can get a higher % of your income having more units in 1 location. But I think its fun to have different markets.  I have Hawaii, Utah(skiing) Tucson for Desert, NH for Fall leaves, Yellowstone Park Cabin.   Now that I live in Hawaii Im selling/sold some of mine as its just harder to leave(perfect weather yearround)

[Cole Schlack]

Quote from @Michael Baum:

I like this approach as well @Patrick J. Mayo. Our place is seasonal, April - Oct and maybe Thanksgiving and Christmas/New Years.

We would like to find a place that has a wider appeal, not necessarily winter only. There are places that offer 10 months a year occupancy but they can be expensive.

 Yeah Hawaii has 10 months + but can be expensive as it starts are $500k

[Michael Baum]

Seems like most places with that sort of occupancy starts there. We spent a week in Sedona checking it out. Pricing is similar.

[V.G Jason]

Quote from @Cole Schlack:

Quote from @Patrick J. Mayo:

I'm new to real estate. My rookie brain would like to pick 3-5 areas to purchase STRs that compliment each other so that one area is cash flowing when the other is not. Like a summer beach house and a winter cabin. Is anyone using this strategy? Personally I'd love to have STRs on the Gulf Coast, near ski resorts, and a few other spots. I'd love to visit them with my family during the off season as well. If this has merit... what would be a good combination of locations? Thanks.

 I have done it, its true you can get a higher % of your income having more units in 1 location. But I think its fun to have different markets.  I have Hawaii, Utah(skiing) Tucson for Desert, NH for Fall leaves, Yellowstone Park Cabin.   Now that I live in Hawaii Im selling/sold some of mine as its just harder to leave(perfect weather yearround)

 You got my target set up. But obviously beat a lot of the market to it.

[Chad McMahan]

Quote from @Patrick J. Mayo:

I'm new to real estate. My rookie brain would like to pick 3-5 areas to purchase STRs that compliment each other so that one area is cash flowing when the other is not. Like a summer beach house and a winter cabin. Is anyone using this strategy? Personally I'd love to have STRs on the Gulf Coast, near ski resorts, and a few other spots. I'd love to visit them with my family during the off season as well. If this has merit... what would be a good combination of locations? Thanks.

I'd recommend, rather than trying to find areas to invest that offer different seasonal strengths- to diversify in 1-3 areas that are simply high ROI. Average returns throughout the year, is all I care about when I invest.

[Andres Murillo]

You'll want to make sure you aren't solely banking on seasonality for the performance of your STR. Design, amenities, guest services, unique features, views, sought-after locations, and overall guest experience are giant factors in the success of an STR.

These are all especially important in the type of "traditional vacation" markets you described. These are usually areas with lots of competition. Even worse, lots of competitors are true vacation rental investors whose motivation is offsetting their regular travel expenses with some additional income. Without a proper "moat from the competition" you won't see the highest possible occupancy or ADRs regardless of seasonality.

Your strategy seems foolproof as long as your choosing competitive properties in those markets. The strategy also lends itself well to a more "full-service" vacation booking firm. You can do your best to pull leads into your own channels outside of AirBnB and market to them a "year-round" vacation solution. Really interesting possibility!

[Ben Scarborough]

Quote from @Patrick J. Mayo:

I'm new to real estate. My rookie brain would like to pick 3-5 areas to purchase STRs that compliment each other so that one area is cash flowing when the other is not. Like a summer beach house and a winter cabin. Is anyone using this strategy? Personally I'd love to have STRs on the Gulf Coast, near ski resorts, and a few other spots. I'd love to visit them with my family during the off season as well. If this has merit... what would be a good combination of locations? Thanks.

Hey Patrick, you will not find a better beach market than somewhere along the Gulf Coast. I grew up in Pensacola, FL and now live in Gulf Shores, AL and can't say enough how much I love these areas. 

As @Brooklyn McCarty mentioned earlier, Gulf Shores is very reliable for income at least 6, usually 8 months out of the year.

When my wife and I were getting started, we decided to invest in the Smokies due to mountain markets usually maintaining tourism for more around 10 months out of the year. This data felt safer to us since we didn't have access to a lot of money at the time that we could tap into if there were an emergency. That being said, I would still start in a mountain market if I were to do it over again. 

The TN Smokies, Blue Ridge, and Western North Carolina mountains are all great options.

Please feel free to reach out if you want to discuss anything more or if you have any questions. Happy to help!

[Melissa Savage]

Quote from @Patrick J. Mayo:

I'm new to real estate. My rookie brain would like to pick 3-5 areas to purchase STRs that compliment each other so that one area is cash flowing when the other is not. Like a summer beach house and a winter cabin. Is anyone using this strategy? Personally I'd love to have STRs on the Gulf Coast, near ski resorts, and a few other spots. I'd love to visit them with my family during the off season as well. If this has merit... what would be a good combination of locations? Thanks.

As others have mentioned, there are pros/cons to this and lots of different things to consider. Personally, I think a mountain market is a good place to start. Shoot me a message -- happy to talk through your goals and make some recommendations. 

[Michael Baum]

I would be curious as to what incredible tax benefits to the LLC.

Plus this is pretty blatant advertising. 

[Aaron T.]

This idea turns into a full time job if you dont have the right crews/teams in place. we manage STRS over 4 time zones and its really tough between guest relations, maintenance, cleaning, etc... If you dont have the right people in place it is a nightmare. 

[Patrick J. Mayo]

Quote from @Michael Baum:

I would be curious as to what incredible tax benefits to the LLC.

Plus this is pretty blatant advertising. 

Absolutely. (Both points.) One BP podcast explained that an LLC might be beneficial in shielding yourself if you are a high net worth individual, but other than that the tax benefits are minimal. If you don't need the shield, say you have an umbrella policy that covers quite a bit, you're better off not creating an LLC from a borrowing point of view. A company has to borrow at a higher rate. I'd love to hear from someone with experience in this.

For example... If you have the cash and don't need to borrow, does that mean an LLC is the better route?

[Sara Levy-Lambert]

1. Investing in a mix of summer and winter destinations is a smart move for any new real estate investor. With this strategy, you can ensure consistent cash flow throughout the year.
2. The Gulf Coast and ski resorts are great choices for vacation rental properties. These locations offer high demand for short-term rentals, especially during peak tourist seasons. You can check occupancy trends on a number of free tools, just google awning airbnb estimator
3. When it comes to selecting the right mix of locations, consider factors such as local economies, real estate prices, and rental demand. This will help you determine which areas will give you the best return on your investment.
4. Don't be afraid to get creative with your vacation rental portfolio. Consider adding a mountain cabin or a city apartment to your portfolio to diversify your offerings and reach a wider range of travelers.
5. The best part of owning vacation rental properties is being able to enjoy them with your family during the off-season. Make sure to choose locations that you and your loved ones will enjoy visiting, and you'll have a great time while growing your real estate portfolio.

[January Johnson]

Quote from @Patrick J. Mayo:

I'm new to real estate. My rookie brain would like to pick 3-5 areas to purchase STRs that compliment each other so that one area is cash flowing when the other is not. Like a summer beach house and a winter cabin. Is anyone using this strategy? Personally I'd love to have STRs on the Gulf Coast, near ski resorts, and a few other spots. I'd love to visit them with my family during the off season as well. If this has merit... what would be a good combination of locations? Thanks.

FL/AZ is a good combo.  When it's too hot in AZ, the beach here is hopping! Winter is the busy season in AZ.

[William Beck]

Just a thought, but maybe it makes sense to start in one market with a few to get experience and figure out scaling before jumping into multiple markets at once. I'm sure there are people that have done that, but obviously making money in one area is probably easier to scale than multiple at the start. THEN you can look at market #2, #3. I'm buying a few in my market before jumping into others. Obviously, if you've got money to burn, go get it!

[Melissa Nash]

Personally I pick areas that I want to visit and possibly live in full time someday. I am not just chasing the cashflow.... my strategy is more a lifestyle choice. All of my properties cashflow well...... and I am diversified with desert, mountains, etc. But reading your post- you mentioned that you want to use them also.... so I would pick the places that you love to go and chances are others want to go there also and its a win win. 

At the end of the day what is your EXIT strategy? That will also help you decided. Some markets appreciate much faster than others and that might be important to you. 

My properties in CA will grow the fastest and I know I am giving up a little cashflow on a couple of them but that is ok bc I am planning for future growth. 

Also what about tax strategy? Are you looking for that? that also affects the type of property you buy. 

Lots to think about..........  Hopefully I triggered more questions for you to think about. 

[Patrick J. Mayo]

Quote from @Melissa Nash:

Personally I pick areas that I want to visit and possibly live in full time someday. I am not just chasing the cashflow.... my strategy is more a lifestyle choice. All of my properties cashflow well...... and I am diversified with desert, mountains, etc. But reading your post- you mentioned that you want to use them also.... so I would pick the places that you love to go and chances are others want to go there also and its a win win. 

At the end of the day what is your EXIT strategy? That will also help you decided. Some markets appreciate much faster than others and that might be important to you. 

My properties in CA will grow the fastest and I know I am giving up a little cashflow on a couple of them but that is ok bc I am planning for future growth. 

Also what about tax strategy? Are you looking for that? that also affects the type of property you buy. 

Lots to think about..........  Hopefully I triggered more questions for you to think about. 

Yes thank you. I need to learn more about the tax strategy. Does anyone have a good book to recommend that focuses on the tax benefits and strategies in real estate? I'm reading "Real Estate by the Numbers" by J Scott and Dave Meyer at the moment. It has a couple of chapters on it that I haven't reached yet. May be great.

Honestly I don't know what my EXIT would be at this point. I just want to make the best long term investments I can, hopefully finding cash flow to help fund scaling, and if I'm savvy enough I can 1031 multiple times and eventually leave some investments to my kids. (Thereby avoiding the taxes all together I believe) I'm learning a lot, but what I know for sure is that I have a long way to go. At least I know that! 

[Melissa Nash]

A good CPA that knows real estate can help or you can hire a real estate coach that has the experience to advise. I learned long ago to follow mentors or others that are DOING and succeeding in real estate and follow what they are doing. 

Personally my STR story started bc I wanted a place for my family to use in between guests, it ended up renting out so much we couldn't use it. I did do a 1031 exchange on it bc we got a crazy offer on it, and in turn was able to buy 2 more properties from that 1 purchase and now has a value around $2mil just from that 1 exchange. But the best part is that I was able to do cost segregation on 1 of the properties 2 years ago that gave me a $300k depreciation off my taxable income. Last year I did it with another property... basically its the greatest tax benefit bc for the last 3 years I have paid Zero in federal taxes while earning a high income and buying more and more real estate.

1 of those properties breaks even each year..... not a lot of cashflow but I plan to retire there eventually so for now its being paid for and equity being paid down and value going up. The other one is a cash cow and more than makes up for the low cashflow on the other. So, for me its about a bigger picture and portfolio growth long term. 

[Clay Asplundh]

I currently own and west palm beach, Florida and it is definitely seasonal with more than half of our revenue coming between December and April. I too am looking to grow my portfolio and potentially balance out some of the seasonality. I know some potential options as popular summer markets include the smoky mountains and many east coast beach towns. Good luck and feel free to reach out if you have any questions! 

[Neil Doldo]

My wife and I own three STRs in the Blue Ridge market--taking the opposite strategy.  We are doing so well with all three, we decided not to go into another market quite yet.  We have developed such a strong network of cleaners, contractors, etc. that it has made scaling faster for us.  Plus we are only 90 min away so we are able to save a ton in start up costs and can get there quickly enough to handle issues without the need for a management company.

We definitely want to diversify at some point, but we have been able to find a sweet spot (in a competitive market) that we will continue to scale in one market first.  

I'd be glad to answer any questions anyone might have about the market or how we have been able to scale.

[Clarissa Baker]

Great approach! It might be worth your while to check out the lists that have come out for best places to invest in for Airbnb/STRs. I believe Poconos and Ruidoso are good places