West Eleventh Residences: An Airbnb Building, Your Thoughts?

Question

https://www.bizjournals.com/so...

2 of my friends just invested, one in a studio for 540k and one friend invested in a one bedroom apt for 1 mill.

Studio apartments now starts at 650k. They're asking for 10 precent at the time of signing, again after 6 months, one year and 2 years.

Building will be completed by 2028 (might be longer), nightly rate with airbnb could be between 350-450$ for a studio apt, I know with this money I could buy 2 SFH somewhere else in FL. Your thoughts?

Ray Hage · Answer

Based on those stats, it doesn't sound like it's worth it to me. You could still buy some pretty decent houses in south FL for 650k-1m and don't need to worry about HOA issues or this building ever getting completed. That is a lot of gambling imo

Ryan Moyer · Answer

I looked into it a while back and if I'm remembering right yes you do have to manage with them, but the management fee is included in the HOA. It's essentially Airbnb managing it, which I would assume means they're partnering with someone for management. Although with them trying to expand into this niche (essentially Airbnb hotels) maybe they're planning to do it in-house so they can keep doing more.

If I recall that part of it was actually reasonably priced. Something like 10% covered full management and all HOA fees. But I could be mis-remembering.

The big downside to me was tying up all that money and not having a projected completion date until 2028, which as we know will likely be pushed back a few more times. That's a lot of time to lose out on the time value of that money, not to mention who knows what that market will look like that far in the future.

Another thing I was not impressed with was the sales people. Overseas call farm that would call back over and over and try not to let you off the phone. "Have you looked at the packet we sent yet?", "are you ready to put down a deposit?", "we can go ahead and get that deposit taken for you right now". Felt more like a shady telemarketing call for car insurance than a potential $1M real estate transaction.

Michael Baum · Answer

I dunno. This has been paraded around off and on for the last couple of years.

Not really sure. One thing that has me wondering is the tax situation. Seeing as the place offers a ton of concierge services, it might reflect back on the owner and change the tax situation. I am not sure by any means of that.

I do know that $400 a night won't cover a 1m nut to my satisfaction.

Bryan Keller · Answer

Thank you guys for your response, definitely sounds like some serious red flags for me. I hope my friends will be ok but based on your input I don't think it's the right investment for me.

Andrew Steffens · Answer

Yeah, those sound like red flags for sure. Even if you are remembering correctly with 10% management etc not having direct control (if things go awry) over your investment is not ideal either.

Andrew Steffens · Answer

I would stay away from HOA's - little power to control the costs. Also do they force you to manage with them?

West Eleventh Residences: An Airbnb Building, Your Thoughts?

West Eleventh Residences: An Airbnb Building, Your Thoughts?

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