Another newbie. Best areas to buy my first STR

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Another newbie. Best areas to buy my first STR

Member since 2023 · 9 posts · 1 vote

I am new to investing and looking for the best area to start. I am in NY BUT looking to move to either NC, SC or FL in a year. I was looking for either a home or condo by the beach because they seem more easy to rent weekly. I would need a mgt company to watch over it but don’t know the best percentage to look for.
Any wisdom from you seasoned investors is greatly appreciated! Thanks in advance and taking time to reply.
Blessings.

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Levi BennettPro Member

Real Estate Broker · Charlotte, NC · Member since 2014 · 285 posts · 248 votes

Hey Joseph, welcome to the community! I'm a broker in NC, investor and have been doing STR and investment real estate for clients and myself for 9 years in North Carolina and Florida.

The beach can certainly be a good investment, but comparing it to the mountains it will be hard to make a case. Seasonality at the beach is dramatic, and weeks or month long contracts are easy to obtain almost anywhere in the South because of housing demand shortages, particularly in places like Charlotte (8000 listed homes, and 60,000 applications for those homes for medium term rentals). You can definately do well at the beach but keep in mind a few things.. one is the homestead exemption for SC is dramatic. Most investors pay 6-10x more in taxes per year for an investment home there, and that can kill ROI. The other thing, back to seasonality, is that peak season in obviously summer, but in the mountains you have 2-3 peak seasons. Summer, Leaf, and holidays (and ski season if you're close to a ski area). Cash flow tends to be more consistent in the mountains. If you're set on a beach area, I would allocate more money for at least a 4 bedroom (big revenue jump for multi-family stays..) and focus on Florida since the seasonality is significantly longer than even Georgia or SC.

Finally, do NOT fall into the newbie trap of thinking location is everything. If your goal is ROI, then don't make your goal location, make it acquisition and ROI. There are several layers to acquiring an STR/MTR and one of them is location, but if you leave out the other 6 layers, you could be stuck holding the bag and doing marginal, or worse, losing money because the other factors weren't considered. Definately work with an experienced STR agent wherever you go and use someone who not only knows how to underwrite STRs and has paid data to help you do that, but also someone who understands the fundamentals of what makes a successful STR/MTR and give you the best chance at succeeding and being in the top 10% of property listings.

I hope this is helpful, best of luck, and feel free to reach out if you need anything.

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Noah Laker
Real Estate Broker · Sacramento, CA · Member since 2021 · 518 posts · 410 votes
3y
I am a broker, investor, and PM (100+ listings) on the West Coast. Almost my entire portfolio is STR. We are currently in Sacramento, Phoenix, and Tucson metros.
Vacation markets have been hit the hardest recently. Sacramento has remained very stable by comparison, I believe because we are a state capitol, two major universities, business and medical sectors are strong, growing population, and some more barriers to entry to scare off the stupid money.
For property management, we charge 20% of gross revenues, or 15% for larger portfolios.
If you're looking to invest in NorCal or Arizona, let me know! Or if you just want to talk shop, DM me. I've done business in Florida as well.
2 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
3y
Arizona. California is generally kinda crazy.... :-)
4 Reply
John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
3y
North or South Carolina Beach house would be a great place to have a vacation rental.
2 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
3y
Quote from @John Underwood:

North or South Carolina Beach house would be a great place to have a vacation rental.

Better than Florida? Just curious..... If I gave you your choice of a free beach-house in those 3 states, which one would you take?
1 Reply
John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
3y
SC, likely Myrtle beach or Hilton Head areas. There is tons of stuff to do around Myrtle Beach.
Florida has a much better chance of Hurricanes which they have had their fair share of the last few years. This is causing insurance rates to go through the roof!
SC and NC are much more drivable for many more people.
2 Reply
Andrew SteffensBusiness Member
Tampa, FL · Member since 2022 · 4k+ posts · 3k+ votes
3y
Tampa FL is one of the few markets appreciating this year per Zillow and the STR declines have been minimal!
[email protected]813-563-0877
Vacation Rentals of Florida53 Reviews
Website View Page
1 Reply
Brooklyn McCarty
Investor · Member since 2022 · 1k+ posts · 754 votes
3y
I would reach out to Avery Carl’s team, the short term shop. They operate in over 18+ markets and they will teach YOU how to manage it so you are saving those commission fees
2 Reply
Leslie Anne Morris
Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
3y
If the mountains intrigue you at all definitely consider the Smokies! If you buy in the right location and make sure it has all of the amenities guests are seeking - we are still seeing deals pencil out quite well.
1 Reply
Myrtle Mike ThompsonBusiness Member
Realtor · Myrtle Beach, SC · Member since 2016 · 352 posts · 204 votes
3y
@Joseph Amaturo I can certainly help if you decide to focus on Myrtle Beach. Quick, cheap flights from NY into the airport here - which is literally 5 minutes to the beach - so you can check on your investment from time to time or have a place to get away to in the offseason. The local property management companies I partner with charge 20% of gross bookings and can handle absolutely everything if you want to take more of a passive approach. Larger management companies like Evolve may offer a 10-12% management fee but you lose quite a bit in terms of service in my opinion.
[email protected]843-999-2301
Myrtle Mike Real Estate581 Reviews
Website View Page
1 Reply
Levi BennettPro Member
Real Estate Broker · Charlotte, NC · Member since 2014 · 285 posts · 248 votes
3y
Hey Joseph, welcome to the community! I'm a broker in NC, investor and have been doing STR and investment real estate for clients and myself for 9 years in North Carolina and Florida.
The beach can certainly be a good investment, but comparing it to the mountains it will be hard to make a case. Seasonality at the beach is dramatic, and weeks or month long contracts are easy to obtain almost anywhere in the South because of housing demand shortages, particularly in places like Charlotte (8000 listed homes, and 60,000 applications for those homes for medium term rentals). You can definately do well at the beach but keep in mind a few things.. one is the homestead exemption for SC is dramatic. Most investors pay 6-10x more in taxes per year for an investment home there, and that can kill ROI. The other thing, back to seasonality, is that peak season in obviously summer, but in the mountains you have 2-3 peak seasons. Summer, Leaf, and holidays (and ski season if you're close to a ski area). Cash flow tends to be more consistent in the mountains. If you're set on a beach area, I would allocate more money for at least a 4 bedroom (big revenue jump for multi-family stays..) and focus on Florida since the seasonality is significantly longer than even Georgia or SC.

Finally, do NOT fall into the newbie trap of thinking location is everything. If your goal is ROI, then don't make your goal location, make it acquisition and ROI. There are several layers to acquiring an STR/MTR and one of them is location, but if you leave out the other 6 layers, you could be stuck holding the bag and doing marginal, or worse, losing money because the other factors weren't considered. Definately work with an experienced STR agent wherever you go and use someone who not only knows how to underwrite STRs and has paid data to help you do that, but also someone who understands the fundamentals of what makes a successful STR/MTR and give you the best chance at succeeding and being in the top 10% of property listings.
I hope this is helpful, best of luck, and feel free to reach out if you need anything.
7 Reply
Sarah KensingerPro Member
Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
3y
The easiest way to decide where to have a STR, is asking yourself where you enjoy traveling too.
As for the percentage of what a PM would take....the best is 20-25% without any other added fees unless they want you to help pay for software etc. For the most part companies that charge 10-15%, usually aren't doing what they should be.
[email protected]330-557-3021
1 Reply
January Johnson
Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 487 votes
3y
Quote from @Joseph Amaturo:

I am new to investing and looking for the best area to start. I am in NY BUT looking to move to either NC, SC or FL in a year. I was looking for either a home or condo by the beach because they seem more easy to rent weekly. I would need a mgt company to watch over it but don’t know the best percentage to look for.
Any wisdom from you seasoned investors is greatly appreciated! Thanks in advance and taking time to reply.
Blessings.

The Short Term Shop teaches you how to self-manage so you can keep that 18-25% in your pocket. I tell clients that "with a keypad lock on the door and a good housekeeper, you can rule the planet!"
2 Reply
Alex Speer
Member since 2023 · 4 posts · 1 vote
3y
Omaha NE is a great area to start! bigger bang for you buck than a lot of other states!
0 Reply
Logan Williams
Real Estate Agent · Scottsdale, AZ · Member since 2022 · 11 posts · 16 votes
3y
The Arizona short-term rental (STR) market poses certain challenges, particularly due to the high vacancy rates this past year, even during the busiest seasons like the Super Bowl and the Waste Management Open. Many of these vacant properties are from individuals seeking quick cash, resulting in low or no ratings and competitive pricing. This can be frustrating for hosts who have been in the market for a while and have earned a reputable status.

On the other hand, STRs in northern Arizona offer a different scenario, with a lower price point and the ability to attract guests throughout the year. This is due to the region's diverse attractions, such as hiking, water sports, and the allure of escaping the summer heat. Additionally, during the winter, guests are drawn to the area for skiing and snowboarding.

In contrast, the demand for STRs in Scottsdale and Phoenix primarily peaks during the winter and spring seasons. These locations may not have as much appeal during the hotter months, limiting their potential rental income.
I represent an investment brokerage here in Scottsdale but we specialize in off-market opportunities across the state, happy to connect and answer any questions.
3 Reply
Ricardo Hidalgo
Real Estate Agent · Member since 2019 · 569 posts · 257 votes
3y
Quote from @Joseph Amaturo:

I am new to investing and looking for the best area to start. I am in NY BUT looking to move to either NC, SC or FL in a year. I was looking for either a home or condo by the beach because they seem more easy to rent weekly. I would need a mgt company to watch over it but don’t know the best percentage to look for.
Any wisdom from you seasoned investors is greatly appreciated! Thanks in advance and taking time to reply.
Blessings.
Panama City Beach market has adjusted favorably towards buyers. Most of the properties in STR market are at 10-15% of gross rentals in comparison to purchase price. They have options under 400k near the beach which is a good entry point for most investors to get exposure in a new marketplace.
0 Reply
Zach Edelman
Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes
3y
Hard to say, there a ton to choose from and all offer their own pros and cons and challenges/advantages. I would seek some more intimate mentorship from direct investors our brokerages that have experience with STRs specifically, such as the Short Term Shop.
1 Reply
Cameron Griggs
Real Estate Agent · Outer Banks, NC · Member since 2023 · 3 posts · 3 votes
3y
Joseph - you should consider the Outer Banks. The STR market is strong from Memorial Day to Labor Day. Our mgt company commissions are between 10 - 15% of gross bookings and take care of everything.
1 Reply
Andy B.
Member since 2023 · 9 posts · 3 votes
3y
@Levi Bennett thanks! Could you elaborate on what you meant by this "Finally, do NOT fall into the newbie trap of thinking location is everything. If your goal is ROI, then don't make your goal location, make it acquisition and ROI" ?
1 Reply
Annette Barnett
Member since 2023 · 52 posts · 47 votes
3y
Have you checked out AirDNA? Lots of cool data there, it helped me decide to purchase an STR in Nashville, though that market is really saturated at this point. That's one thing you've got to be wary of - supply & demand.
2 Reply
Yiwei Cheng
Investor · Cincinnati, OH · Member since 2023 · 139 posts · 81 votes
3y
Hi Joseph, there are endless locations and so many opinions on which different areas are good for STR. You can start by deciding whether you want something close to you, in a vacation rental destination, or a non vacation rental location but still cash flow like the Midwest. You don't have to be in a vacation rental market like beaches or mountains to have a cash flowing STR. Often you can buy in the Midwest for less money and still get great cash flow similar to vacation destinations.
2 Reply
Alex ScattareggiaPro Member
Investor · Cabo San Lucas, Mexico · Member since 2023 · 150 posts · 139 votes
3y
Quote from @Joseph Amaturo:

I am new to investing and looking for the best area to start. I am in NY BUT looking to move to either NC, SC or FL in a year. I was looking for either a home or condo by the beach because they seem more easy to rent weekly. I would need a mgt company to watch over it but don’t know the best percentage to look for.
Any wisdom from you seasoned investors is greatly appreciated! Thanks in advance and taking time to reply.
Blessings.
Hi Joesph, if you are looking to move to the target market anyway why dive in with a property manager?

In my experience there is very little that you can do as valuable as self managing in the beginning. If for no other reason than to learn the process and know what you expect from your future PM. If you are out of market there are a variety of ways to manage but especially if you are going to live in the market where you buy I would recommend a few months minimum of self management and learning how to do it from valuable resources like this and others. Best of luck!
1 Reply
Joseph Amaturo
OP
Member since 2023 · 9 posts · 1 vote
3y
Quote from @John Underwood:

North or South Carolina Beach house would be a great place to have a vacation rental.

I was looking in South areas, is there any suggestion in areas? I was looking at Murtle, Charleston and Hilton head, but are there locations off the beach area that are good to look at but still get rentals for beach goers? Thanks for responding, appreciate your time.
0 Reply
Joseph Amaturo
OP
Member since 2023 · 9 posts · 1 vote
3y
Quote from @Myrtle Mike Thompson:

@Joseph Amaturo I can certainly help if you decide to focus on Myrtle Beach. Quick, cheap flights from NY into the airport here - which is literally 5 minutes to the beach - so you can check on your investment from time to time or have a place to get away to in the offseason. The local property management companies I partner with charge 20% of gross bookings and can handle absolutely everything if you want to take more of a passive approach. Larger management companies like Evolve may offer a 10-12% management fee but you lose quite a bit in terms of service in my opinion.

Ok thank you Mike
0 Reply
Joseph Amaturo
OP
Member since 2023 · 9 posts · 1 vote
3y
Quote from @Annette Barnett:

Have you checked out AirDNA? Lots of cool data there, it helped me decide to purchase an STR in Nashville, though that market is really saturated at this point. That's one thing you've got to be wary of - supply & demand.

Nice idea, thank you Annette!
0 Reply
Joseph Amaturo
OP
Member since 2023 · 9 posts · 1 vote
3y
Quote from @Alex Scattareggia:

Quote from @Joseph Amaturo:

I am new to investing and looking for the best area to start. I am in NY BUT looking to move to either NC, SC or FL in a year. I was looking for either a home or condo by the beach because they seem more easy to rent weekly. I would need a mgt company to watch over it but don’t know the best percentage to look for.
Any wisdom from you seasoned investors is greatly appreciated! Thanks in advance and taking time to reply.
Blessings.
Hi Joesph, if you are looking to move to the target market anyway why dive in with a property manager?

In my experience there is very little that you can do as valuable as self managing in the beginning. If for no other reason than to learn the process and know what you expect from your future PM. If you are out of market there are a variety of ways to manage but especially if you are going to live in the market where you buy I would recommend a few months minimum of self management and learning how to do it from valuable resources like this and others. Best of luck!

Thank you Alex. Is this what you did? My concern is not being there to fix issues.
0 Reply

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