Oak Island, NC - STR Update
As we approach the close of our second year in operation I wanted to provide some updates on our property. We purchased our STR in October 2021 and completed a rehab to place it in service by January 2022. In 2022, we had a gross revenue of $71,302. The summer months June through August had a total revenue of $30,966. For 2023, we anticipate our total gross revenue will be lower, though unsure how much lower as of right now. In particular, our 2023 summer revenues were significantly less at $22,596. I believe the primary contributing factor to the lower revenue this summer was operator error due to overpricing our nightly rates. This may also be a result of increased supply of units on the market as well. To date in 2023, we have a gross revenue of $56,436 with no bookings scheduled as of yet for November/December. I anticipate another $6-7k total, if that, to close out the year in the $62-3K range. As a results, I will be sure not overprice summer nightly rates next year.
We have been very fortunate with occupancy in the fall/winter months thus far. We have a firepit and backyard area which I believe helps set our unit apart from some other beach properties. Our numbers for September/October this year are nearly identical to last years. This further supports my concern that I overpriced our summer months and thus had to significantly reduce rates to capture summer reservations.
As for supply, in August 2020 there were a total 1,400 listings. Three years later there were a total of 2,100 listings. The monumental supply increase is something that has been experienced in many markets. To combat the supply increase, we have remained vigilant with updating our pricing and our listing to ensure we are near the top of the search on AirBNB/VRBO.
For new STR owners or those looking to invest, I would be certain to look at more than just the revenue but also the other added tax and appreciation benefits of the property. There are other intangibles that are critical to understand -- flood hazard insurance premiums being one of focus. Ultimately, if and when we decide to sell, the profit from asset appreciation and principal paydown will far eclipse any cash flow earned. While you should never plan for appreciation, I believe this is the key benefit that can help set apart real estate from other investment vehicles.
Apologies in advance for the novel.
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Enemy method all the way! This is crucial especially when new to markets