Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
Just saw a pitch by Rogers Capital raising money for STR portfolio. Plan is to roll it up to institutional investor.
I've also seen Key City Capital doing this. One of the comments was that no one else is doing this. Rogers is now on a second fund.
Have you seen any other groups raising money for pools of STR? Anyone here invested with them or Key City? I guess Vacasa did this too, but went public. Vacasa went from $200 share to about $9 something. They've pretty much done nothing but loose money....they've cut the loses, but appear to still be loosing money. Not sure if Vacasa owned STR or just managed?
Are they late to the game? Has that ship sailed? or are they on to the cutting edge, corporate managing the STR experience. What are your thoughts?
I believe a good operator can make money in any real estate category in any market cycle. That said STR appears to be under some stress. I have no STR holdings myself but know several people that have been in STR for a while and they are saying "things have changed."
For example, a guy I spoke with this weekend has large STR house on the Gulf of Mexico. He's had it for 4 years. He said the first three years were fantastic. Now, he is just covering his costs.
I still believe there are great operators that can probably make good money in this space, but I would be concerned about someone who shifted from owning to syndicating. Are they just trying to live off the syndication fees? I'd want to check the PPM carefully and make sure they have a ton of skin in the game and the fees are not significant.
I believe a good operator can make money in any real estate category in any market cycle. That said STR appears to be under some stress. I have no STR holdings myself but know several people that have been in STR for a while and they are saying "things have changed."
For example, a guy I spoke with this weekend has large STR house on the Gulf of Mexico. He's had it for 4 years. He said the first three years were fantastic. Now, he is just covering his costs.
I still believe there are great operators that can probably make good money in this space, but I would be concerned about someone who shifted from owning to syndicating. Are they just trying to live off the syndication fees? I'd want to check the PPM carefully and make sure they have a ton of skin in the game and the fees are not significant.
Corporate managing is slowly fading and the smaller boutique STR companies are taking off. A corporate company can't or doesn't want to give the care and attention a STR property needs, which in turn is leading to mediocre returns. A smaller company gives a lot of care and attention to the details of running a STR, so owners prefer working with a smaller company. I'm curious to see the next decade or two, but predictions are being made that the bigger STR companies are heading out.
I know of a few more groups doing this as well. I personally am in the process of starting my own 506 c fund for this. I operate in the market around Disney World, and have been for the past 3 years designing and creating some of the top themed rental properties on the market.
As Michael said, every market is different. My market is on the horizon of a HUGE acquisition opportunity for literally rescuing investors who bought off inflated revenue (since Florida was one of the few open states during covid our numbers were off the charts, thats not the case anymore). The key factor in my market is the opening of Epic Universe, Universals new state of the art theme park, set to open in 2025.
These two reasons, great buying market headed our way and unseen market growth coming in 2025 is why I am starting my own fund.
Operator quality is the whole game in STR syndications — agree completely. Our lane is adjacent (operating boutique resorts, 40–120 keys across LATAM), but the diligence rhymes: we underwrite the operating layer, not the story. Two additions to the PPM checklist: confirm the FF&E reserve is real (we haircut 4% off hotel EBITDA before calling it NOI — deferred capex is the silent killer in hospitality), and verify sponsor skin in the game beyond the acquisition fee. On structure: we buy with 75% equity plus a 25% seller note, no bank debt that can trigger a default — boring on purpose. In a soft market the capital stack matters more than the thread count.
Regulation uncertainty would give me pause. It seems the best performing STR markets have very specific fundamentals that lend itself to STR operators success: Locations that recognize incoming revenue relies on STR being an available service to bring in visitors, generally are also highly desirable areas & inherently there's often barriers of entry. That all flies in the face of scaling some large portfolio that can be sold to an institutional investor. Seems we are in a market that favors the smaller operators who own the right real estate. Seems to me scaling to the appropriate size portfolio for institutional interest with the strong fundamental STR real estate will be challenging.