Short Term Rentals in my market (Pocono Mountains)

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Short Term Rentals in my market (Pocono Mountains)

Mike Eichler
Realtor · Pocono Pines, PA · Member since 2019 · 183 posts · 108 votes

Hello Bp, 

I wanted to hop on here and write about what I have seen in my backyard STR market in the Pocono Mountains of Pennsylvania. For Transparency and details on my background, I am a licensed realtor in PA and work in property management of over 110 STR properties in the Poconos Market. I often hear people saying that Airbnb is dead or that it's not what it used to be. 

My initial thoughts are, how is this true? Just remember, its easy to get caught up in finding value. This is a mistake my mentor and I made early on. Going for the 4 bedroom home thats priced in the realm of 3 bedrooms. Big win right? Not always, and in fact with STR usually the opposite. I'd rather have the 2 bedroom priced like a 3 bedroom. Why? In order to be in the upper echelon of available listings, or reach occupancy and rates above the average Joe, your listing needs to reign supreme. Be honest when buying the home, is this somewhere you would be excited to book and stay? Your thinking must align with the travelers, and often experienced-based thinking will take you much further than value based.

So, let's say you are looking to enter the STR market and don't know what to look for in a winning home. (Remember that I work in the Poconos market, so your market may differ slightly.) Firstly, you have to consider the price point. For the Poconos, I like to explain homes here in three separate tiers. (These are not in order of how profitable they are, it's just used as a way to separate them for explanation purposes. )

The first tier of homes are 1-2 bedroom homes these are homes that are tailored ( or should be) toward couples or small families and can range between 100-250k. The second tier of homes are your 3-4 Bedroom homes priced between 250-400k. This is the tier that you really need to be careful of, which I will explain in more detail later. Finally, your third tier of homes are your 5 Bedroom+ Large Cabin homes priced in the realm of 400-700k.  (There is also a fourth sub-tier of A+++ properties which includes your awesome lakefront homes and 7+ bedrooms at 700k - 1 Million. ) 

In the Poconos market, we have been seeing homes that are smaller or larger be the better performers.  I believe this is because of the sheer lack of inventory of 1-2 or 5+ bedrooms.  The beauty of the smaller is that this market is historically a "vacation market" and a couple's getaway market and that has not changed.  With small homes you get quick and easy stays with fewer issues, cheaper cleaning fees, higher occupancy, and still great rates.  The Larger homes tell a different story, these are more expensive purchases but allow for large groups to travel together and more importantly for you,  split the bill together.  With a large group of say 16+ guests a $2000 or $5000 weekend is much less expensive when multiple parties are paying.   


To summarize, STR is not dead to the ones that treat it like a business. When run like a business from the beginning, choosing the right house at the right price and furnishing correctly, then adding the right amenities according to your market, you will do just fine. Also remember that Real estate is a long-term play so even if the cash flow isn't a "home run" right now you can refi later and hopefully even pull out some equity you can put down on another one, bringing you closer to financial freedom.

Thanks for reading BP!  

-Mike Eichler 

~Realtor and STR Property Manager~

Also, DM me, I'm always happy to help investors looking to enter the Poconos market, and I'm available for STR questions.

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Theresa Holl
Investor · Minneapolis · Member since 2023 · 265 posts · 162 votes
2y

Great post Mike!  Interesting strategy you're outlining there.

2Reply
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  • Jonathan DempseyBusiness Member
    Rental Property Investor · Pocono Pines, PA · Member since 2018 · 153 posts · 117 votes
    2y

    Great post Mike, these fundamentals can be taken to any market.

    Understanding the traveler demand and needs, seeing where the market may be lacking (and avoiding where they are saturated), then catering to that market.   Every market is a bit different, but sticking to what you would be desiring as a guest is more certain to hit than going based strictly off value.

    I find it ironic how vast the differences are between STR and LTR. Upgrading on seemingly frivolous touches in LTR won't pay off in the rent increase (if you even get one). Upgrading items in an STR can lead to high ROI, because people are paying for an experience and looking to treat themselves, their friends, and family.

    Keep up the good work in the Poconos Mike!




    1Reply
  • Mike Eichler
    OP
    Realtor · Pocono Pines, PA · Member since 2019 · 183 posts · 108 votes
    2y
    Quote from @Jonathan Dempsey:

    Great post Mike, these fundamentals can be taken to any market.

    Understanding the traveler demand and needs, seeing where the market may be lacking (and avoiding where they are saturated), then catering to that market.   Every market is a bit different, but sticking to what you would be desiring as a guest is more certain to hit than going based strictly off value.

    I find it ironic how vast the differences are between STR and LTR. Upgrading on seemingly frivolous touches in LTR won't pay off in the rent increase (if you even get one). Upgrading items in an STR can lead to high ROI, because people are paying for an experience and looking to treat themselves, their friends, and family.

    Keep up the good work in the Poconos Mike!




     Great addition Jonathan, thanks!

    0Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    2y

    So each market can be very different. What works well in the Pocono's might not work as well in the Smokies or Destin.

    I know that we wouldn't be doing what we are doing if we had a 2/2.

    0Reply
  • Theresa Holl
    Investor · Minneapolis · Member since 2023 · 265 posts · 162 votes
    2y

    Great post Mike!  Interesting strategy you're outlining there.

    2Reply
  • Sunny A.
    Real Estate Agent · South Jersey and Philadelphia, PA · Member since 2016 · 52 posts · 13 votes
    2y

    I don't see Poconos as a lucrative market right now.

    I have operated in the market for almost 7 years now with few properties. Pre-covid time were different, there was less competition so the occupancy was high for sure. Definitely that was money making time in terms of operations and appreciation as well.

    Things have changed now, there is so many STRs now that people are renting for 100-150 USD a night which is like a motel price.

    Now it may make sense from the perspective of, if Poconos is where you travel a lot with family or you are buying full cash to park the money, or tax strategy or various other personal reasons could be there where it might make sense to invest there.

    But coming in from the perspective of an investor who are new or have little experience and are trying to build wealth from not too heavy asset portfolio. Most probably they will be taking a mortgage out, current rate are at 7-9%, so easily on 300K average Pocono home you will have a mortgage of $2000 or may be more!

    It is very very hard to make an NOI of $2000 every month or an average NOI, when your general occupancy trend is like weekends and long weekends because Poconos is not where USA travels, it is basically people from close by cities of NJ, NY, PA travel here.

    I am not saying it is not the place to invest but if you are looking for cashflow with a 20% down with current mortgage rate, I would run my numbers very carefully.

    I did not touch on HOA, township licensing and restrictions specially 2 people max per bedroom and Pocono Promise :P

    0Reply
  • Christopher Zebrowski
    New to Real Estate · NJ · Member since 2023 · 8 posts · 3 votes
    2y
    Quote from @Mike Eichler:

    Hello Bp, 

    I wanted to hop on here and write about what I have seen in my backyard STR market in the Pocono Mountains of Pennsylvania. For Transparency and details on my background, I am a licensed realtor in PA and work in property management of over 110 STR properties in the Poconos Market. I often hear people saying that Airbnb is dead or that it's not what it used to be. 

    My initial thoughts are, how is this true? Just remember, its easy to get caught up in finding value. This is a mistake my mentor and I made early on. Going for the 4 bedroom home thats priced in the realm of 3 bedrooms. Big win right? Not always, and in fact with STR usually the opposite. I'd rather have the 2 bedroom priced like a 3 bedroom. Why? In order to be in the upper echelon of available listings, or reach occupancy and rates above the average Joe, your listing needs to reign supreme. Be honest when buying the home, is this somewhere you would be excited to book and stay? Your thinking must align with the travelers, and often experienced-based thinking will take you much further than value based.

    So, let's say you are looking to enter the STR market and don't know what to look for in a winning home. (Remember that I work in the Poconos market, so your market may differ slightly.) Firstly, you have to consider the price point. For the Poconos, I like to explain homes here in three separate tiers. (These are not in order of how profitable they are, it's just used as a way to separate them for explanation purposes. )

    The first tier of homes are 1-2 bedroom homes these are homes that are tailored ( or should be) toward couples or small families and can range between 100-250k. The second tier of homes are your 3-4 Bedroom homes priced between 250-400k. This is the tier that you really need to be careful of, which I will explain in more detail later. Finally, your third tier of homes are your 5 Bedroom+ Large Cabin homes priced in the realm of 400-700k.  (There is also a fourth sub-tier of A+++ properties which includes your awesome lakefront homes and 7+ bedrooms at 700k - 1 Million. ) 

    In the Poconos market, we have been seeing homes that are smaller or larger be the better performers.  I believe this is because of the sheer lack of inventory of 1-2 or 5+ bedrooms.  The beauty of the smaller is that this market is historically a "vacation market" and a couple's getaway market and that has not changed.  With small homes you get quick and easy stays with fewer issues, cheaper cleaning fees, higher occupancy, and still great rates.  The Larger homes tell a different story, these are more expensive purchases but allow for large groups to travel together and more importantly for you,  split the bill together.  With a large group of say 16+ guests a $2000 or $5000 weekend is much less expensive when multiple parties are paying.   


    To summarize, STR is not dead to the ones that treat it like a business. When run like a business from the beginning, choosing the right house at the right price and furnishing correctly, then adding the right amenities according to your market, you will do just fine. Also remember that Real estate is a long-term play so even if the cash flow isn't a "home run" right now you can refi later and hopefully even pull out some equity you can put down on another one, bringing you closer to financial freedom.

    Thanks for reading BP!  

    -Mike Eichler 

    ~Realtor and STR Property Manager~

    Also, DM me, I'm always happy to help investors looking to enter the Poconos market, and I'm available for STR questions.


     Thanks for posting Mike,

    I've been looking at the homes for sale in the Poconos area like: Tobyhanna, Coolbaugh, Tunkhannock, Kidder, and Cliffton. It seems like most of the smaller homes in that 100-250 range are in pretty rough shape. After factoring in the repairs and the operating costs it would be difficult to break even right now. Do you have clients that with recent purchases, are actually making 12+% CoC there?

    0Reply
  • Justin Moser
    Investor · Collegeville, PA · Member since 2016 · 19 posts · 10 votes
    2y
    Quote from @Sunny A.:

    I don't see Poconos as a lucrative market right now.

    I have operated in the market for almost 7 years now with few properties. Pre-covid time were different, there was less competition so the occupancy was high for sure. Definitely that was money making time in terms of operations and appreciation as well.

    Things have changed now, there is so many STRs now that people are renting for 100-150 USD a night which is like a motel price.

    Now it may make sense from the perspective of, if Poconos is where you travel a lot with family or you are buying full cash to park the money, or tax strategy or various other personal reasons could be there where it might make sense to invest there.

    But coming in from the perspective of an investor who are new or have little experience and are trying to build wealth from not too heavy asset portfolio. Most probably they will be taking a mortgage out, current rate are at 7-9%, so easily on 300K average Pocono home you will have a mortgage of $2000 or may be more!

    It is very very hard to make an NOI of $2000 every month or an average NOI, when your general occupancy trend is like weekends and long weekends because Poconos is not where USA travels, it is basically people from close by cities of NJ, NY, PA travel here.

    I am not saying it is not the place to invest but if you are looking for cashflow with a 20% down with current mortgage rate, I would run my numbers very carefully.

    I did not touch on HOA, township licensing and restrictions specially 2 people max per bedroom and Pocono Promise :P

    I also have a STR lakefront in Pocono’s and am struggling due to low rates.  The region has gone through some significant saturation coming out of the pandemic where a strong boom in STR occurred.  I have invested to make the house nicer and added some amenities only to see achievable rents go down from last year.  It’s early but I’m seeing similar struggles amongst other STR owners.  

    I can see the logic around the value of small or large places and perhaps that is the win right now.  However lakefront should still be a dominant amenity.  Open to ideas to differentiate with significant CAPEX and operating expense add like hot tub.  
    1Reply
  • Mark Miles
    Rental Property Investor · Philadelphia, PA · Member since 2016 · 543 posts · 716 votes
    2y
    Quote from @Justin Moser:
    Quote from @Sunny A.:

    I don't see Poconos as a lucrative market right now.

    I have operated in the market for almost 7 years now with few properties. Pre-covid time were different, there was less competition so the occupancy was high for sure. Definitely that was money making time in terms of operations and appreciation as well.

    Things have changed now, there is so many STRs now that people are renting for 100-150 USD a night which is like a motel price.

    Now it may make sense from the perspective of, if Poconos is where you travel a lot with family or you are buying full cash to park the money, or tax strategy or various other personal reasons could be there where it might make sense to invest there.

    But coming in from the perspective of an investor who are new or have little experience and are trying to build wealth from not too heavy asset portfolio. Most probably they will be taking a mortgage out, current rate are at 7-9%, so easily on 300K average Pocono home you will have a mortgage of $2000 or may be more!

    It is very very hard to make an NOI of $2000 every month or an average NOI, when your general occupancy trend is like weekends and long weekends because Poconos is not where USA travels, it is basically people from close by cities of NJ, NY, PA travel here.

    I am not saying it is not the place to invest but if you are looking for cashflow with a 20% down with current mortgage rate, I would run my numbers very carefully.

    I did not touch on HOA, township licensing and restrictions specially 2 people max per bedroom and Pocono Promise :P

    I also have a STR lakefront in Pocono’s and am struggling due to low rates.  The region has gone through some significant saturation coming out of the pandemic where a strong boom in STR occurred.  I have invested to make the house nicer and added some amenities only to see achievable rents go down from last year.  It’s early but I’m seeing similar struggles amongst other STR owners.  

    I can see the logic around the value of small or large places and perhaps that is the win right now.  However lakefront should still be a dominant amenity.  Open to ideas to differentiate with significant CAPEX and operating expense add like hot tub.  

     Sadly there’s no good solution in the Poconos right now. I have a bunch of friends who own houses in the Poconos of all different shapes and sizes, and no one is profitable anymore.

    There's just too much oversaturation of the Poconos market. Housing prices are cheap so everyone bought a house and turned it into an STR, and there's way too many STR‘s. You can get a house for $100 per night which makes all of the houses unprofitable

    Plus there’s a lot of regulation limiting occupancy, etc. etc.

    There's tons of houses on the market for sale right now in the Poconos at very inexpensive prices, because no one is making any money on their STR‘s so everyone has to sell. Housing prices keep dropping and dropping because no one is buying the listings

    Unfortunately what will happen is people will see the cheap homes for sale and new people will come along and try and turn them into STR‘s. Then they will also be unprofitable and they will sell them, it is a vicious cycle and there's simply too many STR‘s in the Poconos right now, the demand isn't there and basically no one is making any profits off STR right now in the Poconos, they're basically all losing money month over month on STR

    Even right now in peak Summer season, most of my friends places are barely booked: they have low occupancy rates, and when they are booked, it’s only because they had to lower their prices extremely low like $100 per night. So you have people with thousands of dollars in monthly mortgage + monthly expenses who aren’t even breaking even in peak summer season. And it’s even worse outside of the summer months 

    I'm sure some local real estate agents will hop on this thread to tell us how amazing the Poconos are, and cite examples of profitable homes (because of course this is bigger pockets and there's always real estate agents who love to defend their home turf), but any examples they cite are almost certainly the exception to the rule. I'd have to think that, at this point, 99% of Poconos homes are failing to break even every month in STR

    At this point the Poconos has basically just become a market for locals, people in NYC or Philly who want a vacation home that occasionally rents out to subsidize a tiny portion of their mortgage every month. It isn't a place where you go to actually earn a decent return on your money. You're way better off just sticking your money in the stock market and not having the hassles of dealing with STR tenants!

    1Reply
  • Mark Shay
    Real Estate Agent · Poconos, PA · Member since 2021 · 59 posts · 57 votes
    2y

    The Poconos Association of Vacation Rental Owners put out an impact study that talks about the big picture which is good.  30 million visitors coming each year, nice things to do, mix of resorts and outdoor destinations that are not overcrowded, a pleasant place to drive to.  STRs generate about as much hotel tax revenue as the hotels/resorts so there is support at higher levels:  https://poconosvro.wildapricot.org/Economic-Impact

    Local regulation is rough. 74 municipalities each with their own zoning and STR ordinances plus most of the housing stock is in planned communities, many were built as vacation/resort summer homes.

    I think it is fair to say that the STR market in the Poconos is very competitive and in a bit of a correction. There are 6,800 licensed STRs in the 4-county Pocono region. Average homes, in average shape, in average communities with average listings and average marketing are doing well below average financially. As was stated above, there are an awful lot of mediocre properties that are dull and that are not doing well. I do think we are moving to an 80/20 market where 80% of the revenue will come from 20% of the homes.

    You can do very well in the Poconos, you just have to earn it.  

    1Reply
  • Mark Shay
    Real Estate Agent · Poconos, PA · Member since 2021 · 59 posts · 57 votes
    2y

    Recent STR Pros Podcast about the Poconos:

    https://hospitality.fm/show/episode/mastering-the-poconos-ma...

    Also:
    How to Feel Confident Purchasing STRs in the Poconos  

    1Reply
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