Looking for advice on STR strategy and markets

Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes

2y

Hey @Robert Johnson, so 3k net cash flow is doable but that will be based on your purchase price.

If you have a 500k budget, I think that 3k will be tough... But that doesn't mean it will cashflow if you spend more. Not saying it isn't doable, but it will be tougher in this market.

Regarding the Bootcamp, I did moderation of the forums for the STR bootcamp so I think it is a pretty good value. The Q&A sessions were fun.

Pretty much cruise this forum as well. There is a ton of info right here.

1 Reply

Robert Johnson

OP

Member since 2023 · 24 posts · 21 votes

2y

Quote from @Michael Baum:

Hey @Robert Johnson, so 3k net cash flow is doable but that will be based on your purchase price.

If you have a 500k budget, I think that 3k will be tough... But that doesn't mean it will cashflow if you spend more. Not saying it isn't doable, but it will be tougher in this market.

Regarding the Bootcamp, I did moderation of the forums for the STR bootcamp so I think it is a pretty good value. The Q&A sessions were fun.

Pretty much cruise this forum as well. There is a ton of info right here.

Hey Michael, thanks for the prompt reply. To clarify, I didn't mean 3k from a single property - although that would be perfect. $3k is my starting overall net cash flow goal, even if that takes multiple properties. I do plan to keep 6 months of reserves for each property though so the fewer the better to get there.

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Amanda M.

Realtor · MN · Member since 2024 · 33 posts · 18 votes

2y

Hi Robert! Have you done research in areas you're familiar with yet? That's a great place to start and you can at least start practicing running scenarios and analyzing deals.

As far as analyzing deals, I use a combination of AirDNA, Data Rabbu, and doing my own comp-shopping on VRBO and Airbnb to estimate occupancy and nightly rates. When we bought our first STR it's so tempting to look all over the place - and I started to, I was looking in places I've never been but were appealing for personal reasons or hot markets in the investor world. Ultimately I bought a couple hours from my house because it's a market I am already very familiar with which is a huge competitive advantage. Good luck!

3 Reply

Pacifique L. Mahoro

Oklahoma City · Member since 2020 · 4 posts · 0 votes

2y

Quote from @Michael Baum:

Hey @Robert Johnson, so 3k net cash flow is doable but that will be based on your purchase price.

If you have a 500k budget, I think that 3k will be tough... But that doesn't mean it will cashflow if you spend more. Not saying it isn't doable, but it will be tougher in this market.

Regarding the Bootcamp, I did moderation of the forums for the STR bootcamp so I think it is a pretty good value. The Q&A sessions were fun.

Pretty much cruise this forum as well. There is a ton of info right here.

Hey @Michael Baum, I am also looking to get my first STR like Robert (I own a few LTRs but it's irrelevant here). In the current market when spending $500k or less on STR what's a reasonable cash flow to expect? I do understand that it depends on my markets and other factors but would like having some benchmark to help decide a good or great deal from a bad one.

Also, to get to the $3k cash flow, how big a house would it require?

0 Reply

Jeff ChisumPro Member

Lender · All 50 States · Member since 2020 · 248 posts · 142 votes

2y

90% of my clients are using the 10% down second home occupancy loan to buy in the STR asset class in all 50 states. I have unicorn opportunity that has Lowe rates and fees than Fannie.

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Michael BaumPro Member

Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes

2y

Ok @Robert Johnson and @Pacifique L. Mahoro. I wish I had the magic bullet answer on these kinds of questions.

There are so many variables to get a positive return. Especially as to what you think a positive return is. Some folks say they won't look at any deals that don't net a 20% return. I think that is pretty tough in this environment.

I might be happy with 12% if the area was right. Maybe I could use it with the family from time to time. There are plenty of options for cleaners and handy people to rely on. Etc.

You are going to have to decide what a good return is for you.

@Pacifique L. Mahoro, for example, you might look in the Broken Bow area. There are some deals to be had if you search. Smaller cabins seem to do better overall than large places. Nightly is lower of course but bookings are high.

@Robert Johnson, you might want to narrow down your area. Seeing as you like the outdoors stuff, it sounds like you want to use it. You don't say where you are located, so maybe start looking at areas you like to visit that are within a few hours drive.

3 Reply

John UnderwoodPro Member

Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

2y

I'd use the enemy method over Airdna data.

Higher interest rates, high property values, increasing STR rules and flat put bans plus oversaturation are things that make this a tougher business.

You really have to do your research in identifying an area and a property that will cash flow today with no guarantee it will keep cashflowing in the future.

1 Reply

Conrad LegéPro Member

Chicago, IL · Member since 2017 · 104 posts · 35 votes

2y

Quote from @Jeff Chisum:

90% of my clients are using the 10% down second home occupancy loan to buy in the STR asset class in all 50 states. I have unicorn opportunity that has Lowe rates and fees than Fannie.

Hi Jeff,

That is interesting. I am looking to purchase my second property and have never heard of this program before. Where I can learn more about this?

thanks,

0 Reply

AJ WongBusiness Member

Real Estate Broker · Oregon & California Coast · Member since 2022 · 822 posts · 696 votes

2y

Quote from @Robert Johnson:

Hey everyone, new investor here.

I have a clear goal of trying to hit $3k / mo in net cash flow and I have a moderate-to-high risk appetite. After some initial research this has led me to being attracted to STRs.

I've read "Rental Property Investing" and "Short Term Rental, Long Term Wealth" so far this year already. Ideally I'd like to find a property where I have a reasonable chance of not losing my shirt with contingency plans (i.e. retain the ability to use it as a LTR or MTR if STR doesn't work for whatever reason). I have the time and willingness to self-manage remotely. Because this is my first property I'd really love to find something as turnkey as possible and avoid rehabbing.

I'm wondering if I should buy the bnbinnercircle or BP STR BootCamp program first or just get to identifying markets and talking to agents that specialize in STRs to start underwriting properties to estimate cash flow? I have a spreadsheet set up already but the "Short term rental, long term wealth" book didn't go into that much detail in estimating gross annual income. Yes I'll use AirDna and any other tool I can find, but if anyone has a good resource for estimating this I'd super appreciate it. Lastly, I'm looking for some advice on how to narrow down what market I'm looking at. I downloaded the STR Insights 2024 report and am looking through that, but combined with using AirDna's data and asking myself "where would I want to vacation" I'm feeling a bit of analysis paralysis. If it's helpful, I love the outdoors. I surf, I climb, I love the mountains and hiking so any of that feels interesting. Thanks!

Surf, Mountains, hiking? Oregon Coast STR could be a fun option. We have about 40 eligible vacation rental properties for sale on our HOT list. Connect anytime, can give you a run down of performance and metrics. Usually top properties generate near 10% of valuation in gross annual income. Happy hunting.

541-800-0455

Sesemi | STR Brokers powered by Fathom Realty 516 Reviews

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Kyle Wise

Member since 2019 · 30 posts · 32 votes

2y

Quote from @Jeff Chisum:

90% of my clients are using the 10% down second home occupancy loan to buy in the STR asset class in all 50 states. I have unicorn opportunity that has Lowe rates and fees than Fannie.

@Jeff Chisum, do you mind sending me a DM with those details?

0 Reply

Jeff ChisumPro Member

Lender · All 50 States · Member since 2020 · 248 posts · 142 votes

2y

Quote from @Kyle Wise:

Quote from @Jeff Chisum:

90% of my clients are using the 10% down second home occupancy loan to buy in the STR asset class in all 50 states. I have unicorn opportunity that has Lowe rates and fees than Fannie.

@Jeff Chisum, do you mind sending me a DM with those details?

Of course!

0 Reply

Jeff ChisumPro Member

Lender · All 50 States · Member since 2020 · 248 posts · 142 votes

2y

I will send you a DM

0 Reply

Sarah KensingerPro Member

Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes

2y

There's a lot to cover with your questions so feel free to reach out, plus we offer complementary STR analysis. But for the numbers you're interested in, a wonder if Hocking Hills Ohio area or western NC would be a good spot for you to look into. Properties can be around the $500-$800+ range but would bring good returns.

[email protected]330-557-3021

1 Reply

Sarah KensingerPro Member

Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes

2y

Quote from @Sarah Kensinger:

There's a lot to cover with your questions so feel free to reach out, plus we offer complementary STR analysis. But for the numbers you're interested in, a wonder if Hocking Hills Ohio area or western NC would be a good spot for you to look into. Properties can be around the $500-$800+ range but would bring good returns.

@Pacifique L. Mahoro This might be beneficial to you as well, although if distance is a priority these areas are far from OKC. BTW I'm an OKC/Stillwater born and bred girl; my family is still there so I'm down there at least once a year!

[email protected]330-557-3021

1 Reply

Andrew SteffensBusiness Member

Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes

2y

I am working with a client right now on a $750k purchase with a 15% investor loan netting $3-5k in net profits and a 30%+ CoC return (Tampa Gulf Beaches). Self managing first year for cost seg purposes then getting a PM and doing it again next year is the plan. Not all are that high, but it is definitely possible. I think you likely have enough knowledge now, and if you need clarification find it here. I would find an expert agent or PM in a solid market and take it from there. Good luck!

[email protected]813-563-0877

Vacation Rentals of Florida53 Reviews

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Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

2y

@Robert Johnson

I would strongly encourage you to make sure you actually want to own and operate an STR... which puts you in the hospitality business.

I only own LTR but I follow a lot of STR operators, including people in my network, and it has gotten much tougher both to buy and to operate. You really have to stand out from the crowd.

I didn't look at your bio or any other posts but - can you house hack an STR? That's a lower risk way to get started.

1 Reply

Robert Johnson

OP

Member since 2023 · 24 posts · 21 votes

2y

Quote from @Nicholas L.:

@Robert Johnson

I would strongly encourage you to make sure you actually want to own and operate an STR... which puts you in the hospitality business.

I only own LTR but I follow a lot of STR operators, including people in my network, and it has gotten much tougher both to buy and to operate. You really have to stand out from the crowd.

I didn't look at your bio or any other posts but - can you house hack an STR? That's a lower risk way to get started.

Hi Nicholas, my draw to STR is primarily the higher potential for cash flow. I have the time to manage the properties as well. If I could generate a high cash flow from LTR or MTR I'm open to going that route. I've explored the idea of house hacking but I live in Austin, TX and the prices here are so high that it's been turning me off to that idea. Open to having my mind changed though.

1 Reply

Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

2y

OK - you should house hack. it opens up loan options with a lower down payment.

0 Reply

V.G JasonPro Member

Investor · Member since 2022 · 3k+ posts · 3k+ votes

2y

You seem fancied on the idea, will be impulsive on the decision, and a chicken in execution. Maybe, I am wrong but that's just the tone I get. Go be safe with this and do something different.

Go buy debt you can make $2500/mo on that for a 3 year tenure if you vet appropriately. You're reading the wrong stuff, you need to go in the trenches and talk to markets and get the scope.

That reading material tells you STRs are recession proof. Total hot garbage, lack credence.

1 Reply

Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

2y

@V.G Jason

good post. saying that you want to buy an STR for the return is sort of like saying you want to be an anesthesiologist for the salary. that's great, but... do you want to be an anesthesiologist? i was trying to figure out how to say to not choose a strategy solely because of perceived yield.

1 Reply

V.G JasonPro Member

Investor · Member since 2022 · 3k+ posts · 3k+ votes

2y

Quote from @Nicholas L.:

@V.G Jason

good post. saying that you want to buy an STR for the return is sort of like saying you want to be an anesthesiologist for the salary. that's great, but... do you want to be an anesthesiologist? i was trying to figure out how to say to not choose a strategy solely because of perceived yield.

100%.

You say it a lot easier than me though.

0 Reply

David N.

Member since 2021 · 59 posts · 16 votes

2y

@V.G Jason and Nicholas I appreciate what you are saying to Robert. I'm in a similar boat to him. I've encountered before the caution flag you are both throwing up. I don't think I'll mind being in the hospitality business but I'm sure I can't fully appreciate until I do it. Right now, I've tried to adopt a strategy that I heard on one of the Real Estate Rookies podcast, of just looking for the deals. The rest is all about exit strategy. Does that seem sensible? I'm trying to make sure I have my finances lined up and debating if I need to set up an LLC. Do I? And looking for where are the best markets to get deals.

0 Reply

V.G JasonPro Member

Investor · Member since 2022 · 3k+ posts · 3k+ votes

2y

Quote from @David N.:

@V.G Jason and Nicholas I appreciate what you are saying to Robert. I'm in a similar boat to him. I've encountered before the caution flag you are both throwing up. I don't think I'll mind being in the hospitality business but I'm sure I can't fully appreciate until I do it. Right now, I've tried to adopt a strategy that I heard on one of the Real Estate Rookies podcast, of just looking for the deals. The rest is all about exit strategy. Does that seem sensible? I'm trying to make sure I have my finances lined up and debating if I need to set up an LLC. Do I? And looking for where are the best markets to get deals.

It's not about mind being in it-- it's about wanting to. A lot of the junk that comes with this albeit I've only been in it for a year is just that-- junk. Lots of nonsense, that no one talks about. In STRs, more so than LTRs, and some not even explained in this thread.

In regards to LLC & markets, that's up to your diligence. Everyone has such different perspectives on it, it's probably best to research it to see what you're comfortable with and then go for it.

I will say on finances, be more than equipped. Never stretch yourself.

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Brian G.

Rental Property Investor · Los Angeles, CA · Member since 2013 · 1k+ posts · 1k+ votes

2y

@Andrew Steffens hey Andrew how big is the property in question, how close is it to the beach and do you own/self manage STRs yourself? Thanks!

1 Reply

Kyle Wise

Member since 2019 · 30 posts · 32 votes

2y

Quote from @Andrew Steffens:

I am working with a client right now on a $750k purchase with a 15% investor loan netting $3-5k in net profits and a 30%+ CoC return (Tampa Gulf Beaches). Self managing first year for cost seg purposes then getting a PM and doing it again next year is the plan. Not all are that high, but it is definitely possible. I think you likely have enough knowledge now, and if you need clarification find it here. I would find an expert agent or PM in a solid market and take it from there. Good luck!

@Andrew Steffens I live in Tampa and look at properties all day and am pretty skeptical you're seeing a 30% cocr return with these rates. Not saying it isn't possible but you've truly found a diamond in the rough with a 30% cocr especially as insurance premiums are going through the roof here.

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Looking for advice on STR strategy and markets

Looking for advice on STR strategy and markets

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