Eager to hear about your Biggest STR Home Runs - which path did you take?

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Eager to hear about your Biggest STR Home Runs - which path did you take?

Investor · OR · Member since 2020 · 63 posts · 32 votes

I’d love to hear if your biggest home runs have been from:

a) buying an existing STR, tweaking it with your own unique skill set and applying your experience-proven enhancements to be a top performing property, or

b) converting a previously non-rental property into an STR?

Thanks!

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V.G JasonPro Member

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

I bought distressed in a very, very good area. Rehabbed it and the equity gain after was significant. These properties in better areas make every dollar worth more. To add a bathroom in the hood versus the primo areas is about the same cost; the return is completely different.

I buy most STRs full cash, and re-fi out with under 30% in LTV. Take that money and buy another. I try to do it under 30, and closer to even 20 or 10%. If it has great LTR capabilities, I'll have a larger loan if it's strictly a seasonal/market related STR it's no leverage on it.

The money is where the work is needed. I do not buy rehabbed, flipped, or turnkey. The money is lost there.

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Kumar R.
Property Manager · Destin, FL · Member since 2023 · 83 posts · 27 votes
2y
Quote from @Collin Hays:

In 2010, I bought a dilapidated cabin near downtown Gatlinburg over the phone for $210,000. The rental income was less than $10,000 a year. I was three states away. My sister lived only about 150 miles away, so she went over and looked at it after I bought it. She wept.
But, but, but!!! The cabin was circa 1800 and had good bones. It was right on the Roaring Fork River near downtown. Made from solid logs from the now-extinct Chestnut tree, wood floors, and original rock fireplace.
I put $40K into restoring it and played up the theme that it was the old. Placed functional antiques in every room, an antique persian rug, a few animal skins. Super cool!
It never did less than $35K a year after I did all of that. Sadly, it burned to the ground in 2016. I rebuilt with another genuine log cabin, but it's not quite the same.
Here are the before and afters:

@Collin Hays Thank you for sharing your experience. Sorry to hear about it but love the fact that you are still doing it.

@John Underwood investing early and if done right, pays well for a very long time. Congratulations!!

@Andrew Steffens and @V.G Jason what you both described is an outcome of which levers do you want to pull, time or money. Nothing better than finding that diamond in the rough and then flip it as long as you have the time, money and energy to see it through.

@Michael Baum, sometimes base runs are better ;-)
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Ray WilliamsBusiness Member
Lender · Denver, CO · Member since 2017 · 181 posts · 83 votes
2y
I view STR as a long game. So if this helps let me know. The example I will give we have now owned 10 years this fall. We bought a home in a ski resort town. So yes timing turned out to be critical, as now those permits are like pinky rings. We have gone from self-management to professionally managed by a luxury focused STR team. For the acquisition I originally sought to cover the note, knowing we would use it. Since that time, it is Top 1% in the sub-market, occ% is just about 75%, and avg ANR >$600/nt. Longer-Term goal- Absorb appreciation, pay off note, reinvest to maintain Top1%, and use cash flow to grow wealth. We have recently used appreciation for another acquisition.
For us there is a balancing act of improvements for guest experience, with functional improvements. I always view the asset as something we will need to put money into. And with a hospitality focus on STR there is a monthly spend on consumables. We have migrated into adding a new property in the last 60 days and will look to replicate what we are doing, in a new submarket with one simple goal- crush the competition and help create memories.
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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
2y
Quote from @Tom Dieringer:

I’d love to hear if your biggest home runs have been from:
a) buying an existing STR, tweaking it with your own unique skill set and applying your experience-proven enhancements to be a top performing property, or
b) converting a previously non-rental property into an STR?
Thanks!

My biggest STR home run was purchasing a property in a vacation market before STRs were common. The property is worth ~6x the purchase price (up almost $2m) and highest income year was over 50% of purchase price).
Of course this is no longer an option seeing STRs are common.
There are still value adds more sophisticated than rehabs.
Good luck
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Sarah KensingerPro Member
Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
2y
Budget has a lot to do with what an investor can do, but personally I prefer option b because the outcome is in my hands. I'm not making something work that is pieced together and, in many cases, just easier to completely redo.
[email protected]330-557-3021
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
2y
Quote from @Mark Miles:

Quote from @V.G Jason:

Quote from @Mark Miles:

I’ve done both but A is much much easier and cheaper. B can cost $30-$50k to setup and furnish from scratch. But you may be able to do option A for $10k or less in setup & furniture, esp if you buy the place fully furnished. (these numbers are just furnishing & setup costs, they exclude house purchase & closing costs)

It's not cheaper. It's likely more expensive. You're just viewing it as an add-on price, not from where it started. Sellers of A are profiting off you, think about that. The original buyers of the A bought it likely discounted too, so they're making value both sides. On the bid & the offer.

No, you’re missing the fact that when you buy a house fully furnished you can roll in the cost of the furniture into the purchase price and get it all financed on a 30-year mortgage (depending on appraisal price of the home, YMMV). You can’t do that with an unfurnished property - you have to pay for the entire cost of furnishings up-front. Huge difference paying for furniture in cash $30-50k up front vs financing it over 30 years

My cash on cash ROI goals require me to outlay as little up front cash as possible and buying furnished homes facilitates achieving that high ROI

Huh? It make sense cause you can amortize furniture in your bundled price?

Talk about missing the forest for the trees. If you're cash restricted, get out of this before this creeps up on you. Let's not confuse this, you're looking for lowest barrier of entry not the best entry.
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
2y
Quote from @Kumar R.:

Quote from @Collin Hays:

In 2010, I bought a dilapidated cabin near downtown Gatlinburg over the phone for $210,000. The rental income was less than $10,000 a year. I was three states away. My sister lived only about 150 miles away, so she went over and looked at it after I bought it. She wept.
But, but, but!!! The cabin was circa 1800 and had good bones. It was right on the Roaring Fork River near downtown. Made from solid logs from the now-extinct Chestnut tree, wood floors, and original rock fireplace.
I put $40K into restoring it and played up the theme that it was the old. Placed functional antiques in every room, an antique persian rug, a few animal skins. Super cool!
It never did less than $35K a year after I did all of that. Sadly, it burned to the ground in 2016. I rebuilt with another genuine log cabin, but it's not quite the same.
Here are the before and afters:

@Collin Hays Thank you for sharing your experience. Sorry to hear about it but love the fact that you are still doing it.

@John Underwood investing early and if done right, pays well for a very long time. Congratulations!!

@Andrew Steffens and @V.G Jason what you both described is an outcome of which levers do you want to pull, time or money. Nothing better than finding that diamond in the rough and then flip it as long as you have the time, money and energy to see it through.

@Michael Baum, sometimes base runs are better ;-)

It's not a time vs. money approach, it's passive vs active investing. I don't walk on water, so let me preface and I am not doing this to brag but just state a point. There's maybe a soul, likely less, on here that has more activities on me. Most confess they have a 5 year old, a W2, and a wife and therefore need to be passive not active investors. I have 4 kids, all under 9 and one newborn, a wife, 10 plus small businesses, farmland/timber investments, infrastructure, wells, and over 40 REI properties. That's not to be brag, that's to tell you if you know how to manage time, people, money, and everything in between there's not stopping you from being an active investor.

Passive investing, stick to fixed income. Everything else is a farce. You make money actively, not passively. People confuse liquidity with safety in regards to risk. People confuse ease with better. As I said before, the money is where the work is.

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