⚠️Forget the STR Guru Hype - Here’s What Helped My Clients Buy TOP Short-Term Rentals

[AJ Wong]

Short term rentals are a top asset class - with a lot of investor demand and not a lot of investable supply. But let's be real - investing in any ole' AirBNB is not as easy (or hard) as social media gurus make it out to be but you definitely do not need the help of one to find a lucrative investment. 

A short term rental is simply a residential property that is operated as a hospitality business (rented and occupied less than 30 days) - to be successful it requires due diligence, imagination, decisiveness, attention, effort and care. There is no magic pill. I started my AIRBNB 'career' arbitraging my Venice Beach Bungalow while I traveled SE Asia from 2015-2017 (before any regulations/rules) and invested in my first STR in Oregon back in 2018 after experiencing the potential first hand.

Fast forward a decade and I've owned, operated and sold 4 personal successful AIRBNBs with one paid off STR rental in Baja Mexico and a new (for us) Riverfront Cabin on the Southern Oregon Coast in process. Between all of that - I worked with Vacasa's Real Estate Division (once - one of the top and largest national STR PM companies and founded in OR) and strategically developed my real estate business to focus almost exclusively on investors to the tune of $30M+ in Residential and Commercial Sales.

WHY did I choose to focus on this niche? Because: Oregon Sells Itself! Who wouldn't want to own prime vacation home here? lol One other thing I observed since arriving in Oregon - is that initially there was little to no regulation and today the main reason most clients find and work with me is to help them navigate the nuances of STR permitting, licensing, permissions and process. It's where I'm of most value.

In fairness to the municipalities along the Oregon Coast - they have done an excellent job at curtailing their constituency's (like me) from being overrun with 'out of towners.' Generally the density of STRs in our coastal towns is lower - like 5%+ of the existing housing supply. Although this can be frustrating for investors - at the same time it also elevates the barrier to entry, protecting existing operators as well as the local charm and driver of the tourism in the first place! I'm often walking a tight rope, between maintaining the coastal peace and solitude it is known for and supporting ( investors) find their own slice of heaven - that can legally be shared with other guests and visitors. The hard truth is that the Coastal economy is heavily reliant on tourism and an imperceptible percentage of the properties I've sold would have otherwise been acquired by locals as primary residences. In other words - the Oregon Coast STR market has really always been that - a region where vacation rentals and seasonal homes make up a significant percentage of the overall housing supply and the average sales price is well above the median home price.

Professionally - in my markets, I'm confident that I'm in the TOP .1% of STR knowledge, experience and results. That is not to take anything away from the other excellent brokers in my area or that I work with regularly - but nobody offers the breadth of coverage, or proportion of quality closed STR sales or client performance (at least that I'm familiar with..) This is NOT a pat on my back - but to demonstrate that any 'coach' or 'guru' that is not a licensed professional in MY MARKET can't possibly deliver for the prices they are asking.

Take a look at some of the 'coaching fees' below..and note that several of the top national 'STR GURUS' actually have reached out to me for Oregon STR investor support. Not only do they charge the client (what is likely a grey area) 'coaching' fee - for providing semi-real estate related services (in an unlicensed state) BUT they also want a referral percentage from the local Realtor of (25-35%). Our average STR sale is +/- $700K - assuming a +/-3% Buyer's RE Commission that is an additional $5K+/- that could have been utilized for the BUYERS benefit in negotiations.

Here are some 'STR coaches' costs that came up in recent forums: 

Michael Cheng: Done-for-you: $25K Do-it-with-you: $15K

Bill Faeth: Offers a “do-it-with-you” coaching program for $9K.

BnB Turnkey: Minimum all-in budget: $250K (includes down payment, closing costs, underwriting [$20K], design [$30K], contractor work, and furnishings).

My BnB Accelerator: Do it for You: Property sourcing for $25K ($10K upfront, $15K at closing).

STR Search: Do it for You: Property sourcing for $18.9K upfront.

For perspective: Using our $700K STR Example..20% down is $140K plus closing costs of $15K = $155K / PLUS another 3-5% ($25K) for an STR Coach? That is 15-20% of the total capital invested (or multiple mortgage payments), and a healthy portion of the capital generally required to furnish or update the home to the standards of a high performing rental. That's not to imply that that these services are not 'worth' it - if you get your dream investment all the power to you! But I have my doubts about anybody not directly involved in the transaction delivering that much value. In some cases that is more than the actual agent/broker and mortgage broker/banker compensation - combined! To think that highlighting what are very typically already performing STRs (albeit with customization required to optimize) is an equivalent contribution to the lender and agent on the ground is ludicrous. Not to mention - the price of a decent boat or quick trip to Tahiti for you and a few friends..

Here is how to find a prime STR for any budget - in any market and my personal secret: Create a dream vacation home for yourself in a place that you love and share it with others. Thank you for your attention to this matter :) 

- Budget: Total capital for investment - down payment, closing costs, furniture/design, monthly costs with utilities and management, mortgage quotes. 

- Market: The top 3-4 areas you visit, dream about, are familiar with or prefer (although the actual market might be nearby). 

- Team: A TOP RATED ⭐️ on the ground and reputable investor (ideally STR) focused RE Broker/Agent in each of those regions. A go-to national lender or recommended local mortgage broker from the top rated RE Broker(s). A highly rated local STR focused PM (or two) that can provide additional localized insight and projections. A trusted/experienced or financially prudent friend or mentor that can provide guidance. The actual support team (cleaners, handymen, designers) will come later..

- Prospects/Analysis: 3-6 top prospects from each Broker in the preferred regions with existing STR performance records and/or projections from third party local property mangers. A method and format to organize those prospects (I like a shared google spreadsheet).

- Evaluation: Many great online tools and resources to validate performance or potential for enhancement. Including (but not limited to) investors' own real world experiences. What did it cost you to personally stay in the areas? Was it difficult to find a vacancy - with pets? Was the rental worth what you paid? Would you pay more if it was furnished from this decade? Or for a hot tub/sauna? Go on AIRBNB and look at the calendar (without pre-selected dates) of comparable homes in the area - is it full? None of these take or provide any mystical insight, but they can validate if an investment is feasible or you are on the right track.

- Strategy: Is a better price available? Do you need to pay above asking to get the home you want? Can you incorporate a seller concession to cover closing costs to furnish it better, or stretch your budget for the home with deeded beach access? Do you have to sell to buy and coordinate a 1031X, can you push to closing to coordinate with the holiday season? 

- Execution: When it does come time to actually tour and make offers there are generally two things that matter most - Timing & Location. Timing because the very best STRs will generally have other investors seeking the same performance (especially with bonus depreciation!) but also because...permitting. Regardless of what a listing says - validation and re-validation of intended usages and familiarity with localized ordinances, rules and jurisdictions is absolutely critical to an investable STR. The caution I have with a 'Coach' from outside of their respective market is that there are STR nuances they are unlikely to be aware of before it is too late for their 'student'. Not to mention - a majority of real estate investment risk comes from property due diligence of property inspections and offer validation. Just because a property generates above average income doesn't always equal a healthy long term investment.

*Remember - these aren't their contracted State Licensed Real Estate Professionals - like those required to provide real estate advice and related services. Like those that know - for example: in Seaside Oregon there is a 50% landscaping requirement and 50% parking requirement of the front yard - and that one space per bedroom is required, that the vehicles cannot utilize the garage or park tandem. Or that usually there is a 30% saturation restriction for actively licensed homes in neighboring properties, but there are zones that have a 0% requirement for the prime oceanfront home. Or they might not know that in one highly desirable coastal area with a current STR moratorium - you can quietly acquire the LLC of the existing rental and 'bypass' the forever waitlist. OR maybe that you can technically have an STR in Cannon Beach (sometimes) but you can only rent it to one guest every 14 days...or better that there are very specific listings that have no restriction. Or the most easy to comprehend example: The local specialized STR Agent/Broker or Brokerage has an optimal listing coming to market that meets and exceeds your needs..

In zero of those examples would a non-local 'coach' be of any value to acquiring an STR - that most importantly can continue to operate as one. Often in real estate - it is what you do not know are the most critical and essential. I assure you finding a high grossing STR for sale is not difficult - finding and closing on investable terms is an entirely different matter entirely.

- Optimization: If you made it this far - you probably forgot my secret sauce...It is: Create a (zoned) vacation HOME for 'yourself' that you share with others. To whatever capacity and resources you have, do the best that you can in creating a space that you would enjoy. If you have the ability and insight to purchase an STR (especially in an awesome destination) you have the resources at your disposal for the inspiration, education and occupation for return on investment. A lot of guests on the Oregon Coast's dreams include owning a space here one day - make it a reality for them (even if just for a weekend.) Hospitality is a reflection of getting what you give.

Personally - I think 'investors' are better off investing in themselves via $10-15-25K worth of STR vacation rental time in the areas they are searching. What better way to know your guru than to become one? 

This is not a knock - but it is a reality check (that I am clearly underpaid!) lol There is A LOT of STR noise on the internet, so there shouldn't be any expensive secrets.

Would love to hear of any super successful stories from any investors that have utilized the above services. I imagine if you've acquired the home of your investment dreams, it was well worth it. 

Cheers.