Branson, MO · Member since 2014 · 27 posts · 28 votes
Who else has been able to leave their job and have freedom in their life from owning vacation rentals listing on Airbnb and Homeaway? I live in Branson, MO and love my business. Who else is out there?
I'll do $500k gross in vacation rents this year, and $1mil next, averaging more then $150k/door/year. No problem leaving my day job, but in the short term I have definitely created another one!
I have done extremely well with airbnb in New Orleans but the new rules coming in to play on April 1 are going to completely squash my game. In order to continue renting out one side of a double I would have to have the homestead exemption. That means I would have to take the property out of the LLC and refinance it as owner occupied AND I would have to kick the long term tenant to the curb so that I could move in. I have no idea what the multitudes of investors are going to do, some are holding large amounts of properties that will be faced with having to shut down the strs. Many will not find the properties as desirable as regular rentals. It could have quite an impact on the market here. It is going to be interesting to see how it all plays out.
@Kimberly Jones is a bed and breakfast a possibility? I see that you can get a license for that and need only an operator occupant. Would you consider renting out an apartment in the CBD? It seems like that area is fair game.
@Chad C. bed and breakfast wouldn't work with a 2 bedroom shotgun. As far as the CBD, it isn't about the area, it is about the zoning of the property. If the property is zoned commercial you can run wild and free with it. My property is in a mixed use area and is on one of the busiest streets in New Orleans, but it is zoned residential. I did consider trying to get it rezoned as commercial but that could take a while in this city.
@Kimberly Jones The thing Im learning is that the CBD is all condos, and no association is going to let you do short term rentals. I see many listed, so I guess it doesn't deter owners. I talked to an broker today, and he said there is no real way to enforce it, or prove you are doing it, Just to say its family visiting.
I suggested a "principal bed and breakfast" because it seems like an exception that can be exploited. With a principal bed and breakfast you do not need the homestead exemption, just leasing agreement. Once you get the licence, you can rent it out however you see fit, not literally a bnb where 2 parties share the same space. maybe Im reading it wrong.
@Chad C. Both accessory and principal require homestead exemption. The City has done a fine job of killing a huge number of str's with that one requirement. Here is my view on it all....
I cannot imagine how they are planning to enforce. There are 4k+ properties on airbnb in Orleans Parish. I saw something last week talking about the new enforcement department and I think it said there were 3 people who are to cover inspections. I am going to take a wild guess and say that out of 4k, less than half will have a homestead exemption, probably more like 1/3rd. Even if it is 1/4, how the hell are they going to process 1k applications AND inspect them all within 2 weeks??? That is NOT going to happen. At the same time they are processing the applications for the ones that do have homestead, how are they going to manage to target and enforce the ones that don't??
There is one thing I don't think anyone on this train thought about and it's a doozy....what is it going to do to the market when investors can't run their properties as str's? Some are going to go to ltr and that is going to saturate the rental market. Rents will have to be reduced to compete. Many will say to hell with it and start dumping, which will saturate the sales market, which will also bring prices (and values) down. How many properties are currently listed in Orleans? I believe it is somewhere around 1500. If just 1/4 of the current airbnb's are thrown on the market it could be catastrophic. People are going to go into foreclosure, perfectly good properties are going to sit vacant, taxes will stop getting paid. Their little fees for str licensing are going to be a drop in the bucket of the money they are going to lose. On top of all that, folks who would have brought tourist dollars here are going to go elsewhere. It is going to be a straight up cluster fu**.
Hey Brad Moncado , how many nights per year are you averaging at your properties? Do you mortgages on each? If so, what is your cash flow compared to the price you paid for the properties?
I considered buying vacation rentals in Branson, but ended up buying my first deal (and am actively searching for my second) in Tulsa, OK instead.
We get between 160-175 nights per year in Branson of paid nights, and are working on ways to get more off season bookings. The good news is, it only takes around 100 nights a year to cover expenses, and the rest is great income. We consider our income passive because we have very minimal interaction with guests. We have a mortgage on each of our properties, and some I have purchased using creative methods that the sellers and us both benefit from. With you living so close, the topic of our Springfield Real Estate Investor Group this month is vacation rentals, google it for more details.
To those of you who are managing the larger properties -- are you leveraging your other VRs to build/pull the capital for the new VRs? Or are you making enough in net revenue that you quickly build up the pot to have the next round of capital for the next property? How often are you adding units to your portfolio?
I'm curious as to what the return on investment someone would get from a VR? Please note if you are managing the property yourself. I'm interested in buying a property in San Antonio and renting it out to tourists that come visit. Thanks
We self manages several that I own in the Branson, MO area. Our goal is to bring in twice what it cost us to hold a property. It doesn't work on every one of them, but with the number we own, we live life the way we want to. We are teaching all about this in Branson this weekend.
I love this thread, thanks for starting it @Brad Moncado! My husband and I are very close to our goal of buying our first vacation rental this year. We spent a year and a half researching various local markets and analyzing long term rentals and vacation rentals. Turns out we're much more interested in owning and managing vacation rentals.
Our biggest challenge is lowering our expectations on a vacation rental to look at it as an investment and not as a place we would want to rent. Cash flow is cash flow, but we can't get the idea out of our head that it has to be a place that we would rent.
Currently evaluating a condo with a low entry point with less capital tied up (that we would never personally rent, but would show great cash flow) versus the big 5 BRs (that we would personally rent) that would have a scary mortgage liability and tax rate.
Newer to BP, so happy I found this forum and will be following!
@Christine S. Savvy response. It sounds like you were able to get past the emotion that 99% of people have when looking at the vacation rental market. That emotion creates a premium than turns the potential of cash-flow into a break-even proposition.
I love this thread! I am currently in the middle of renovating a 4500 square-foot building in the heart of Kennebunkport Maine into five luxury apartment rentals.
Each will be between 700 ft.² and 1200 ft.² In the high season of June - August, occupancy in Kennebunkport is 95%. In the off-season I can expect an occupancy between 40% -50%.
Each unit will come with two bedrooms, two bathrooms and full kitchens with high-end finishings. Large living area, flat screens TV's gas fireplaces etc etc
The Airbnb people tell me I can expect between $300-$500 a night in season and between $200 and $400 off-season. My all in cost including purchasing the building and construction is a little over $1 million.
Cap Rate of 11 and cash on cash return around 30%.
Seems to good to be true!!
I'm on that path @Brad Moncado. Two properties in Scottsdale, AZ, will be buying two more this year. I have been slowly finding folks like yourself and working on creating a group that are on this same path. If you want, PM me your contact info and we can connect and share further ideas.
Cheers to You!
Mike
Hey Mike. I too have 3 places in Scottsdale and I'm looking for another 2 in the coming month's. Please add me to the group you're creating.
I host remotely from my home in Vancouver Canada. I have a great cleaning team, a handyman on call which I haven't had to use yet.
My main problem now is financing. First 3 are paid off in cash and now I'm trying to get a loan but I'm a foreign investor so I'm having to jump through hoops. Because I've had these str for less than 2 years they won't consider the income from these properties. They're actually negatively affecting my application. (hoa, insurance, property tax are all expenses)
My wife manages several short term rentals for another BP member in our town. It's worked out great for all involved, allowing my wife the flexibility to stay home with our daughter and the owner to travel and pursue other interests.
We are going down this path this summer. Looking to get a duplex or other small multi and live in part while putting the other part up for short term rental. This will allow flexibility for when groups of our family come to visit too.
From the money saved/made through the short term rental will allow us to get others.
@Brad Moncado, thanks for sharing this post. Ive been sitting on the fence with this for a little while, but want to jump in. Working the full time other job for now.
@Blair Russell I love the sound of what you're doing, I'd like to diversify to a lot of states. When you say they can be 'picked up cheap'... what methods do you use to do that. And what to you call "just outside of the tourist zone". I don't quite have the money saved to pay a downpayment on a 220k+ unit yet (which seems to be the base for VR in the areas I'm looking), but I'm headed that way.
As a side note, there's a piece of property for sale, that I've seen on and off the market, in an active vacation area near here. It's on the river and surrounded by 700k to $2mil homes. Asking price right now is 480, but its a place that I've seen go on and off the market for asking as low as 300k. Needs a little work, but I feel like it's a fantastic Airbnb candidate and a property I'd love to own...
@Dan Mead Yeah, It helps to be in different locations especially as STR rules keep changing, and the markets shift. My rentals can support each other and I learn things in each location that benefit the others. I sent you a PM.
So I am interested in Vacation Rentals. But am too new to REI in general that I don't know what I don't know, so not sure where to start. Any suggestions for guys looking to get started in REI and VRs at the same time? Thanks!
To people that are successfully running VR, do you see the great returns in tourist cities mainly (close to beach, skiing, hot city) or in boring areas as well (conferences, weddings, etc.)?
I own all my vacation rental homes, and all my homes VR's are within 15 minutes of where I live. At our event last year we had a speaker panel on managing a VR from 100-1000 miles away and our group loved it! Having a power team is the key, with the most important being a quick response appliance repair/handy fixer upper person, a fabulous cleaning team, and a community of other owners that will communicate with each other. Other than that, people can self manage from afar and enjoy life. Hope that helps!
Brad :-)
Hi Brad. I did a quick search on Branson on airbnb and found a few of your homes. Very nice! Also looked at. Realtor. Com and homes are about 40-50% cheaper than the airbnb homes in looking to purchase and have purchased.
Would you be interested working together (managing) if I decide to invest in your town?
Still really early but I like what, I'm seeing.
What time some of the tourist attractions in Branson?
I have 2 airbnb rentals. To get comfortable with the concept of VR I suggest you travel to a VR yourself, or an airbnb. Then consider being hosts. Get to know if you want to interact with a host as a traveler, and if you want to interact with your prospective guest as a host. That will help you decide if you want to hire that out (vrbo, someway, or co-host on airbnb, or some other local property mgmt co). That option comes with a cost but whatever works with your philosophy is the right option.
Next, do some leg work on those listing sites. What generates the highest rents? What are the cleaning fees? What are the county/state/city zoning laws? Do you like the area yourself if you have to go there to maintain?
The one in my home is pure and simple convenient and borne from the love of traveling and meeting people. From there, combined with our desire for real estate investing, we decided to buy a house that we'd live in one day in the city we'd be happy to live in. To afford it, we listed it. This will allow me to be considered a real estate professional and offset our w-2 wages was well as deem our furnishings as expenses.
Any time we visit it will be a 'necessary trip for business' as we maintain it or repair something. If it's blocked out for any period of time, the irs categorizes it differently so we won't block it out but I'd consider raising the rents during that period.
That said, it's in North East FL, St Augustine, where the spring and summer is in demand but the rest of the year is not "slow". 2 miles from great beaches, walking distance to the Old Town and National Monument, wedding venues, concert hall, marinas, tourist destination. Key for us, we love the house and the area and expect to have mortgage pay down and tax advantages. Know what your goal is first.