Hello BP Community!
I wanted to reach out to the community to get some feedback on a market that I have recently visited and am interested in making an STR investment. My wife and I really loved the area, and saw a lot of potential for an investment property as the area draws a high-end residential community, as well as year round events that bring in droves of tourists.
I am looking for a 2/2 or 1/1 condo in the Camelback area (not far from downtown), that will be in the $100K to $150K range and will meet the cash flow requirements. I live in CA, so this will be ideally be under property management.
Here are some questions I had:
1) I guess I need to step back and ask - what is the consensus on Scottsdale as a viable STR market? Or is the opinion that a long-term tenant is a better way to go?
2) Does anyone have contacts for a great property management company? What is the % range that these management companies tend to charge and what do their services entail? I have a SFR in KC, MO and property management in that area tends to be around 8-10% of gross rents.
3) I noticed that many condominium communities employ land lease fee's, how prevalent is this in the Scottsdale area?
Thank you all for taking the time and look forward to your responses!
Hi @JP K.
Scottsdale is great area for short term rentals due to the strong tourism of the area. Spring training brings huge crowds, and the summer, while very hot, brings a ton of out-of-towners to the area as well. To answer your questions:
1. STR may be a stronger market as the rental prices on condos under 150k for a 1/1 or 2/2 would be hard to cash flow once you add in HOA fees.
2. I haven't dealt with any PM companies out here personally but I'm sure others here can comment on it. A Yelp or Google search should get you going in the right direction
3. Land lease fees are just something that comes with the territory. I haven't seen enough to the point I'd label it as "many", but there are some condos that have this fee and you'd want to avoid.
Hope this helps.
If you are planning to use a property manager, be sure to determine if they are geared towards short term rentals. It's a different ballgame and there are quite a few nuances that a property manager should be aware of. For example, licensing, tax collection and remittance, turnovers and lots of customer service. A short term property manager will charge more than a long term manager due to the extra work involved. I've seen mainly 20-30%. You also want to make sure that they take credit cards, list on other sites besides just their website, don't require check in at an office that's only open limited hours, amongst other things. We manage STR's across the US and then partner with "boots on the ground" contractors to handle maintenance, cleaning, etc.
Bottom line is you can manage it all on your own or hire someone to manage it for you or in the case of Evolve, it's my understanding that they handle the bookings and then you handle the guest once they check in. It all depends on how involved you want to be.
I am have been invested in STR's in Scottsdale for 4 years running now and it has been quite fruitful though the population of STR's has exploded. Competition is hot especially in the 1-2 bedroom condo's and I recently purchased two higher end homes that are not as price sensitive. That said, it is still a great market to invested in. If you want to connect with me and send me your email address I can send you some additional details on how my 2 bedrooms are fairing.
Thank you all for taking the time to respond.
@Bob Okenwa - Thanks for the info! From what I saw while there, speaking to locals, and reading some of the forums, I thought that the market was strong enough to at least explore the possibility of setting up as an STR. I have been trying to dodge the properties that have the land lease fee, all things being equal when comparing properties.
@Wendy Schultz - Great info, thanks Wendy. That makes a lot of sense dude to the frequency of guests and the level of attention they may need. I will do some research in to local PM's and see the checklist of services they offer. The AirBnB I stayed in had a keyless entry which I though was a great idea and cut down on the back and forth between a manager.
@Michael Greenberg - Thanks so much Michael, I will PM you now!
@JP K. I currently own/ self manage a handful of very lucrative vacation rentals in the Scottsdale market and must say 2017 continues to blow me away as I am now booked all the way until the end of May- July with all my units.
If you follow the strategy correctly, you can make an extremely good “cash on cash” return (27-42% depending on debt services). Which in return can bring strong annual returns. I have represented several buyers and helped them in acquiring, furnishing, getting their platform started, and creating their very own rockstar vacation rental. It brings me lots of happiness, as I am a “pride of ownership “ kind of guy, and like to see everybody be happy with their investments. I am currently a super host with over 90 (4.9 star reviews on AIRBNB), and this all started with just an idea to try and make some seasonal income.
My two most recent has maintained 91% occupancy since going live in November 2017 and brought in over 20k each gross in just under 6 months. Not too shabby for under 200k investments.
Not to mention seen over 11% appreciation each with no rehab costs. If you have any interest in taking a look at the Phoenix market, any questions about how to successfully run/ manage a short term rental ( in any city), or just want to pick my brain, feel free to reach out. I love hearing other investor perspectives. Hence why bigger pockets has been such a value add to my life! I have multiple properties that meet my criteria currently on the market, breakdown of expenses ( cleaning fees, furnishings, operating expenses, etc.) I’m more than happy to chat! Thank you, George
I am local here to Scottsdale and I must say this is all great information. I have been looking at the STR space here locally but wasn't sure about summertime occupancy. I know the local hotels and resorts deep discount in June-Sept and make up for it by having pool parties with expensive drinks and stuff....
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