Investor · West Monroe, LA · Member since 2015 · 196 posts · 70 votes
I am interested in investing in vacation rentals, but I'm not sure where to begin learning. Can anyone advise on books or other information that has helped you gain knowledge in this area? Any advice or help is appreciated greatly!
Honestly - the best place for on the ground information you are going to get is through FB groups. Some of them have 1,000s of people in them and they would all be able to talk you through it.
From an investment angle, BP makes more sense because you can bounce ideas off of other people here for investing in different areas of the United States and get information that is useful.
But, let me say this - we have 12 condos and they rent extraordinarily well. But, the condos with the best lakeviews rent more often (30% or better) The ones closest to the amusement park rent better. The ones closest to the lake rent better. The ones with the biggest TVs rent better.
Travelers pay attention to the details and will rent what gives them the most bang for the buck. So make sure to consider theses angles when buying as well.
Honestly - the best place for on the ground information you are going to get is through FB groups. Some of them have 1,000s of people in them and they would all be able to talk you through it.
From an investment angle, BP makes more sense because you can bounce ideas off of other people here for investing in different areas of the United States and get information that is useful.
But, let me say this - we have 12 condos and they rent extraordinarily well. But, the condos with the best lakeviews rent more often (30% or better) The ones closest to the amusement park rent better. The ones closest to the lake rent better. The ones with the biggest TVs rent better.
Travelers pay attention to the details and will rent what gives them the most bang for the buck. So make sure to consider theses angles when buying as well.
@Austin Works I agree with @Michael Kugler . There is alot of information here on BP that will give you much insite. I fully agree with location. My VRBO is on a lake close to a University it stays rented. And I like to go there and enjoy time on the lake which is a plus.
Right now the biggest concern is STR regulations and permitting. So some quick advice would be to focus on areas that either have no interest or future interest in regulating STRs or areas that already have established policies that are working for them and that have reasonable qualifications to entry.
Thanks to all for the great information, I will definitely look into these books and articles. Can you tell me what markets are doing well in the Southern/Southeastern regions? I live in North Louisiana. @Jon Crosby@Mike V.@Sid Payne@John Underwood@Michael Kugler
Thanks to all for the great information, I will definitely look into these books and articles. Can you tell me what markets are doing well in the Southern/Southeastern regions? I live in North Louisiana. @Jon Crosby@Mike V.@Sid Payne@John Underwood@Michael Kugler
I'm in the Disney World area and Colorado mountains with plans to expand to a beach area, maybe Costa Rica.
@Austin Works, yes that is pretty much it. I don't own the place I manage in Colorado, it belongs to a buddy of mine. I used to live in the Kissimmee area so I know the area and have connections there. I am trying to look for some deals off the MLS but I'm not sure how to do that remotely. I will say that that market is becoming saturated and more and more competitive so I would like to start looking elsewhere to diversify.
@Austin Works I'm in Fort Walton Beach / Destin, FL. This is a great area for vacation rentals and you should definitely check it out. I have three of my own here and also sell real estate here. The vacation rentals I have do very well. Since you are in Louisiana you definitely should consider the Emerald Coast of Florida. It is within driving distance for you, which can be very helpful if you want to check on the property, if you have an emergency or if you are planning on using the property occasionally yourself (which most people do, it's a great perk of owning a home on the beach). I can't speak to other parts of the country, but as far as Florida is concerned the Emerald Coast is one of the more affordable areas as well and very popular destination.
I would suggest you check out the following website for info about vacation rentals in general: http://vrownersguide.com/ It is a vacation rental owners guide website. I'm not connected to it in any way just find the information on it helpful.
Good luck! Don't hesitate to post any questions on the forum here and to also follow all the various discussions. I learn a ton just be reading through those.
Thanks to all for the great information, I will definitely look into these books and articles. Can you tell me what markets are doing well in the Southern/Southeastern regions? I live in North Louisiana. @Jon Crosby@Mike V.@Sid Payne@John Underwood@Michael Kugler
Cabins in the Great Smoky Mountains, Tennessee -- Gatlinburg or Pigeon Forge. I bought my first one there and am absolutely killing it. Trying to get into another one before the leaves change in October which is a very busy season. It's AirBNB/VRBO friendly, with a 10-month high season, Jan & Feb are the only low months but even those pay the mortgage. I expect to get a 30-40% ROI
@Tim Schroeder has it right; the Gatlinburg, Pigeon Forge, Sevierville (and Wears Valley) areas are pretty hot. VR's are welcome and have been the backbone of the lodging industry for 40+ years. Prices are a little inflated right now due to a shortage of homes resulting from the 2016 wildfires. Lots of construction going on and many older owners cashing out their own vacation homes. Even with this inflation, you can do VERY well here.
I just settled on my 3rd and 4th homes and my first two are doing very well. I hope to have #3 available for rent in the next 7-10 days while #4 is going to take me about 2 months to rehab and get ready. We also bought a lot to build #5 later this year.
Avery Carl is an agent and works the area; she is here on BP. She and her husband own a handful of rentals in the area too.
@Villy Ellinger, this is great news. We really enjoy this area and will actually be in Destin this Saturday (7/21) thru the following Sunday. Would you happen to be available during that time to show us a property or two? I've heard from other investors that Jetti East cash flows pretty well.
@Tim Schroeder, I have read on several blogs that TN is a great market. In your opinion, would you say that an investor should aim to buy below market value or can you still cash flow paying retail? This is way out of my element, as I am typically a value add investor.
@Chuck Kramer, I was just about to ask if you guys could recommend an agent, so this is very helpful. I will reach out today and I'll be sure to let her know you referred her. Also, I know I just asked Tim this, but are you aiming to pay below market value for these types of rentals, or is it typical to pay appraised value as long as it cash flows on these STR's?
Well I am new to all this. But, of course common sense says to aim to buy below retail if possible. For me, being new, I didn't feel I had that option. How does a newbie find below-market deals? How do you beat out professional investors? I don't know. So what I did is I bought retail off MLS, but made sure the numbers worked.
Also, here's the critical thing: For cash flowing properties, purchase price is not the key factor, income and expenses are. I know this sounds crazy and doesn't make sense on the surface. How can I say that purchase price doesn't matter? Well, just run the numbers through an ROI spreadsheet (by the way I use very conservative expense estimates). As I write this I was looking at properties and I had my ROI spreadsheet up. There is a property for $325,000 that I am looking at that should net $19,170 a year with ROI of 19.9%. If I increase the sale price by 20,000 the net changes to 18,148 and 17.9%. That's a modest drop of about $1000 bucks a year. The point is, both of those numbers are respectable (18k or 19k) and that 20k in extra purchase price barely affected my return.
@Austin Works I have not yet paid asking price. It has been helpful to submit the offer with proof of funding as it seems a lot of deals here fall through on the financing side.
I run my analysis based on asking to be sure it works, but have managed to get around 5-7% lower.
One exception was a recent buy that, in my opinion, was priced about 50K too low.made list price offer 15 mins after it went live, sight unseen. I only added an inspection contingency on that one.
Just to add to what @Chuck Kramer said, as I think he mentioned he is buying larger properties. For the 2-3 bedroom properties (and sometimes the larger ones, depends on how turn-key they are), especially the ones that are new to the market, it's taking at asking price and sometimes over (if there are multiple offers) to snag them. If the property has been sitting on the market for a few weeks there is more room to negotiate, but most of the time we aren't seeing properties go for more than a 5% discount from purchase price. Of course, there are exceptions, but when you are running your numbers make sure you take that into account. The smaller/lower asking price the property, the less leeway I have been seeing sellers give on purchase price.
@Tim Schroeder also gives great advice to not get too caught up in purchase price and monthly net profit, but overall COC return.
I'm from Houston and looking to get into short term as well. Thank you all for the info provided.
Questions for those who have own vacation rentals for a long time (if any here)....do you see a dip in rent when the economy is down? Right now everything is great and vacation rental is making good return. My concern is that when the economy takes a down turn and we still have mortgage to pay for these vacation houses....risk is high?
I'm from Houston and looking to get into short term as well. Thank you all for the info provided.
Questions for those who have own vacation rentals for a long time (if any here)....do you see a dip in rent when the economy is down? Right now everything is great and vacation rental is making good return. My concern is that when the economy takes a down turn and we still have mortgage to pay for these vacation houses....risk is high?
About 5% of my total apartments (so, about 50), are rented via STR. But I don't do it. I have a small handful of investors who lease blocks of apartments from me, pay me a fixed monthly amount, and they lease to STR. I like it as only 1 tenant to deal with for a block, and I make them do all maintenance.
I have actually done a few vacation rentals with great success. I moved to a different area and took a break but getting ready to get back into it. I just used hotels as my comparison on amenities, conveniences and prices. There are a lot of guidelines in the lodging industry which helps to ensure you don't get sued. For example bed bugs. The best way to avoid them, is to replace all linen, including blankets. I just donate to the homeless or goodwill, along with towels. I only have leather like living room furniture as well, less penetrating material, easier to sterilize and clean. When I get some rentals on the same property then I will hire a towel/linen service which washes everything at the lodging standard temperature. There are 2 turnkey vacation rentals for sale right now in Scottsdale AZ by the owner and he has been very successful and is selling them fully furnished with TVs, linens, kitchen, etc. He has done it right and just wants to downsize his properties. If you're interested let me know, he's even willing to stay in touch with the buyer for any questions.
I'm from Houston and looking to get into short term as well. Thank you all for the info provided.
Questions for those who have own vacation rentals for a long time (if any here)....do you see a dip in rent when the economy is down? Right now everything is great and vacation rental is making good return. My concern is that when the economy takes a down turn and we still have mortgage to pay for these vacation houses....risk is high?
Here in SFL the savvy investors pivoted to STR as a way generate the necessary income to hold their properties during the downturns, and were successful in doing so. I believe vacation rentals are the best value for the buck, so imagine more would seek them out in a downturn. You may have to adjust your pricing but you should still generate more income than LTR.