Southern indiana · Member since 2018 · 5 posts · 1 vote
New guy here. While on my third vacation to Hilton Head island SC, something dawned on me...I had paid $1500 for 7 days on the beach with my wife and kids. Being a versed stock market enthusiast, I began to do a little math one morning for ***** and giggles while I smoked my cigarette and drank the 1st cup of coffee for the day.... I was taken aback by the sheer Income potential that was compounding in someone else’s account while I was sitting on their balcony...the calendar was booked the week before me, and the week after we were set to leave...assuming everyone paid the same rate I did...I was blown away by the $6000/month earning potential...Does anyone here have experience with this sort of real estate investing?
@Michael Wayne Fraze III If you have selected the area you like for vacation rentals 100%, I can respect that. If not... I would strongly suggest you come down to the Panhandle of Florida and check out Okaloosa Island/Ft Walton Beach/Destin/Miramar Beach. This is a very popular area with year round tourist demand and amazing beaches. Yes, I'm biased, lol. I own three vacation rentals here, I live here and I sell and manage vacation rentals here. That said... look into several areas. Also, I will respectfully disagree with a comment made above about HOA fees. Here's the deal -- yes, condos on the beach can have high HOA fees. But those are not necessarily something to be repelled by. In many cases HOA fees of $400 to $600 per month may actually be a cost saving version of other expenses. With vacation rentals (especially in upscale, high-revenue areas on the beach) amenities such as pools, lazy rivers, landscaped grounds, exercise areas, etc are key in attracting year-round visitors. HOA fees cover for those. Condos with lots of common amenities are a lot more popular with visitors than those that don't have them. On the flip side, if you own a stand alone single family home near the beach and you use it as a vacation rental, you will still need to provide amenities in order to compete. So let's say you have a pool, a hot tub, a landscaper that takes care of the grounds, etc. That can be several thousand dollars in annual maintenance. Not to mention that if the roof needs to be replaced on a SFR you will be the one responsible for $10K-$20K. In a condo development the HOA will take care of roof, walls, grounds, cable, water, wi-fi usually. In short, don't just look at a $500 per month HOA and freak out. Figure out what is covers and what it might cost you out of pocket if you had to cover those same items for a single family home. Also, don't discard the added benefit of free marketing for "well known" condo complexes. Some are so in demand with guests that they look them up by name on VRBO etc.
@Michael Wayne Fraze III
DisclaImer: I do not know this market
Condos are rarely worth it. The HOAs are sky high. If they’re renting it to you that means the building is not warrantable so terms and rates will be through the roof. You’d likely have to self manage just to break even. That’s a lot of work for no money.
If you pay cash and therefore don’t have a mortgage you can make a good return but not enough to let a couple hundred grand just sit there. Best bet is pay cash, take out a heloc, buy more with HELOC. But even then you’re talking about 40% equity sitting there doing nothing.
Vacation Rental Markets to make money
#1 Gatlinburg Pigeon Forge
#2 Orlando Disney
#3 Big Bear
I’m in Pigeon Forge Gatlinburg Wears Valley so I can attest to the big returns. The others I’ve learned about by hanging out on this forum every day.
Long story short.... your weekly rent was likely not paying for your hosts cigarettes. And the fact that all bookings were 7 days means the HOA is probably a ball buster
I am on an email list for Myrtle Beach (even though I will not buy a STR there). This graphic (hopefully it posts) was emailed yesterday. It shows basically you will brake even. If you put $65K down payment you could earn a free vacation a year basically. I rather invest elsewhere the $65K make $6,500 - $13,000 return for the year and use $1,500 of it to rent the beachfront for the week. Numbers don't lie.
That’s good enough for me! I’m looking to get into my first vacation rental...I’ve cross referenced cities with the highest tourism revenues, in areas I like. The whole plan is to just acquire one unit for my families enjoymentand host it on VRBO/AirBnB while I’m not there. Thank you for the graph. Really helps me to put things into perspective!!
@Lisa R Barone Unfortunately not. Get on realtors email lists. What I do know about the Poconos is low booking window/short season for the year. Checkout AirDNA and see what others are making.
There are plenty reaping the benefits of Short Term Rental Investing, some cities and states it can be more seasonal so throughout the course of the year you may tend to only breakeven. Depends where you buy, for instance in Orlando the tourism and demand is much more consistent. With sites like Airbnb, VRBO, Homeaway and the like, it's never been easier to keep these units occupied and make great returns if you or the right property management company can manage it optimally.
@Michael Wayne Fraze III If you have selected the area you like for vacation rentals 100%, I can respect that. If not... I would strongly suggest you come down to the Panhandle of Florida and check out Okaloosa Island/Ft Walton Beach/Destin/Miramar Beach. This is a very popular area with year round tourist demand and amazing beaches. Yes, I'm biased, lol. I own three vacation rentals here, I live here and I sell and manage vacation rentals here. That said... look into several areas. Also, I will respectfully disagree with a comment made above about HOA fees. Here's the deal -- yes, condos on the beach can have high HOA fees. But those are not necessarily something to be repelled by. In many cases HOA fees of $400 to $600 per month may actually be a cost saving version of other expenses. With vacation rentals (especially in upscale, high-revenue areas on the beach) amenities such as pools, lazy rivers, landscaped grounds, exercise areas, etc are key in attracting year-round visitors. HOA fees cover for those. Condos with lots of common amenities are a lot more popular with visitors than those that don't have them. On the flip side, if you own a stand alone single family home near the beach and you use it as a vacation rental, you will still need to provide amenities in order to compete. So let's say you have a pool, a hot tub, a landscaper that takes care of the grounds, etc. That can be several thousand dollars in annual maintenance. Not to mention that if the roof needs to be replaced on a SFR you will be the one responsible for $10K-$20K. In a condo development the HOA will take care of roof, walls, grounds, cable, water, wi-fi usually. In short, don't just look at a $500 per month HOA and freak out. Figure out what is covers and what it might cost you out of pocket if you had to cover those same items for a single family home. Also, don't discard the added benefit of free marketing for "well known" condo complexes. Some are so in demand with guests that they look them up by name on VRBO etc.
That’s very encouraging!! Much like yourself, I’m biased to SC. However...several of the cities you listed were ones that came to mind when I was digging up data on tourism rentals. Thanks for tips!!
@Account Closed Thanks for the visuals - helpful. Can you share why you would not invest in a STR in Myrtle beach? What area would you feel make more sense. Trying to zero in on couple of areas to take a deeper dive in . Thanks
@Account Closed Thanks for the visuals - helpful. Can you share why you would not invest in a STR in Myrtle beach? What area would you feel make more sense. Trying to zero in on couple of areas to take a deeper dive in . Thanks
I chose East TN/Smokies. Study the markets and determine which works best for you. For me TN is STR friendly and I get a significant return.
@Account Closed Thanks, I am trying to soak up as much as I can while I figure out how to do my analysis and figure out what strategies work best and how to identify the right markets
We are doing well in Upstate NY, near a tourist area. We don't see the week long beach bookings but we are booked all summer. In the winter we also stay booked and have had travel nurses for 3 months at a time in the off season.
@Michael Wayne Fraze III
We own 4 units in 3 properties in Carolina Beach, NC. Just listed 2 this summer. They do really well for us in season and off-season. I would recommend if you are looking for a place to enjoy for yourself in addition to reducing rental income, then just search in an area you enjoy, like SC.
You already know the area, you know how much people are paying for rentals in that area, and you know what makes a good rental based on what you enjoy. No sense starting out in unfamiliar territory just because people promise you great returns.
Just my $.02.