Real Estate Broker · Grand Rapids, MI · Member since 2018 · 77 posts · 33 votes
Hello all. Thank you in advance for any advice. I am looking for information to determine a realistic value on a potential STR on Lake Michigan. This property is located between Muskegon, MI and Ludington, MI and provides an excellent elevated view.
It is a four bedroom, 2 bath log home with a fire pit down by the lake and a covered front porch which provides amazing Sunsets.
I hope a few people can answer some questions.
What is the major driving force in a choice to rent a place on Lake Michigan? Is it bedrooms? View?
Will this be rented by more than one family or a few unrelated couples or groups?
What would be a realistic occupancy rate on the Summer season ( Memorial Day through Labor Day)?
What can I expect for occupancy outside those dates provided that I adjust my price accordingly?
How will a lack of High speed internet affect the price and occupancy?
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
7y
@Dan Farkas. Hey bud just go on AirBnB as a guest and cruise the listings near this property. In other words tour “competition”
Are they booked? How much are they charging per night?
Just spend an hour on it and you’ll figure out real quick if you’ll make or lose money.
As for the question about one family or two.... who cares?
Internet... that depends. We have a 1 bedroom with no internet that grossed 54k last year. Just make sure they know it’s internet free BEFORE they book.
Real Estate Broker · Grand Rapids, MI · Member since 2018 · 77 posts · 33 votes
7y
@Luke Carl I am certainly cruising the listings on VRBO and AirBnB and the prices seem very wide in their amounts. I have some for $500 per night and others at $200 per night. Many of them seem to be pretty sparse in their bookings for 2019. Some are available at $200 per night and some are already booked at higher or even lessor amounts. That is why I ask here. :-)
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
7y
@Dan Farkas here’s an idea. Check out some properties in a busy market and compare them to yours. Orlando for instance. Or PForge. In fact why not click on the website in my profile and check out my properties. Check out the differences between my calendars and the calendars near your perspective property.
The thing about STRs is they can be managed from anywhere in the world. You don’t need to be near them.
Of course in this instance it sounds like you’re interested in the property for personal reasons and cash may not be a factor and that’s totally cool! But if cash is the driving force, buy in a proven busy market.
Real Estate Broker · Grand Rapids, MI · Member since 2018 · 77 posts · 33 votes
7y
@Luke Carl Thank you. I will look into that. I appreciate the input again. Yes! I am potentially interested in the property for personal reasons also. Nailed it! :-)
Contractor · Grand Marais, MN · Member since 2016 · 249 posts · 417 votes
7y
@Dan Farkas if you want it for yourselves, and any income is a bonus, that is fine. If you need the income to help make payments, not so good, it sounds like. If bookings are sparse this close to summer, doesn't sound good. Our summer from may through October is probably 90 percent occupied. Find something that makes money, and rent that cabin as you want to use it. I am also a gc, and log cabins are endless maintenance. You will be dumping lots of money into it. Also, you will probably want to use it labor day, July 4, and memorial day, which are the perfect times to be renting. Str's are work, so it needs to make sense.
Lender · Grand Rapids, MI · Member since 2018 · 703 posts · 446 votes
7y
That area can be difficult, they book up nicely in the whitehall area because you have more stuff to do. what city are you talking about?
I always see people want to be on the water or walking distance to the water if your doing a vacation rental. If you want short term rentals a view is nice, but some of those people are so busy they don't really get to even see the view.
Real Estate Broker · Grand Rapids, MI · Member since 2018 · 77 posts · 33 votes
7y
@Luke Carl Hahah! I voted! In this case it is a fixer upper that could be a really nice place. I mean it already is nice. but it could be Fabulous! Honestly, I want to buy this property and hold it long term. I am just looking for what the whole picture looks like as it is a completely different market than my long term rentals. I also own several Rv's also HAHAhaha.
Real Estate Broker · Grand Rapids, MI · Member since 2018 · 77 posts · 33 votes
7y
@Matt Groth I agree with much of what you are saying. I agree that the place will need a ton of long term maintenance and I am understanding of that. I just want to understand the market. What the draw is and how they are valued. For instance; Having a 12 week Summer rental for $500 per night at 90% occupancy with a four weeks outside the prime time at $300 per night is completely different from $12 weeks @ $200 per night and 90% occupancy. One is worth it. The other isn't.
What Lucas said is correct but if you don't find comps that's a good thing and figure our your niche. Look for areas that do not have AirBNB rentals. One of my best rentals was located close to Calvin college because there were no rentals in the area so I had no competition. As for your other questions.
What is the major driving force in a choice to rent a place on Lake Michigan? Is it bedrooms? View? Depends on your target. If it's a business person or somebody visiting area for leisure, it's normally clean and close to their amenity. If it's on the beach and the location itself is the attraction then you need to have alot of amenities at your home. Never oversell your property however, because if you oversell people are less likely to give you 5 stars so I always undersell and then people get pleasantly surprised.
Will this be rented by more than one family or a few unrelated couples or groups? It will depend on your stay discounts. If you give large discounts to longer stays that will encourage families and it will also depend on how you market your home. If you write kid friendly in your headline you obviously target a different person than if you say right next to all the shopping and clubs.
What would be a realistic occupancy rate on the Summer season ( Memorial Day through Labor Day)? If you do it right, you should be almost 100% occupied. If you are new to AirBNB you have to discount your rates a little but once you get 15-20 reviews and a Superhost rating you can definitely charge more. I just put up a short term rental that was fully booked for almost 4 months out in less than a month but my target was people looking for a cheap, clean location to sleep that was quiet. Alot of that was my track record as a host as people do read ratings.
What can I expect for occupancy outside those dates provided that I adjust my price accordingly? This is where you knowledge of the areas help. For special events like graduation, valentine's day, government holidays, and special fests you will always be occupied so you should know this so you can raise your rates. During Jan-Feb-March I try to get long term guests as much as possible and try to make a modest profit although now all of our properties book at least 70-80% year round regardless of month. Otherwise I would expected 50 percent occupancy. If you use the AirBNB suggestions for rates you definitely will get booked. I am always 20 percent above their suggestions.
How will a lack of High speed internet affect the price and occupancy? You have to have it. If you don't you alienate all the long term guests which make managing so much easier. If you really don't make sure you post it on the listing more than once you do not have it because guests alot of times automatically assume there is and will be upset if it does not. Reach out if you have more questions.