Vacation Rentals in the Poconos
Rental Property Investor · Queens, NY · Member since 2019 · 94 posts · 27 votes
Does anyone own vacation rentals in the Poconos, if so how is that going, would you recommend investing there?
I posted about this the other day in response to someone else’s question:
I've spoken to a few STR investors in the Poconos & here's some things they've warned me about:
1) Super low occupancy rates: you can rent for full weeks in summer but that's your only real guarantee. If you're super close to one of the ski resorts you can also rent for winter weekends (though the ski season has been getting shorter recently). Fall & spring are apparently super tough - very low demand - both weekends & weekdays. 75 annual rental days is considered good in the Poconos and 100 is considered excellent (so 20-25% annual occupancy). Compare that with Gatlinburg, TN & Florida spots that get 80+% occupancy year-round
2) Apparently there's a shortage of good cleaners in the Poconos. I've had numerous Poconos Airbnb owners tell me this shortage of quality labor is causing real problems.
3) Expenses can run high, which is a real problem with only 20-25% annual occupancy rates to produce income. Very high power bills, increasing property taxes, costly HOA fees, snow removal costs, hotel tax, septic & well maintenance costs, etc, etc
4) Perhaps most damning is this: I've talked to quite a few Poconos investors who are looking to sell after only 1 or 2 years of operating. To me this is a huge red flag. When I talk to STR investors in Pigeon Forge or across Florida, they're looking to BUY more STRs not to sell what they own! It worries me that so many Poconos STR owners sell so quickly after buying.
I posted about this the other day in response to someone else’s question:
I've spoken to a few STR investors in the Poconos & here's some things they've warned me about:
1) Super low occupancy rates: you can rent for full weeks in summer but that's your only real guarantee. If you're super close to one of the ski resorts you can also rent for winter weekends (though the ski season has been getting shorter recently). Fall & spring are apparently super tough - very low demand - both weekends & weekdays. 75 annual rental days is considered good in the Poconos and 100 is considered excellent (so 20-25% annual occupancy). Compare that with Gatlinburg, TN & Florida spots that get 80+% occupancy year-round
2) Apparently there's a shortage of good cleaners in the Poconos. I've had numerous Poconos Airbnb owners tell me this shortage of quality labor is causing real problems.
3) Expenses can run high, which is a real problem with only 20-25% annual occupancy rates to produce income. Very high power bills, increasing property taxes, costly HOA fees, snow removal costs, hotel tax, septic & well maintenance costs, etc, etc
4) Perhaps most damning is this: I've talked to quite a few Poconos investors who are looking to sell after only 1 or 2 years of operating. To me this is a huge red flag. When I talk to STR investors in Pigeon Forge or across Florida, they're looking to BUY more STRs not to sell what they own! It worries me that so many Poconos STR owners sell so quickly after buying.
Hi Eric, thank you for the info. It is super helpful. Though I read that there are different areas in Poconos. Some of them are really low in occupancy rate, but those closer to resorts (ski, water parks) are way better. What are the areas the experience you shared is related to? Or such a low occupancy is common for Poconos? Thank you!
The Poconos are tough. You’ll probably do ok in the summer for 10 weeks when school’s out, you’ll maybe rent for a few nights in the winter, and you'll hardly rent at all in the spring & fall. Even if you price it at $0/night in the spring & fall, the demand simply isn't there - there's a huge over-supply of houses in the Poconos relative to demand - hundreds & hundreds of rentals sit vacant every night in the spring, fall and winter. This isn’t the Smoky Mtns of TN which attract 10+ million overnight guests each yr.
There's too many houses in the Poconos & the local economy isn't great. There aren't enough jobs so it's tough to find long-term tenants. Thus everyone tries to STR their homes & there's simply WAY MORE vacation houses for rent than there are people looking to rent them!
50% annual occupancy in the poconos is a pipe dream; 25% is maybe achievable if you have a really nice place.
Another thing to be careful of: the Poconos have been getting much less snow in recent years which really hurts winter demand for skiing. The primary rental season in the Poconos has always been summer, with "ski season" as a smaller secondary rental season sprinkled in, but not really much any more.
Keep in mind the Poconos aren’t high elevation like Vermont or Colorado - they’re only like 1,000 ft above sea level so it wasn’t really great skiing to begin with. And at only 1,000 ft above sea level, they hardly get enough snow for skiing any more. Given global climate change, this trend appears to be worsening.
Most of the people who use the rinky dink Poconos ski slopes are locals from neighboring towns who live nearby & make day trips over to ski. Very few people come in from out of town to ski here, when they can easily drive to the nearby Catskills instead. In fact, most of the skiers from the NY/NJ/Philly area go to the Catskills 2 hours away in NY (much higher elevation & taller mountains), or up to Vermont. Hence why most Poconos rental properties sit empty all winter. Sadly, the bulk of the Poconos rentals happen only in late June, July & August when the kids are out of school. About 10 weeks a year of solid rentals is what ya get here.
Finally, there was a recent Pa Supreme Court decision (Slice of Life vs Hamilton Twp) where the Supreme Court unanimously ruled that STRs can be considered transient housing, which is illegal in residentially-zoned areas. Thus local residents can now complain about any STR & local governments can shut down any Airbnb/VRBO that they wish.
Also, the Poconos is comprised of 4 counties with dozens of townships & dozens of communities. Each county, township & community sets its own unique STR laws, rules, regulations, fees & tax rates.
After the Supreme Court ruling, each county, township & HOA is now busy creating their own STR laws, rules & regulations. They will be restricting the # of STRs that can operate in certain areas, the # of people you can have staying in a house, length of stay restrictions, limits on # of days per year you can STR, there will be home inspections, etc; they are also outright banning STRs in many residential areas. With strict fines for violations. I have some friends who serve on the boards of the various townships & HOAs, STR regulation is getting MEGA attention in the Poconos right now!
If you do decide to dive into the Poconos, I highly recommend that you spend many months learning the pros & cons of all of the different towns, townships & communities in the Poconos.
And if you do dive in, be sure to be super conservative with your projected occupancy rates, projected income & projected expenses. And be sure to get a GREAT deal when you buy - don’t just settle for any old house that looks like it “might make a good vacation rental.”
Finally, beware that it’s tough to have an exit strategy in the Poconos bc there’s such an over-supply of housing. At all times, there’s thousands of properties lingering on the for-sale market for years at a time. If you ever buy something, be fully aware that it’s a highly illiquid market with waaayyy too much supply and if you make a mistake or change your mind & ever wish to sell what you bought, that can take years to do.
@Mark Miles
Thank you so much.
This is an amazing analysis you did on the Poconos subject! Every point is super valid. I'm gonna read it a couple more times and process all this. Thanks again!
I agree with a lot of what was said above about the Poconos and their problems. I don't agree that you can't rent out long-term, it depends where you are. You will get no winter visitors unless you were next to the slopes. And the long-term prognosis isn't so good for skiing this far south. Climate change will chip away the ski season in many more Southern areas like this.
Yeah i eneded up finding fulltime renters in hamlin. Best bet if youre that far in.
@Mark Miles I really appreciate your thorough analysis of the Poconos. I recently began considering getting into STR over there but saw some of the facts that you shared and wanted to dive a little deeper. I'd love to connect to talk more about investing. I am still new to this so I was wondering how to figure out annual occupancy as I would like to analyze different areas. Thanks again!
@Ernesto Gencarelli Jr.
Hi Ernesto, were you able to get a positive cash flow? Or this rental just covers common expenses?
@Mark Miles I really appreciate your thorough analysis of the Poconos. I recently began considering getting into STR over there but saw some of the facts that you shared and wanted to dive a little deeper. I'd love to connect to talk more about investing. I am still new to this so I was wondering how to figure out annual occupancy as I would like to analyze different areas. Thanks again!
@Caileen Gonzalez
Hi Caileen, I'm also new to this. I have the same question, how to estimate occupancy rate. This is what I did. I selected the area I'm interested in, choose a several houses which I think are similar to what I was thinking about to buy. Then I just monitored each week/weekend if they are avaliable for rent or not. Not sure if this is the best way, maybe we can get an advice from experts.
Like others said, it's a very expensive area, and while there is money to be made, you'd be better off focusing your efforts elsewhere.
@Caileen Gonzalez
Hi Caileen, I'm also new to this. I have the same question, how to estimate occupancy rate. This is what I did. I selected the area I'm interested in, choose a several houses which I think are similar to what I was thinking about to buy. Then I just monitored each week/weekend if they are avaliable for rent or not. Not sure if this is the best way, maybe we can get an advice from experts.
That's a reasonable way to estimate occupancy rate. But, as others have mentioned, the entire Poconos is in regulatory flux right now since that Pa supreme court decision this summer. Now each of the Poconos townships is in the process of creating its own STR ordinances. If, after reading this entire thread, you still think the Poconos is the best place to invest your money, then I would strongly advise that you wait 6 months to buy in order to see what regulations & ordinances get passed by all the different townships.
Otherwise you’re playing with fire if you buy something & STR gets banned or restricted in that particular area 6 months later. Then good luck selling the house you just bought (or trying to find long-term tenants) when everyone else is doing it too at the same time bc of a new regulation! Just look at what’s happening in Hawaii right now after their new STR laws took effect:
https://www.kitv.com/story/408...
From that article:
Some of those former rental properties are already up for sale, and more are expected to hit the market. Not just from that property but all around Waikiki.
"There is a bit of a panic and frenzy start to develop," said General Manager Tom Lonigro. "This has the possibility of creating a direct and devastating economic impact.”
@Eric P.
Thanks again for the advices and links. I will definitely not consider Poconos as a potential REI. At least not untill we have a new clear STR rules. As for now I'm going to shift my focus on other areas.
And thanks to all participating in this topic.
last time I stayed at the Poconos I was bored to tears . We had virtually nothing to do and the area seemed rather depressed . My family agreed we would never go back . I can’t understand the reason for the high prices and desire for anyone to park money there .
@Dennis M.
Next time you go to the Poconos let me know, I’ll meet you for a beer and a Newport, haha. I’m a half hour away.
My wife is from the Poconos, and will not allow me to buy property there.
Sounds good Matt ,thank you for the offer . Hopefully there’s more to the place than a rock field ...a lake ...and some over priced restaurants lol
@Caileen Gonzalez
Hi Caileen, I'm also new to this. I have the same question, how to estimate occupancy rate. This is what I did. I selected the area I'm interested in, choose a several houses which I think are similar to what I was thinking about to buy. Then I just monitored each week/weekend if they are avaliable for rent or not. Not sure if this is the best way, maybe we can get an advice from experts.
@Caileen Gonzalez
Hi Caileen, I'm also new to this. I have the same question, how to estimate occupancy rate. This is what I did. I selected the area I'm interested in, choose a several houses which I think are similar to what I was thinking about to buy. Then I just monitored each week/weekend if they are avaliable for rent or not. Not sure if this is the best way, maybe we can get an advice from experts.
That's a reasonable way to estimate occupancy rate. But, as others have mentioned, the entire Poconos is in regulatory flux right now since that Pa supreme court decision this summer. Now each of the Poconos townships is in the process of creating its own STR ordinances. If, after reading this entire thread, you still think the Poconos is the best place to invest your money, then I would strongly advise that you wait 6 months to buy in order to see what regulations & ordinances get passed by all the different townships.
Otherwise you’re playing with fire if you buy something & STR gets banned or restricted in that particular area 6 months later. Then good luck selling the house you just bought (or trying to find long-term tenants) when everyone else is doing it too at the same time bc of a new regulation! Just look at what’s happening in Hawaii right now after their new STR laws took effect:
https://www.kitv.com/story/408...
From that article:
Some of those former rental properties are already up for sale, and more are expected to hit the market. Not just from that property but all around Waikiki.
"There is a bit of a panic and frenzy start to develop," said General Manager Tom Lonigro. "This has the possibility of creating a direct and devastating economic impact.”
I am (was?) close to putting in an offer on a really lovely 3BD modern ranch house in Lake Naomi, by far the nicest lake community in the Poconos with a huge spa-like clubhouse, pristine beaches, indoor and outdoor Olympic pools, tennis, golf, walking trails, etc. The family/kid activities in summer are nonstop. Though it's quiet and well-kept and you feel very much "in the woods" while there, you are 10 minutes from shopping outlets, highways, and the Kalahari Water Park and 20 minutes from three ski resorts and a casino.
Vacation rental histories I've seen indicate I could at least cover the mortgage and expenses (Lake Naomi dues/membership is SKY HIGH—you get what you pay for.) But this thread has me super-scared that I'm making a mistake.
The thing is, this isn't "just" a vacation rental for me. Primarily, it's an easy city escape halfway between Manhattan where I live and northern PA where my whole family lives. So it's for my use first, but I want rental income to break even, and I don't want to lose money when I sell. The Poconos do seem to have tons of houses on the market, and if you look at price histories, the story mostly isn't pretty. Unless you are flipping and greatly improving a property, you're selling for the same price you bought 10 years ago. With a 10K buy-in fee to Lake Naomi and 4K annual membership/dues, it's going to be even harder to break even when I sell.
The Poconos does have a huge development coming in 2020, Pocono Springs (also 10 minutes from this house), with retail, dining, museums, outdoor light shows, but who knows if that will help the market or not. On the other hand, I drive in from NYC all the time and it seems I'm not alone; the highway is full of families with kayaks and bikes and skis strapped to their cars heading to the Poconos. I just saw a rental history sheet for a small cottage in a not-so-great lake community a good 20 minutes from any ski resort: it made 56K in 14 months. That's not bad for a 130K cottage close to nothing! A realtor owns it and it's staged and marketed very, very well.
I guess my question is: if the Poconos makes the most sense to me location wise for a personal getaway/vacation rental, CAN I make it work, perhaps the way the realtor who owns his tiny cottage is making it work? Or is it doomed to fail? The house I'm looking at has tons going for it: bluestone fireplace, updated kitchen and baths, four-season Florida room, wraparound deck, incredible woodwork, two-car garage. But I'm going to have a mortgage, interest, insurance, community dues, membership, maintenance, snow removal, utilities, and cleaning fees, and ... part of me is thinking I should just invest in Maui instead. :) I know I need to do some calculations, and I'm new at this, but I'd love to hear any feedback for someone like me for whom the Poconos make the most sense lifestyle-location-family wise.
decide where you want a vacation home. Don't decide based on rental income. Make sure trying to short-term rent it is good with the Lake Naomi powers that be. Don't assume anything.
the consensus is that the Poconos are not much of a place to invest
I am (was?) close to putting in an offer on a really lovely 3BD modern ranch house in Lake Naomi, by far the nicest lake community in the Poconos with a huge spa-like clubhouse, pristine beaches, indoor and outdoor Olympic pools, tennis, golf, walking trails, etc. The family/kid activities in summer are nonstop. Though it's quiet and well-kept and you feel very much "in the woods" while there, you are 10 minutes from shopping outlets, highways, and the Kalahari Water Park and 20 minutes from three ski resorts and a casino.
Vacation rental histories I've seen indicate I could at least cover the mortgage and expenses (Lake Naomi dues/membership is SKY HIGH—you get what you pay for.) But this thread has me super-scared that I'm making a mistake.
The thing is, this isn't "just" a vacation rental for me. Primarily, it's an easy city escape halfway between Manhattan where I live and northern PA where my whole family lives. So it's for my use first, but I want rental income to break even, and I don't want to lose money when I sell. The Poconos do seem to have tons of houses on the market, and if you look at price histories, the story mostly isn't pretty. Unless you are flipping and greatly improving a property, you're selling for the same price you bought 10 years ago. With a 10K buy-in fee to Lake Naomi and 4K annual membership/dues, it's going to be even harder to break even when I sell.
The Poconos does have a huge development coming in 2020, Pocono Springs (also 10 minutes from this house), with retail, dining, museums, outdoor light shows, but who knows if that will help the market or not. On the other hand, I drive in from NYC all the time and it seems I'm not alone; the highway is full of families with kayaks and bikes and skis strapped to their cars heading to the Poconos. I just saw a rental history sheet for a small cottage in a not-so-great lake community a good 20 minutes from any ski resort: it made 56K in 14 months. That's not bad for a 130K cottage close to nothing! A realtor owns it and it's staged and marketed very, very well.
I guess my question is: if the Poconos makes the most sense to me location wise for a personal getaway/vacation rental, CAN I make it work, perhaps the way the realtor who owns his tiny cottage is making it work? Or is it doomed to fail? The house I'm looking at has tons going for it: bluestone fireplace, updated kitchen and baths, four-season Florida room, wraparound deck, incredible woodwork, two-car garage. But I'm going to have a mortgage, interest, insurance, community dues, membership, maintenance, snow removal, utilities, and cleaning fees, and ... part of me is thinking I should just invest in Maui instead. :) I know I need to do some calculations, and I'm new at this, but I'd love to hear any feedback for someone like me for whom the Poconos make the most sense lifestyle-location-family wise.
You make some very valid points. Here's a few things to consider:
- If you don't care about ROI, and you just want a nearby house to use with some occasional rentals to offset the mortgage cost then yes, this could be a good move for you. It's not gonna fund your retirement or be an amazing investment, but it could very well suffice for your very specific situation.
- You also need to be aware that selling the house, if you change your mind, could be a huge hassle - tons of inventory out there & you might need to mark your asking price down significantly and take a loss in order to sell. Such is the Poconos.
- You mention the rental history that you saw: 56K in 14 months. A couple things about this:
- 1) Did you ask to see their Airbnb & VRBO reports to verify that? Unless you see that, it's just a number they plucked out of thin air "because they heard that the guy down the block was earning that"
- 2) Funny how they're offering 14 months of rental history - did you catch on to why this is? It's bc summer season is really the only time that houses in the Poconos rent. So they're including 2 full summer seasons in their 14 months of rental history!!! So really what they're telling you (if even the numbers are remotely accurate) are that they made 28k last summer and 28k this summer. Ha! 56K in 14 months, heck of a way to make it sound twice as good as it is!!! Kudos to that listing agent for cherry picking 14 months of data!
- It seems that you're well aware of the very high costs of the Poconos... mortgage, interest, insurance, community dues, membership, maintenance, snow removal, utilities, and cleaning fees
- You didn't mention property taxes - they are EXORBITANT for what you get in the Poconos (Monroe County especially, which is the main part of the Poconos). You also didn't mention pest control, landscaping / lawn mowing / lawn care, booking fees, resort taxes / hotel tax that you'll have to pay, supplies, and possibly property mgmt fees (depending if you self-manage).
- Finally, since most of the income comes in during the summer season, you must be prepared not to use the place during the summer season (which of course is the best time!). Would you be fine using this house the other 9 months of the year (when it will mostly not be rented and the Poconos is pretty dead) and maybe only using it for yourself one weekend each summer? It will be tempting to invite all your friends and family out there over July 4th weekend but if you do that, you'll lose 25% of your annual income!
- So, bottom line, this COULD be a great opportunity for you given your very specific life circumstances. Just go into it with eyes wide open. If I were you, I'd calculate how much this would cost me per month WITHOUT any rental income - can you afford that??? If so, then any rental income will just be icing on the cake so you are fine. If you can't afford to buy this place without the rental income, then it's probably a bad decision.
- Also ask yourself if you're disciplined enough NOT to use the house during the high demand times, which is when you'll most want to use it (such as summer & july 4th wknd), in order to earn that rental income. And be sure to use your head not your heart when making investment decisions such as this. Good luck whichever way you go!
also, the only STR place worth buying in poconos is RIGHT NEXT to ski slopes. otherwise crickets much of the year rentalwise
Appreciate all the input, thank you. Let me approach it this way instead: I definitely want this vacation rental to pay for itself, mortgage-wise, after a 25% down payment. And I definitely want to not lose money when I go to sell it in 5-10-15 years. Other than that, I don't need it to fund retirement or cash flow to high heaven. (And yes, I have the discipline to never use it in summer, given that I spend most of summer on the West Coast.) So if not the Poconos, then where would you advise buying a house within 2 hours of NYC to provide an escape from skyscrapers and concrete, in a market where the property could earn enough vacation income to pay for its total monthly expenses? Catskills? Jersey shore? A duplex in Stroudsburg that I can lease half of to a long-term renter and "house hack" my own weekend getaway? Jersey and New York taxes seem just as bad as Monroe County, though appreciation seems better too. And of course, just a little bit south of the Poconos is the beloved-by-realtors Allentown/Bethlehem/Easton area, currently on fire real-estate wise... but that's not exactly a bucolic escape.
Appreciate all the input, thank you. Let me approach it this way instead: I definitely want this vacation rental to pay for itself, mortgage-wise, after a 25% down payment. And I definitely want to not lose money when I go to sell it in 5-10-15 years. Other than that, I don't need it to fund retirement or cash flow to high heaven. (And yes, I have the discipline to never use it in summer, given that I spend most of summer on the West Coast.) So if not the Poconos, then where would you advise buying a house within 2 hours of NYC to provide an escape from skyscrapers and concrete, in a market where the property could earn enough vacation income to pay for its total monthly expenses? Catskills? Jersey shore? A duplex in Stroudsburg that I can lease half of to a long-term renter and "house hack" my own weekend getaway? Jersey and New York taxes seem just as bad as Monroe County, though appreciation seems better too. And of course, just a little bit south of the Poconos is the beloved-by-realtors Allentown/Bethlehem/Easton area, currently on fire real-estate wise... but that's not exactly a bucolic escape.
Ha! There really isn't a place within a couple hours of NYC (other than NYC itself, where Airbnb is illegal) that gets enough year-round tourism to offset the monthly costs.
You can do what most people on here do: buy an investment property somewhere with strong ROI (such as the Smokies, Rockies, Hawaii), then take your rental profits and use them to vacation wherever you want!
Interestingly, here's Evolve's market report for the Smokies (Gatlinburg area) and the Poconos (Stroudsburg/Tobyhanna). The Poconos looks not as busy, for sure, but this implies that rentals actually *can* cover my monthly costs. It's not that I trust Evolve's reports implicitly, it's just that I have no reason to think a national company would "push" an area like the Poconos when they could focus on any vacation area anywhere. They have a ton of market reports here: https://evolvevacationrental.com/vacation-rental-performance-reports ... I'm leaning against using Evolve, but their site is one of the few where I've seen market reports all in one place. The AirBNB calculator also says I can expect between $2100-$2900/month income from a 4BR in Pocono Pines. That figure definitely covers my mortgage and expenses and even the high membership fees. Am I missing something here? It looks to me that I can cover my monthly expenses and break even. What I'm more worried about is exit strategy and making my money back when I sell. I come from CA where appreciation is never a concern. Looking at the flat values over the last 10 years in the Poconos is scary. Although buyers who've taken properties with good bones and cosmetically updated them have definitely made money, like anywhere. I'm not trying to argue, I'm really trying to figure this out. For context, I have a lot of cash on hand from a sale in San Francisco—enough to buy cash, but I'm trying to use "other people's money" instead—and I do plan to buy more properties than just this one in the Poconos, all in bigger money-making markets. But maybe I'm doing this in the wrong order? Chris, instead of taking over this thread with my individual situation, maybe I can DM you and ask what you would do in my shoes? I know it's only my "heart" leading me toward the Poconos... if my family wasn't there I'd ignore it completely. But what if I do three "head" investments and one "heart"? Would that work? :) Maybe I do the smart ones first and get rental income streaming.
https://www.evolvevrn.com/hubfs/DownloadableContent/VRPR/Gatlinburg-Area.pdf
https://www.evolvevrn.com/hubfs/DownloadableContent/VRPR/Poconos-Area.pdf
PS: The PA Supreme Court decision has already fallen out to an extent. A few Pocono communities have outlawed STRs, but the private lake communities never would. They are filled with part-timers, second-home owners, and Florida snowbirds who rent out their homes much of the year. Very few full-time residents there to vote "no" on STRs.
Interestingly, here's Evolve's market report for the Smokies (Gatlinburg area) and the Poconos (Stroudsburg/Tobyhanna). The Poconos looks not as busy, for sure, but this implies that rentals actually *can* cover my monthly costs. It's not that I trust Evolve's reports implicitly, it's just that I have no reason to think a national company would "push" an area like the Poconos when they could focus on any vacation area anywhere. They have a ton of market reports here: https://evolvevacationrental.com/vacation-rental-performance-reports ... I'm leaning against using Evolve, but their site is one of the few where I've seen market reports all in one place. The AirBNB calculator also says I can expect between $2100-$2900/month income from a 4BR in Pocono Pines. That figure definitely covers my mortgage and expenses and even the high membership fees. Am I missing something here? It looks to me that I can cover my monthly expenses and break even. What I'm more worried about is exit strategy and making my money back when I sell. I come from CA where appreciation is never a concern. Looking at the flat values over the last 10 years in the Poconos is scary. Although buyers who've taken properties with good bones and cosmetically updated them have definitely made money, like anywhere. I'm not trying to argue, I'm really trying to figure this out. For context, I have a lot of cash on hand from a sale in San Francisco—enough to buy cash, but I'm trying to use "other people's money" instead—and I do plan to buy more properties than just this one in the Poconos, all in bigger money-making markets. But maybe I'm doing this in the wrong order? Chris, instead of taking over this thread with my individual situation, maybe I can DM you and ask what you would do in my shoes? I know it's only my "heart" leading me toward the Poconos... if my family wasn't there I'd ignore it completely. But what if I do three "head" investments and one "heart"? Would that work? :) Maybe I do the smart ones first and get rental income streaming.
https://www.evolvevrn.com/hubfs/DownloadableContent/VRPR/Gatlinburg-Area.pdf
https://www.evolvevrn.com/hubfs/DownloadableContent/VRPR/Poconos-Area.pdf
PS: The PA Supreme Court decision has already fallen out to an extent. A few Pocono communities have outlawed STRs, but the private lake communities never would. They are filled with part-timers, second-home owners, and Florida snowbirds who rent out their homes much of the year. Very few full-time residents there to vote "no" on STRs.
Is your property lakefront? Here's the piece that Evolve isn't telling you... the "average" rental rates that it's showing consist of mostly lakefront properties. If your property isn't lakefront, you ain't gonna earn that level of income! To make it even better, when Evolve estimates "average purchase price" in an area, it uses the average across ALL properties. So it's taking revenue (mostly lakefront) & dividing by purchase price (including all properties) to project an ROI that's much higher than is realistic.
If you're really adamant about pursuing the Poconos, you need to take 1 of 2 strategies: 1) go for a high-end lakefront property (or a property within 1/2-mile of a ski resort), spend the big time money it costs for these properties (note that these properties sell for way more than the average Poconos property). Your revenue will be high, your expenses will be high, but you might be able to cover your monthly expenses. OR 2) find a super cheap property that you like & hope for the best. At least this minimizes your monthly costs so you have a shot at covering your monthly expenses. You're not really gonna get rich in the Poconos - you MIGHT be able to cover your monthly expenses using either of these approaches.
I know people who did what you did - "I heard that this guy is making huge money on his house down the block" or "I saw some numbers on this great property" but those properties are lakefront and then they buy a NON-lakefront house expecting the same revenues! Then 1.5 years later they're shocked & disappointed about their awful revenue & they're selling at a loss. They honestly didn't even think to account for differences btwn lakefront & non-lakefront revenue! They thought they could save a ton of money on purchase price by buying non-lakefront & they didn't realize the revenue would be way lower!!
I mean, let's be honest - most of the Poconos rentals occur in the summer. And when any of us are looking for a summer rental, we're ALLL gonna choose to rent a lakefront house over a non-lakefront. It just looks so pretty in the pictures with those chairs down by the water & those kayaks ready to paddle at sunset! Demand for lakefront homes WAY exceeds demand for non-lakefront. So lakefront gets rented way more at much higher rates.
The thing about areas like the Smokies is that they don't really have this lakefront vs non-lakefront issue. Pretty much any property within 15 minutes of Gatlinburg, Pigeon Forge, etc will be high demand. The Poconos isn't like that. Lakefront vs non-lakefront plays a huuuuge role, so does 1/2-mile from a ski resort. Do what's best for you, but just be sure you're not using lakefront revenue projections to buy a non-lakefront house!! I've seen how that one turns out & it ain't pretty...