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 agree with Mark. I know people In the Poconos. It is far less than they imagined.
Good points, as usual Mark! I rent in the Poconos and I don't take lakefront because I actually don't want to pay that much. I figure I can always walk to the lake, or the pool, etc. But for sure those averages are highly leveraged by lakefront revenue. And the "small house" approach, I have definitely seen that work. A guy I know bought a 70K cottage in Albrightsville, 20 minutes from the nearest ski lift or any attractions really, and he makes a good profit. It might be much smarter and more conservative to go with a cottage for half the price, and market it as a spot for couples or small families perhaps.
Good points, as usual Mark! I rent in the Poconos and I don't take lakefront because I actually don't want to pay that much. I figure I can always walk to the lake, or the pool, etc. But for sure those averages are highly leveraged by lakefront revenue. And the "small house" approach, I have definitely seen that work. A guy I know bought a 70K cottage in Albrightsville, 20 minutes from the nearest ski lift or any attractions really, and he makes a good profit. It might be much smarter and more conservative to go with a cottage for half the price, and market it as a spot for couples or small families perhaps.
Yeah, I think the best opportunities to try to break even & cover your costs in the Poconos are either on the high end of the market or the low end of the market.
Either go all-in & buy a dazzling $700k+ lakefront house in Lake Naomi, rent it for a ton, and hope to cover your extremely high costs.
Or buy a $70k house in the middle of the woods, slap a coat of paint on it, and get whatever you can in rental income and at least your monthly carrying costs are relatively low and you’ve got yourself a nice little retreat in the woods.
Can I ask how much that place you were targeting was listed for? I’m guessing somewhere in the $225k-$400k range?
I see a lot of regrets coming from that $225k-$400k purchase price range in the Poconos. It isn’t high enough to get a nice lakefront property, but you’re still stuck with high carrying costs. So now you basically own a house that’s identical to 10,000 other non-lakefront Poconos properties & then people start wondering why they can’t rent it enough to cover their costs.
I mean, Airbnb, VRBO, etc are a highly visual medium. And when you buy lakefront, you get to post those great pics of empty chairs down by the water at sunset with kayaks in the background. Those REALLY stand out on Airbnb & VRBO in the Poconos. If your house isn’t lakefront, it’s just gonna blend in with the other 10,000 generic Poconos houses on Airbnb & VRBO.
In places like the Smokies or Tahoe, there's thousands of houses for rent, but they have sufficient rental demand to keep those places occupied year-round. Sadly the Poconos has these 10,000 houses for rent that are all more-or-less identical to each other (unless you're lakefront or 1/2-mile from ski resort) & demand is only sufficient to keep like 10-20% of these places occupied for most of the year. So 80+% of the Poconos STR inventory sits vacant for much of the year.
So then they list their home for sale (which is why there’s thousands of homes for sale in the Poconos at all times), hoping to find the next sucker who wants to try where they failed!
@Mark Miles @Robin Rinaldi, any consideration of market cycles in relation to short term rentals? If the economy goes south, the first thing to suffer is discretionary spending.
If short term rentals were going to be a substantial portion of my holdings, I would probably want them to also at least break even as long term rentals. This way if the market changed I would have another play without having to liquidate in a down market.
it is my opinion that str is not worth it unless you can show a very serious premium to long term rental. In my areas (Eastern PA), I do not really see that.
@Mark Miles @Robin Rinaldi, any consideration of market cycles in relation to short term rentals? If the economy goes south, the first thing to suffer is discretionary spending.
If short term rentals were going to be a substantial portion of my holdings, I would probably want them to also at least break even as long term rentals. This way if the market changed I would have another play without having to liquidate in a down market.
That's another problem with the Poconos - the economy isn't great, even during good times. The last 10 years, which has been great for most of the nation, hasn't really benefitted the Poconos much at all. LTR rents really don't cover your costs in the Poconos (there's simply a surplus of properties - they overbuilt back in the day when the Poconos was more popular - so both LTR & STR supply way exceeds demand thus pushing down rental rates), esp once you consider how brutal the taxes are (still not sure why the property taxes are so high), I could only imagine it getting even worse during an economic downturn.
@Mark Miles, I'm not far from the Poconos and its nothing like that near me. Cheap properties cash flowing properties and reasonable taxes.
I haven't really looked in the Poconos for rentals so I can't really comment on that.
high taxes are part of the poconos, mainly monroe and pike counties. i looked at some places and the insanity of a 7000 annual tax bill on a 150,000 bill. almost 600 monthly just to pay taxes on a cheap house!
so imagine long-term renting a house for 1200 monthly and paying 600 school and property taxes monthly! Insane.
the scranton wb market are well outside that.
Ha! Yeah, it’s absolutely INSANE! $7,000 tax bill on a $150k property, that’s almost a 5% property tax rate, it’s insane, it’s gotta be one of the highest property tax rates in the nation! And what are you getting for it? There’s no public transportation, most of the Poconos DON’T even have public water & sewer (so you’re stuck with these annoying & ridiculously expensive septic systems & wells), the schools aren’t great, the libraries aren’t great. And it’s not like the roads are in pristine condition either!
Usually if you pay high property taxes, you expect great public transportation, public water & sewer, top-ranked schools & libraries, great roads, etc, etc.
For the life of me I can’t figure out where those ridiculously high Poconos property taxes go toward.
Sky high property taxes are one of the many things that makes operating profitable rentals very very difficult in the Poconos
Yep, the property I liked was 265K. And like I said, I am only looking at the Poconos for geographic/family reasons. It’s not really my long-term plan. So I’m thinking to switch course: buy a 100K cottage cash, do some cosmetic updates and bells and whistles to make it stand out on AirBNB (and increase value down the road), and hope the rental income covers the taxes and private lake dues. I’ll spend a lot of time there so it’s worth it, much cheaper than paying for an AirBNB twice a month. I know a realtor/contractor/flipper in the area who’s seen this model succeed. I’ll team up with him. Plus, I want to learn how to do remodels (cosmetic ones, nothing crazy) and this is a good place to start. Really glad I read this thread (and ran some painful spreadsheets!) before going with my initial plan.
@Mark
You can't do septic in much of the Poconos So you are looking at a 60,000 sand mound for a house that may not even be worth 200,000!!!
Again, insane
Yep, the property I liked was 265K. And like I said, I am only looking at the Poconos for geographic/family reasons. It’s not really my long-term plan. So I’m thinking to switch course: buy a 100K cottage cash, do some cosmetic updates and bells and whistles to make it stand out on AirBNB (and increase value down the road), and hope the rental income covers the taxes and private lake dues. I’ll spend a lot of time there so it’s worth it, much cheaper than paying for an AirBNB twice a month. I know a realtor/contractor/flipper in the area who’s seen this model succeed. I’ll team up with him. Plus, I want to learn how to do remodels (cosmetic ones, nothing crazy) and this is a good place to start. Really glad I read this thread (and ran some painful spreadsheets!) before going with my initial plan.
I think that is a very wise decision! Remember the old real estate investing adage: you make your money when you BUY, not when you SELL! There is a huge difference btwn a $100k purchase & a $265k purchase, esp in one of the communities where you would be drowning in fees & taxes (I've seen it happen many many times)...
Glad to know you didn't fall prey to whatever swindling salesman of a real estate agent was trying to convince you that buying his charming little house for $265k was the right way for you to make money in the Poconos!! I'm sure that house had a lot of charm, but you would have made money for HIM, not for yourself!!!
Little local knowledge here. I grew up in the Poconos, and have been studying the real estate market there since I was a teenager. My parents bought their house for $300k in 1991, and are currently selling it and hoping to get $400, for a whopping IRR of around 1% per year.
Now... I do happen to know some areas not far from my home, where property prices have increased alongside overall growth in other, hotter real estate markets, that would still be considered the Poconos, perhaps. Take a look around Milford, Narrowsburg, Calicoon, and some other areas that are attracting New Yorkers and the "Escape Brooklyn" crowd who are seeking a more rustic experience than going to the Catskills (off I-84). I know some people killing it--way better than breaking even-- in this space. Happy to share my thoughts for those interested in Poconos. There is definite potential in the region, being the same distance from NYC as the Catskills. In the past 5 years, New restaurants, cafes, bars, art galleries, breweries, yoga studios, concert venues and other interesting stuff seems to be springing up around the Poconos more than I've ever seen. Even in my hometown of Honesdale, PA which had been stagnant, a lot of the above have started to revitalize the town as milennials have opted to stick around for the low cost of living and make their hometown more interesting-- it's great to see!
I even put my family home that's up for sale on AirBNB with mixed success. Again, get closer to the river, and your returns will go up accordingly. Cater to the NYC crowd, and you'll do well. Happy to share any thoughts or insights, as I am a long time airbnb investor and vacation rental manager (we manage across 6 states and expanding fast due to our low cost model). I love this stuff, and enjoy sharing insights about investment returns across markets. Good luck!
@Alex M. Really interesting. I grew up south of Scranton just outside the Poconos and spent a lot of time at Lake Wallenpaupak. The first time I went through Milford as an adult, I thought, "this is a great little town, I could live here." I know Honesdale is going through a mini-revival right now, too. Both those places are a bit far north for my commute, which is very specific to my mom's house. But I've definitely wondered about Stroudsburg, which also seems to have new wine bars, cafes, arts events, etc. And its location on the Delaware Water Gap couldn't be better. It doesn't take long to get to the woods either; a few miles outside of downtown and it's rural. What are your thoughts on Stroudsburg?
@Alex M. Really interesting. I grew up south of Scranton just outside the Poconos and spent a lot of time at Lake Wallenpaupak. The first time I went through Milford as an adult, I thought, "this is a great little town, I could live here." I know Honesdale is going through a mini-revival right now, too. Both those places are a bit far north for my commute, which is very specific to my mom's house. But I've definitely wondered about Stroudsburg, which also seems to have new wine bars, cafes, arts events, etc. And its location on the Delaware Water Gap couldn't be better. It doesn't take long to get to the woods either; a few miles outside of downtown and it's rural. What are your thoughts on Stroudsburg?
@Ken Latchers, Interesting about Stroudsburg and E. Stroudsburg, I was wondering if what I was hearing about a resurgence was hype or not. I'm also interested in a theme I've heard a lot in this thread: that you need to be *right up against a ski mountain* to do well as a Poconos rental. I find those condos and houses inside the Camelback developments downright ugly, along with being cookie-cutter. Jack Frost/Big Boulder have nicer developments for sure, and the advantage of being close to Lake Harmony, because if you're on a ski mountain for winter guests, that means you're not on a lake for summer guests, so it seems to me it's either one or the other—summer guests or winter guests—unless you (a) do something like Lake Harmony that's so close to Big Boulder or (b) shoot for something in a lake community that's just a couple of miles from skiing. I like the intersection of 80 and 380 for that reason: You can be on a lake but within a few miles of Camelback, Kalahari, Mt. Airy Casino, outlet shopping, etc. But this idea of no one renting your house unless it's 1/2 mile to the ski entrance confuses me. Why? When I go skiing, I'm totally willing to drive 10 minutes to a ski resort. I have lots of ski buff friends who will literally drive five hours in traffic every Friday night to get from San Francisco to Lake Tahoe and stay at a ski house 20 minutes from the slopes. Well sure, Camelback is no Tahoe! But are East Coasters really that resistant to getting in a car for 10 minutes to go ski? I guess I don't understand the psychology.
Have you researched on AirDNA.com? I'm a fan nd believe there is a BP pro perk to sign up with thier data.
@Ken Latchers, Interesting about Stroudsburg and E. Stroudsburg, I was wondering if what I was hearing about a resurgence was hype or not. I'm also interested in a theme I've heard a lot in this thread: that you need to be *right up against a ski mountain* to do well as a Poconos rental. I find those condos and houses inside the Camelback developments downright ugly, along with being cookie-cutter. Jack Frost/Big Boulder have nicer developments for sure, and the advantage of being close to Lake Harmony, because if you're on a ski mountain for winter guests, that means you're not on a lake for summer guests, so it seems to me it's either one or the other—summer guests or winter guests—unless you (a) do something like Lake Harmony that's so close to Big Boulder or (b) shoot for something in a lake community that's just a couple of miles from skiing. I like the intersection of 80 and 380 for that reason: You can be on a lake but within a few miles of Camelback, Kalahari, Mt. Airy Casino, outlet shopping, etc. But this idea of no one renting your house unless it's 1/2 mile to the ski entrance confuses me. Why? When I go skiing, I'm totally willing to drive 10 minutes to a ski resort. I have lots of ski buff friends who will literally drive five hours in traffic every Friday night to get from San Francisco to Lake Tahoe and stay at a ski house 20 minutes from the slopes. Well sure, Camelback is no Tahoe! But are East Coasters really that resistant to getting in a car for 10 minutes to go ski? I guess I don't understand the psychology.
To clarify, we’re just trying to make the point that the highest demand comes from lakefront & 1/2-mile to ski resort. That doesn’t mean you’ll NEVER rent a non-lakefront house or ski house that’s 15 minutes from a ski resort! I thought I had made that clear. It just means those houses will earn you less income than the lakefront or 1/2-mile to ski resort. People will naturally trend toward lakefront over non-lakefront & they’ll naturally trend toward closer to ski resort as opposed to further away from ski resort. And with SOOOO many houses for rent on Airbnb in the Poconos, you want to be aware of things like this so you don’t make a bad decision or use faulty data. The further away you are from a ski resort, the greater your competition becomes because if you're 15 mins away, now there's 700 other houses for rent btwn you & the ski resort. That's a lotta competition. And some people might not expand their search radius that far if they already see 100+ ski houses within 2 miles of the ski mountain, so they might not even get to see your amazing house in their search results. So be careful if you’re using rental data from a ski house that’s closer to ski resorts than your target house, or a lakefront vs non-lakefront situation. That’s all I meant!
Also, revisiting an earlier topic - another reason why, if you’re dead set on buying in the Poconos, I encouraged you to aim for lower-priced homes: as mentioned, taxes are RIDICULOUSLY high in the Poconos. But they’re a percentage of your home’s value. If you go after those $200k+ homes, you’re gonna pay much higher taxes than if you get a $70k-$150k house. So not only do you save money on mortgage payment by aiming for a $70k-$150k house, you also save a lot of money on property taxes, which will help in your efforts to try to break even & cover your monthly expenses!
I mean, I can’t believe someone tried to sell you on a 3-BR $265k house in the Poconos as a great investment property!! (Well, I can believe that an agent TRIED, I just can’t believe anyone would actually think that’s a good investment). I mean, there’s literally THOUSANDS & THOUSANDS of houses selling for $70k-$150k all over the Poconos, including Milford, Narrowsburg, Calicoon, Stroudsburg, Bushkill, Arrowhead Lake, Indian Mtn Lake, Pocono Summit, Stillwater Lake Estates, Brier Crest, Tannersville, Mt Pocono, Tobyhanna, etc, etc, etc.
I mean, you can buy 3-BR, 4-BR, & 5-BR houses for $70k-$150k and have PLENTY to choose from. Which means you can buy TWO or THREE homes for the same amount as that $265k purchase price! I mean, I guess some people will pay $200k+ for a Poconos home if they're living there full-time & want to be in a certain school district for their kids, etc, etc. But none of that matters to STR investors!
Also, if you’re gonna proceed with this, fair warning: Poconos realtors have a reputation for being pretty aggressive in trying to upsell buyers to the more expensive homes. This makes perfect sense, as it’s super tough for them to earn a commission-based living in an area filled with $100k houses. If you’re gonna proceed, remember: you’re the one in charge, not your agent. If you choose to have a buyer’s agent, be firm if they try to upsell you to higher priced houses!! Or if you operate without a buyer’s agent, be firm if you approach a seller’s agent on a lower-priced home & they try to encourage you to look at their other higher-priced listings. Buy what’s best for YOU, not what’s best for them. Line YOUR pockets, not your agent’s pockets!
ONLY consider the higher priced homes if there's a TRUE value-add that's gonna WOW people when they see it on Airbnb & will really help your Airbnb listing stand out, such as a beautiful lakefront home or some home with amazing views or a ski-in/ski-out house or something. In my humble opinion, unless you can buy something that really stands out from the crowd, go cheap cheap cheap and keep those costs & taxes to an absolute minimum! Good luck!
Oh! One more point I should make to more directly answer your question - I believe the reason that people stay further away from the slopes in Tahoe is bc they have to. I think the greater Tahoe area runs at pretty much full rental capacity during winter ski weekends, thus pretty much every house gets rented, whether you're right by the ski resort or further away.
As mentioned previously on this thread, the only time the Poconos even remotely approaches running at full rental capacity is during the summer season, the rest of the year there's a huge surplus of rentals so for example, in ski season, people simply don't have to rent a house 15-20 minutes away bc there's 700 closer houses for rent. So that's a more direct answer to your question - if you buy in a super popular ski town that runs at full rental capacity on ski weekends (Tahoe, Killington, Aspen, etc), then every house gets rented so you're all set! Sadly that's not how the Poconos operates. So yeah, distance really matters or you'll quickly find yourself outside of people's search radius. (As opposed to Tahoe, Killington, Aspen where people have to keep expanding their search radius bc the closer properties have already booked up - it's not an East Coast vs West Coast thing, it's a market-specific supply vs demand thing)
Oh I'm definitely going with the cheap cabin now, don't you worry! To be fair, it wasn't a realtor pushing me toward that 265K house, it was me myself and I. Lesson learned. So, not to beat a dead horse on this ski-house/lake house thing, but since almost no property has both, what does a girl do? Buy a lake house with summer amenities for the predictable heavy summer crowd and forego the skiers in winter, or buy a ski-out condo for the skiers and forego the summer crowd?
That is not something any other person can really answer. You need to sit down and do a detailed analysis of such lake houses and such ski places and see what they do year-round.
Of course, and I definitely choose lake/summer for myriad reasons. But my point is: objectively, logically, if this is the reality in this market, then you simply cannot get both the winter and summer crowd. You must choose one or the other.
Oh I'm definitely going with the cheap cabin now, don't you worry! To be fair, it wasn't a realtor pushing me toward that 265K house, it was me myself and I. Lesson learned. So, not to beat a dead horse on this ski-house/lake house thing, but since almost no property has both, what does a girl do? Buy a lake house with summer amenities for the predictable heavy summer crowd and forego the skiers in winter, or buy a ski-out condo for the skiers and forego the summer crowd?
Here’s my take: if you’re gonna buy a high end place & spend a lot of money, then be sure you’re getting something super nice for your money (lakefront or ski-in/ski-out or whatever). In that case, yes, you’re committing yourself to 1 season but your goal is to CRUSH that one season.
If you’re doing it the safer way (IMHO), buy a cheap place & get it somewhere that you can benefit from both summer & winter. You’re not gonna be booked non-stop, but that’s par for the course in the Poconos. You’re getting a great purchase price (~$100k), get it somewhere that you’ll get SOME summer traffic & SOME winter traffic and maybe occasional spring or fall traffic.
So where would that be? Well, there’s 6 ski resorts in the Poconos, so make sure you’re within 20 mins of one of those. Are you gonna be booked non-stop in winter? No, but I’m sure you’ll get SOME winter traffic. And make sure you’re near some lakes or hiking or Delaware River or Bushkill Falls or DWG or whatever for summer tourists. Circle a few spots on a map that meet these criteria, pull them up on Zillow, and pick out some houses to check out!
To be clear, I don’t think I said that being 20 mins from skiing will mean you’ll NEVER get winter traffic (at least I don’t think I said that), it’s just that you’re not gonna be booked non-stop all winter as you would 20 mins from Tahoe.
And, of course, this goes without saying... since you’ll be using the house yourself, be sure to pick a location that you like! And that’s convenient for visiting your family!
What management companies are the folks who have a STR in the Poconos using? Any suggestions are greatly appreciated!