How To Choose a City

Question

Hi there,

I am new here and new to investing.  I am wondering if anyone can advise on how to choose a city to buy a home in with the sole purpose of using it as a STR.  I feel like I could do this anywhere in the US, how do I choose?  I did research and found Kissimmee but then it seems saturated.  I thought about maybe doing Big Bear since I live near there.  I just feel overwhelmed!  Any advice?

Luke Carl · Answer

@Michele Velazquez there are really only 3 or 4 markets this forum deems worthy.  Big bear is one of them. Go for it!

Michele Velazquez · Answer

lol I have no idea what that means!

Paul Sandhu · Answer

I love the smell of diesel fuel in the morning, it smells like money.

For those of you that don't know, there is a refinery in my town.  They primarily produce diesel fuel.  $13,000 worth of sales every minute, 24/7/365.  I get a very very very small cut of that.  Like 0.00002

Michael Baum · Answer

Hey @Michele Velazquez, You are on the right track. You want to look at places that you want to visit as a base. Then you need to look at the regs around STR's. Cost of real estate is a big one. Tahoe has great returns but the initial investment can be huge.

Our house is lake front in the area I grew up in. There are no rules in rural Idaho other than paying the tax. It was a purchase for us specifically but we made it available to others. So far we are doing pretty well. It could be better, but I am just getting some bookings out of season so the year is looking even better.

Make sure you can get good cleaners and handypeople in the area. If you can't, then you need to move on.

Come up with your budget, that will help define your area. For our next STR, we are going pure profit mode. Selecting the area for value and high occupancy 4 seasons long.  I am looking very hard in the Pigeon Forge/Sieverville/Gatlinburg area. I had never considered the area before speaking with Avery Carl and Lucas.

I hope this is helpful. A lot of my decision is based on my gut. I do a lot of leg work but overall, if I like the area, then I feel others will too.

Alex D. · Answer

I had some time so figured I'd do the research on Paul's suggestion. He's investing/looking at contractor/work-friendly areas. They are relatively low-cost housing markets/rent markets but seem to be renting great. There's also a decent supply.

Jerry W. · Answer

@Michele Velazquez, first where do you live?  Next why don't you start looking at places you would like to live and then check all of the air B&B and VRBO sites and see how much they charge and how full they are booked?  That will hopefully get you started.  Asking us to tell you  where to invest in for the entire US is a little bit broad of a question.  How much do you have to invest?  Some houses start at $50K some start at $500K some are a lot more.  You also might tell us about your plans and why you picked STRs.

Michele Velazquez · Answer

Thanks @John D.!

Paul Sandhu · Answer

@Miles McClure  I've had previous renters call me and ask if I had anything in El Dorado, Wynnewood, Hutchinson, etc.  El D is so close to Wichita, that trying to do a niche market probably wouldn't work because of nearby competition.  Coffeyville closest metropolitan area is Tulsa, and that's 75 miles away.  Nobody working 10-12 hours a day is going to make that round trip.

Ethanol plants would be a possibility.  But I'm going to guess that most of those workers travel with a camper.  The complexity index of an ethanol plant is nowhere as near of that as a refinery, hence fewer contractors there.

John D. · Answer

@Michele Velazquez - The airdna.co is a good set of data / research tool, although as you get deeper into a specific market best to check and re-check with local experts and property managers.

Miles McClure · Answer

@paul sandhu Have you done anything in El Dorado? Prices would be higher than Coffeyville but you are closer to more jobs... What about areas with ethanol plants. I deliver grain from my farm and it seems like they are always building/add on to the ethanol plants.

How To Choose a City

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