Best markets to invest in Airbnb
Hi everyone,
I have a number of long term rentals and I am looking to purchase another 3 properties that I want to use as STR on airbnb. I have converted a few of my long terms into STR and have been really happy with the results.
I am looking at a number of different markets to make this model work and I was wondering if I could get some insight from anyone who has some knowledge or experience doing STR in these areas.
The areas I am looking at are:
Davenport, FL, Tampa, FL, Memphis, TN, Chattanooga, TN, Gaitlinburg area, TN,due to the affordable prices and year round visitors
Indianapolis, IN, Kansas City, MO, Detroit, MI for the very affordable prices but I am unsure how these markets would perform year round.
I am also looking at college towns Columbus, OH, Ann Arbor, MI, Waco, TX to take advantage of year round attraction of the universities in these markets.
I have spent hours looking at different reports and opinions on these markets from Airdna and other experts but I would love to hear from people who are actually investing in these areas and have an intimate knowledge of what is going on from the perspective of an investor.
I live in CA and will be buying out of state. The main things I am concerned about are:
1) the affordability of the market (I would like to buy multi family properties for between 100K - 250K)
2)Seasonality of the market (I would prefer there not be a huge difference in occupancy between the highest and lowest months)
3) regulations, I want to stay away from markets that have very strict regulations on STR like Nashville, Orlando etc..
Any type of insight hat I could get would be very much appreciated.
Thanks everyone.
David
All very good insight here!
Hello David, I'm a Northern Calif native now based in Franklin, TN.
I have a few STR's in the Coachella Valley, CA that do well. Also interested in Joshua Tree, CA.
As you're looking to buy out of state (I'm moving more in that direction as well), my recommendation would be Franklin, TN. User friendly STR rules and a growing hi demand destination location close to Nashville.
Currently working with Avery Carl on (potentially) acquiring an STR in the Gatlinburg, Sevierville, Pigeon Forge area.
I like certain areas of Texas. While they have no state income tax, they do have quite high property taxes (higher than Calif in several areas).
TN has not state income tax and relatively low property taxes (somewhat higher sales taxes, but that's at the discretion of the spender).
Best wishes on finding a great deal!
@Sarah Lorenz how about the neighboring cities? Maybe not necessarily for STR but for a long term rentals?
@David Rutledge
Waco, TX...
I Would recommend double checking your sources.
Baylor is probably the only University in that area that draws a significant number of outsiders.
Originally posted by @Joe Crupi:@Avery Carl
Hmm. I love a place with low property taxes and no income taxes. I may just have to move there as well!
You don't want to move there. It's a zoo of tourists. Which is why it's so profitable. Avery was my agent on my 2 cabins there and it's worked out very well - I live in Denver. Managing remotely is a hassle sometimes, but it works.
@Tim Schroeder
Thats a good point!
@Tim Schroeder
Whats been the sweet spot for you in regards to the cabins and number of bedrooms, luxury level, etc? Do you feel like you need to go 5-600k+ to get good returns?
What have you found to be the biggest issue with the management from the distance? Thats likely be my approach as well. Thanks!
I bought a 6br for 500k (which will probably cost 600k now) that sleeps 16 or more. It's very profitable. I get big family groups, so even at $300-800/night (seasonal changes) it's affordable because there are usually multiple families chipping in on it.
I also bought a 4br that isn't as nice but I got a good price on it (foreclosure). I haven't done my books for a while but I reckon it nets between 50-60% of the 6br.
So for me I like the big places. There's also less competition, people stay longer, have more money, and cause less damage and trouble. It also books up further in advance. There are thousands of 1-2br's out there and I think (but have no proof) that they will suffer more in the coming recession.
I am toying with selling the 4br and moving up to another 5+
As far as remote management, being further away means I can't do anything myself, I have to pay someone. i.e. installing a towel rail costs me $50 labor for a handyman to go do it. But a lot of people probably wouldn't do it themselves anyway. Just have to build that into you ROI. You can't shop around for furniture, you have to buy things sight unseen and have them delivered and hope they are good quality. This also means you tend to pay more for everything than you otherwise would.
Day to day management also becomes a PITA sometimes (guest complaints, questions, steady flow of maintenance issues) but that is a function of self-managing a STR not whether it's local or remote. But if you don't want to pay a PM 30% or more of gross, those hassles are the price you pay for stellar returns. It's not for everyone, but if you can devote some time it's well worth it.
All good info, appreciate it! Those bigger properties definitely catch my attention more as well just aesthetically, and I thnk about that when I would consider renting something myself. What part of the area are you in/consider to be solid, or is all of it pretty great?