What made you do your very first STR?

Question

My wife and I got married.  She tried selling her house "FSBO" for 12 months and no success.  She talked to a realtor, I had to come in and sign some papers.  I asked the realtor how much they charge renting out houses to refinery contractors.  She said up to $1000/week.  There was major work going on at the refinery.  Every motel room was booked.

I had a 2BR LTR that became vacant the previous week.  It brought in $350/month.  So my wife and I went to her house and took all the necessary furnishings and appliances to the empty 2 BR.  We put 4 beds in there.  We thought $210/week for each bed is reasonable, $840/week.  Took 3 days, but we got 4 non-English speaking guys to rent it.  I knocked on the door, they handed me $840, I handed them a receipt.  Within the first 48 hours they asked for a grill.  I bought them one. This lasted a few months and they moved out.

Within 30 minutes their friends called and wanted the house. Same story, $840/week and no habla English. This went on for 2 months and they moved out. Within 60 minutes 3 of their amigos wanted the house. I charged $630/week.

We did the same thing with a 3BR.  The first group of renters were 9 guys.  9 guys in a 3BR with just one bath.  They asked for a grill too.  That's when we realized that it's not the number of bedrooms that matters, it's the number of bathrooms.  So our next house was a 3 story house with 4 bath rooms (shower/toilet/sink) and a jacuzzi.  Then we just bought houses that we could recoup our purchase with 6 months of gross rent.

So what's the story with your first STR?

Ken Latchers · Answer

We dreamed about having a bed and breakfast for a while. Who doesn't? That it became apparent that you were chained to it Body and Soul. Extremely demanding guests who wanted vegan no I'm allergic to peanuts can you make it for me at 5 am? Can you make it for me at 1 p.m.? Oh dear? Can you talk to me for three hours I'm bored out of my mind.

so, focus on short-term rentals without the breakfast and without having to be available 24 hours a day in the same space.

Kerry Baird · Answer

I have watched my long term rentals putter on at $200-$300 a month cash flow, only to get hit by a hurricane and have an unexpected $7000 fence to pay off.  That takes 24 months to pay off, for those who wonder.  Thankfully we do have appreciation here, with the in-migration of newcomers.

When I got the opportunity to buy a house in a beach-side municipality that allows STRs, and he wanted to owner finance at 6% interest only, I took action.  He was renting the house to a long term tenant, at $2200 a month and I'm paying him $1500.  So if I could get *at least* $2000 in the short term rental market, it pencils out.

Michael Baum · Answer

We had been wanting a vacation place for a while. I grew up in the North Idaho area and really wanted to return.

This house came up and it was too expensive so we just kept looking. Then the price dropped down to where it was manageable so we got it.

It was is pretty good shape. Just needed a few things. Now it is working for us and we can use it when we like!

The next one is going to be for pure profit making.

Justin Ellis · Answer

I got introduced to Brian Page's course "BNB Formula" while listening to the Mike Dillard podcast. I decided that (the then) $250 price point was fair so I took the course. It was a wealth of information and I liked the strategy (Rental Arbitrage). I hit the streets (2 days only) and met 2 DYI old timers that agreed to lease me 1 of their properties each. I've never had to hunt again as BOTH of them own a ton of property and when they come off lease, I get first dibs!

Although I like the rental arbitrage approach, and I'll never knock Brian's course as it's a great place to start into STR and LEARN; I don't like the fact that I'm investing a ton of cash up front for staging and I don't have ultimate control of the properties (I own more furniture than most small furniture stores, which is more a liability than a asset IF the leases were pulled).

So I'm pivoting into STR management with a focus on $500+ per night units here in Scottsdale and partnering up to build a portfolio of properties that I'll have full control over and can STR (or convert to LTR when (when not if) the STR market gets flooded and prices fall below the LTR rate)

Jeffery Wilen · Answer

Bought a duplex that needed complete gut rehab for an LTR. After getting about half way through the rehab we realized location was ideal for STR, walking distance to water, shops and restaurants. Found great cleaner and maintenance people and it’s been a home run. Peak season we net 3x LTR and off season we net 1.5x LTR.

John Underwood · Answer

We wanted a Lake house. We started off renting to students and it was open for the summer for us.

It was a pain moving stuff out when school started back and we didn't want to fix it up for students.

Some how or another I decided to try the vacation rental and it was an instant success. We have 99 reviews and all but two are 5 star. One person had a problem with a noisy neighbor but only mentioned that to us personally. The other 4 star review was ll positive they just were one of those people that had a problem with selecting 5 stars.

Now we have made vast improvements to the house and property and make more every year.

So we are about to hit 3 digits on reviews very soon.

We also have about 10 all 5 star reviews on Airbnb.

Luke Carl · Answer

Couldn’t make money on LTR in my market so I found an STR market I could easily manage remotely.