Short Term Rental in Lake Harmony, Poconos
Member since 2020 · 1 post · 0 votes
I am interested in buying a short term rental in Lake Harmony which I can also use few times with my family/friends. My initial analysis is not looking very promising so asking the experts here for help -
1. How is the occupancy rate in this region? I see folks say 35% which would mean 120+ nights. Is that realistic?
2. Will 4 bedroom be better or smaller home will have more rental potential? What should I expect as a daily rental rate?
3. While counting expenses I am considering - Mortgage, Property Tax, HOA, Insurance and maintenance (100 per month). Am I missing anything and how much should I allocate (mainly for an STR)?
4. Does Split Rock allow STR? I think Lake Harmony does allow it but not sure if the resort has different rules. How much would it cost to use lake and other amenities at the Split Rock Resort?
Thanks in advance.
Occupancy rate is very low, like 20-25%. Property tax is VERY high. You are also missing electricity which is VERY expensive. You’re also missing a bunch of other expenses such as buying supplies, fixing damage, etc.
Things are really tough in the Poconos right now. SUPER tough to turn a large profit (exhorbitant expenses such as high property taxes & exhorbitant electricity costs combined with low annual occupancy rates).
Another big problem you’ll have in the Poconos is that contractors & service professionals & cleaners & handymen have a habit of being SOOOO unreliable that there’s actually a term for it: the Pocono Promise. It means when someone tells you they’ll be there at a certain time to clean your house or fix something & you never hear from them again! Seriously, that’s what this area is known for! 😝 Causes major stress & headaches for peopl who own homes in the Poconos
Here’s a good thread on the challenges you’ll face in the Poconos:
https://www.biggerpockets.com/...
Also beware that the Poconos tends to have a problem with meth & opioids & other drugs. Here’s a funny post from a BP member that basically summarizes the Poconos in his first paragraph:
https://www.biggerpockets.com/...
Even though I live nearby to the Poconos, I prefer investing in the Southern US (way higher year-round occupancy rates & way more money to be made) but if you’re really intent on buying a property in the northeast, remember that the 30 million people in the nyc area tend to vacation more in the catskills, hudson valley, berkshires, adirondacks & green mtns (vermont) more than the poconos. Those areas have far better skiing (WAY taller mtns), far better hiking (WAY taller mtns, better views) & WAY better fall foliage (better in New England than PA).
Here's a great summary, courtesy of Avery Carl, of the kind of numbers you can expect down south (including complete pro formas). Sadly, you simply won't get annual revenue, annual occupancy rates, annual net income, & annual ROI like this in the north:
https://theshorttermshop.com/c...
Occupancy rate is very low, like 20-25%. Property tax is VERY high. You are also missing electricity which is VERY expensive. You’re also missing a bunch of other expenses such as buying supplies, fixing damage, etc.
Things are really tough in the Poconos right now. SUPER tough to turn a large profit (exhorbitant expenses such as high property taxes & exhorbitant electricity costs combined with low annual occupancy rates).
Another big problem you’ll have in the Poconos is that contractors & service professionals & cleaners & handymen have a habit of being SOOOO unreliable that there’s actually a term for it: the Pocono Promise. It means when someone tells you they’ll be there at a certain time to clean your house or fix something & you never hear from them again! Seriously, that’s what this area is known for! 😝 Causes major stress & headaches for peopl who own homes in the Poconos
Here’s a good thread on the challenges you’ll face in the Poconos:
https://www.biggerpockets.com/...
Also beware that the Poconos tends to have a problem with meth & opioids & other drugs. Here’s a funny post from a BP member that basically summarizes the Poconos in his first paragraph:
https://www.biggerpockets.com/...
Even though I live nearby to the Poconos, I prefer investing in the Southern US (way higher year-round occupancy rates & way more money to be made) but if you’re really intent on buying a property in the northeast, remember that the 30 million people in the nyc area tend to vacation more in the catskills, hudson valley, berkshires, adirondacks & green mtns (vermont) more than the poconos. Those areas have far better skiing (WAY taller mtns), far better hiking (WAY taller mtns, better views) & WAY better fall foliage (better in New England than PA).
Here's a great summary, courtesy of Avery Carl, of the kind of numbers you can expect down south (including complete pro formas). Sadly, you simply won't get annual revenue, annual occupancy rates, annual net income, & annual ROI like this in the north:
https://theshorttermshop.com/c...
Sounds like you should heed @Mark Miles warnings as he has confirmed what you were already finding.
Maybe look for a more VR friendly area?
You could also search VRBO and Airbnb and find properties that have a lot of reviews more than their fair share of bookings and see what they are doing differently. Then you would know what type of property and what type amenities are doing the best and see if their numbers look more promising.
@Mark Miles Thanks for the information. I too am looking at the Poconos as a neighborhood to buy several STRs, your insight is very helpful. What are your thoughts about the upcoming reassessment of the property taxes, do you think most properties will see a rise in their property taxes and HOA dues?
You mentioned that @Ashish Mody was missing a bunch of expenses, I guess I am too. Other than buying supplies and fixing damage, what other expenses should we anticipate? Also, aren't the damages generally covered for by the guests? Would you happen to have a spreadsheet of the anticipated expenses and its relative percentage?
Also, do you think the occupancy rate will be in the 20-25% range in villages that are within a 15-20 minute drive from the ski resorts, and/or villages that have a community lake, pool, etc?
Hi Ruben, I've been looking to buy a STR in the poconos as well, the main challenge i see is the STR ordinance issued by towns in the Monroe county. Basically, for the non owner occupied STR's, you need to have a local person in charge living within 15 miles of the property. Any idea how other STR owners are handling this requirement?
Hi James (and Ashish!), I operate two STRs in the Poconos and have two more coming online soon. I haven't experienced any of the issues Mark mentions, nor have any of my friends who also operate STRs in the Poconos, but that's just our experience.
As far as occupancy rates, we were around 65% prior to Covid, and over 90% since PA opened up STRs again in June. Electricity costs are definitely high, but you can mitigate that by being as energy efficient as possible with mini-split systems or better insulation/windows if your budget allows. Wifi enabled smart thermostats also help by allowing you to turn down the heat after renters leave.
As far as local ordnances go, it's definitely something to be aware of. The ordnances are actually passed at a township level, not the county level. Monroe and Carbon county collect a 3% hotel tax, which Airbnb automatically remits. However, you do need to file quarterly reports with the county letting them know the amount of tax you paid for each property you operate. Each township has different ordnances, so you need to call the township you're interested in and get more information from them. Some of them have ordnances in place and others are still debating what the ordnance will look like. Most of them follow a similar template to the one Coolbaugh passed earlier this year, which you can find at this link-
https://www.ecode360.com/CO230...
As you can see, Coolbaugh requires that the local agent be able to be at the property within 2 hours, not live within 15 miles, which is a much broader requirement. So it's worth doing the legwork to know the requirements for the property you're actually buying in, and you''ll likely need to do that research yourself as most local realtors haven't kept up with the rapidly changing regulations.
Some of the townships have banned STR altogether or are discussing doing so, so be sure to do your due diligence prior to buying!
I hope that helps, and good luck with your search! We've been really happy with our properties and they've cash flowed really well this year for us.
Scott
Thank for the reply Scott, it's really helpful. I was looking in the Middle Smithfield township, i didn't see the 2 hr response requirement in their ordinance. I live in NJ and for me it's a 1.45 hr drive.
Do you think it make sense to arrange a local contact/manager? How reliable are they with this 2hr response time? House prices have gone up in that area as well so worried about the ROI.
I don't have any specific intel on Middle Smithfield, I think it's worth a call to the township office to get more info. Also, if you're looking in an HOA like Mountain Top or Winona Lakes you need to make sure to check with their office to make sure you know the rules for that community. Most HOAs have some kind of rental fee/permit process as well.
As far as having a local contact, it's completely up to you and how involved you want to be in the running of the property. If the township/HOA requires someone who is closer than you, I'm sure you can reach some kind of arrangement with your cleaning team or handyman or other local contact as you build your team. In my experience, it's always worth being in total compliance with the local ordnances, and there's always a way to make it work.
Prices are definitely going up fast throughout the entire region, but there are still deals to be found on the MLS if you do the legwork. The places driving the price increase are generally move-in ready, I know lots of investors have found places that need work on the MLS, or found off-market deals by pounding the pavement and working the phones after they've targeted a community/area to invest in. Rental rates have also increased due to high demand, so I believe it remains a worthwhile market. I generally underwrite the properties fairly conservatively with the hope of being pleasantly surprised when they do better, but you should always run your own numbers and determine what your target prices/return are.
I hope that helps!
Scott
Thanks again Scott. I just spoke with the zoning office in the Middle Smithfield town. They said that owner/contact person should Iive within 15 miles. You are right it varies by town, Coolbaugh looks less restrictive.
I'm glad you called! 15 miles seems a little crazy to me, but rules are rules! Like I said, there's always a solution to these issues if you decide you find a house/community that is worth investing in. Of course, there are other townships too where perhaps the rules aren't quite as restrictive, but if you like Middle Smithfield I'm sure you can find someone to serve as the local agent. One thing to keep in mind is that the local agent is only contacted in the event that someone makes a complaint to the township about your rental, so if you screen your guests and use cameras/Noise Aware, you will likely be able to avoid your local agent being contacted. I've never had an issue at my properties, but we're pretty geared toward family rentals instead of loud parties/college kids, which is when you tend to get complaints from neighbors.
My wife and I have been searching for a vacation home/STR in the Pocono's (Lake Harmony) since late May. During my research there has been quite a bit of rise in price, but also in rental rates/occupancy as well. We close on a FSBO house this week and look forward to the short term rental potential. My underwriting to purchase was based off of Pre-COVID-19 rates/occupancy. I agree with Scott in the fact you need to look out for area's that are banning STR's in their communities, we came across this while doing our due diligence.
Running a short-term rental business in the Poconos is challenging but it can be profitable. As as been mentioned, the townships are still trying to come up with modifications to their zoning and sensible rules and regulations. Add to that the volatility that comes from neighborhood run HOA boards and the market is uncertain. It is hard to oversee such an investment from a distance, but some are finding ways to make it work. I have one investment property near Blue Mountain and I'm also a realtor that helps people find good investment properties. I have a blog that tracks the status of STR in Pocono area townships and vacation home communities in the Poconos. It's a work in progress, but hopefully something that can help - https://movingtocarboncounty.c...
I know this is an old post, but I just started looking up that way.
There is a property in Emerald Lakes. The house is currently a STR through airbnb. I was told that in 2021 it generated 75k in income and had 11k in expenses. Expenses below:
PPL, Internet, Lawn, HOA, Home insurance, Taxes (School, County, Township), Wifi cameras.
I'm missing snow removal and the % withheld from the management company, but when I do my math (even after adding additional expenses like vacancy, repairs, management and snow removal) this property (taking for base the 75k generated in 2021) will cash flow $2100 a month.
AM I MISSING SOMETHING????? Looks too good to be true. I was able to find the property on Airbnb and only had one review. Is he fooling me with the numbers???
Regards,