Looking to create a Long Term and Vacation Rental portfolio

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Looking to create a Long Term and Vacation Rental portfolio

Louis Zameryka
New York, NY · Member since 2020 · 105 posts · 49 votes

We have a 2nd home by a beach in NY. This summer we started renting it out on Airbnb. We like the extra money and thought about other areas we might like to have a home to vacation at which we could buy and fund via long term rental with also an airbnb. Something like a 2 family or a Single Family with accessory apartment or structure on the property to rent short term. Ideal markets for us would be NY/NJ/PA ski areas, or lake/ski, Orlando theme park area, Florida beaches. 

I expect that many over extended Airbnb hosts or even people in general will be hit by a bad economy ahead and go into foreclosure or want to get out prior to that. Anyone have advice on how to find these and build this portfolio? 

Thanks

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Paul Sandhu
Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
6y

This is how I find bank foreclosures in my town. First I look at the the multiple listing service. It's a list of all the properties for sale that are listed with realtors. There are no FSBO properties. We see a house we like, then we look a little further. We go to the register of deeds website for the county. We look to see who owns the house. If the owner of the house is a persons name, and they happen to live at that address, we skip it. If the owner is a bank in New York City or some other distant location, it's a bank foreclosure. If the bank happens to be JP Morgan, we already have a key from previous foreclosures from them. They use the same key for all their front doors. We let ourselves in and take a look at the place. If we like it, we go by the realtors office with $1000 in earnest money and make an offer. If they take too long to accept or reject the offer, I'll find some code or zoning violation and tell my friend that is the code enforcer to send them a letter of the violation. That usually speeds up the process of accepting our offer because the bank doesn't want to spend more money on the house to fix a problem.

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  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    6y

    This is how I find bank foreclosures in my town. First I look at the the multiple listing service. It's a list of all the properties for sale that are listed with realtors. There are no FSBO properties. We see a house we like, then we look a little further. We go to the register of deeds website for the county. We look to see who owns the house. If the owner of the house is a persons name, and they happen to live at that address, we skip it. If the owner is a bank in New York City or some other distant location, it's a bank foreclosure. If the bank happens to be JP Morgan, we already have a key from previous foreclosures from them. They use the same key for all their front doors. We let ourselves in and take a look at the place. If we like it, we go by the realtors office with $1000 in earnest money and make an offer. If they take too long to accept or reject the offer, I'll find some code or zoning violation and tell my friend that is the code enforcer to send them a letter of the violation. That usually speeds up the process of accepting our offer because the bank doesn't want to spend more money on the house to fix a problem.

    5Reply
  • Mike Shulman
    Real Estate Agent · orlando, FL · Member since 2009 · 159 posts · 121 votes
    6y

    Crazy thing is a lot of these Airbnb are just as successful as they were before the pandemic. I'm in Orlando Florida and my Airbnb is doing just as good if not better. There are a lot of people that still want to travel and they're choosing to stay somewhat local where they could drive. People are also more comfortable with the concept of an Airbnb over Hotel because they're around less people. I'm sure there will be properties that fall into a distress situation. But I don't think we'll see the foreclosures from that for roughly 12 months.

    4Reply
  • Nancy Bachety
    Rental Property Investor · North Fork, NY · Member since 2016 · 1k+ posts · 631 votes
    6y

    Either you choose 1) an investment property that will maximize your return or 2) you find a place you want to use sometimes and make some money when you're not using it. There is a distinction and a decision you'll need to make. If you choose maximum return, it probably won't be in NY/NJ/PA but more like a year round drivable destination popular with tourists like the Smokey Mountains, St. Augustine and other parts of FL. Others find great success in Orlando, the Pan Handle and other FL locations. Don't let the tail wag the dog but know what your objective is at the same time. And don't think you'll be able to predict the next economic downtown in x number of months and wait for that to happen. 

    Right now, we're summering in our newest home, as of April 2020, in the Hamptons and taking in ridiculous nightly rent from the accessory bungalow on the property (225 sq ft) because it's the only place we want to spend time in for this time of the year (see #2) and we're able to because we can (see #1).

    Good luck and welcome to the lively STR forums on BP. You'll learn a lot simply by reading through them.

    3Reply
  • Mike Shemp
    Rental Property Investor · Stewartsville, NJ · Member since 2016 · 418 posts · 280 votes
    6y

    In the post-COVID world, we are seeing higher demand with our short-term rental.  Also, the real estate in our markets is doing very well right now as people are buying these properties to live in themselves, or to have a vacation place to go to and rent out when not being used.

    I think this is because people realize they don't have to live in the same city or state where their work is anymore.  That leads them to questions like "why can't I work at the beach? why can't I work from the mountains? why can't I work at the lake?"

    If the economy goes bad, my opinion is that people generally don't say "well no vacation this year" and instead they DOWNSIZE their vacation from the trip to the islands or a trip to Europe, and instead do a trip to the nearby beach or lake. 

    Also, make sure to research any short-term regulations in the markets you are thinking about, and think about what your exit strategy might be if that happens.

    Mike

    1Reply
  • Jaeseok An
    Member since 2019 · 44 posts · 17 votes
    6y

    Urban short-term rentals (eg. San Francisco) are doing bad now, but vacation rental destinations (Big Bear Lake) are doing well, some of them are doing better than past few years. 

    If you are looking for distressed assets, you can refer to below graph to see which states are doing poorly, also hotels are suffering hard now. 

    You can also join the Airbnb hosts FB groups and ask people there if anyone willing to sell. 

    1Reply
  • Louis Zameryka
    OP
    New York, NY · Member since 2020 · 105 posts · 49 votes
    6y

    @Jaeseok An good idea to join the Airbnb group to look for sellers.

    0Reply
  • Louis Zameryka
    OP
    New York, NY · Member since 2020 · 105 posts · 49 votes
    6y

    @Mike Shemp thanks for the info. I actually work in the travel tech field so A) I’m familiar with tech companies and other companies going remote first and B) I can actually see short term rental demand firsthand.

    B is a nice advantage but I have not real estate investment experience so really need some guidance on what move to make to get started and a bit of hand holding with that first acquisition.

    0Reply
  • Louis Zameryka
    OP
    New York, NY · Member since 2020 · 105 posts · 49 votes
    6y

    @Nancy Bachety thanks Nancy. My home on the North Fork is excellent this time of year and also getting insane rates from renters. We never planned to rent it and it’s not an investment it’s something I bought to keep for retirement in 30 years but the offers were so good for rentals we tried it a bit. Which is why I’m interested to try again and find a place we like but is more poised for being an investment via rental and eventual disposition after appreciating.

    I also have to ensure the real estate is a diversification from the stock market and earns better returns than the stock market ideally or id just leave my money there maybe.

    If you have time to chat, I’d love to talk short term rentals.

    1Reply
  • Dustin TurnerBusiness Member
    Real Estate Broker · Little Rock and Hot Springs Arkansas · Member since 2020 · 55 posts · 62 votes
    6y

    @Louis Zameryka I don't know if you'd consider Gulf Shores/Orange Beach, AL (just west of the FL panhandle) but our beach houses there are pacing for a 20% annual return. Inventory is a little less expensive than what we found on 30A and the rents are similar. Good value play, IMO. 

    0Reply
  • Louis Zameryka
    OP
    New York, NY · Member since 2020 · 105 posts · 49 votes
    6y

    @Dustin Turner thanks for the tip. I’m familiar with the area as a great vacation rental spot for a number of years and if I recall about 5-10yrs ago there were no real dominant vacation rental players there so I bet it was and is a great market for single property Airbnb. I’ll take a closer look. Maybe we can chat sometime about it.

    1Reply
  • Alice Horn
    Property Manager · Kissimmee, FL · Member since 2019 · 445 posts · 266 votes
    6y

    Echoing what @Mike Shulman had to say - we  have found that occupancy for July and August was high. June was actually our best month ever. With many people now working from home, and kids doing their schooling virtually, travel patterns are starting to shift. Pool homes are especially popular and the idea of bringing your laptop to the pool and working poolside is a really nice change of scenery after people have been cooped up due to the pandemic.

    0Reply
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