Hi, my wife and I are looking to buy a house in Sandbridge, to be used occasionally by our own families (2 or 3 weeks a year) and rented out as vacation rental when we don't use it. We don't live locally in Virginia Beach, so we will have to rely on Property Management companies. We have not had any experience in this STR market or in the VB area. The big names we found online -- Siebert Realty and Sandbridge Realty both have really bad reviews. Are there any smaller PM companies that do a better job? I am even willing to pay a higher fee in exchange for better cleaning and maintenance, so that the guests are happy and the property will stay in better condition.
Any advice is appreciated.
@Cary McGuckin I was born and raised in VB and have considered a STR there too and the numbers never work well in the deals I've analyzed (even with the possibility of self managing). I'd be curious how the OP is calculating the numbers too.
Many people on here do not live close to their vacation rentals and still easily self manage with tools provided by Vrbo and Airbnb and a great cleaning service to handle turnovers. A PM may charge you as much as 35% of your Gross property income.
Read through this forum for advice on how to self manage.
Local here in Virginia Beach. All I can say is don't go through either of the ones you mentioned as I have rented through both and They left a lot to be desired. I won't ask around and see if I can find anyone with a vacation rental there that has a recommendation for a cleaning company
I don't own or manage STRs but have heard good things about Atkinson for the south end of VB and Sandbridge.
Patti and Erick, thank you both for the input. I will look into Atkinson. I have also heard about Beach Pro and Sandbridge Blue. But honestly, all of them have pretty bad reviews.
It seems that most of the dissatisfaction comes from bad cleaning. My guess is that when every house is turning over on the same day, it puts a lot of stress on the company to have a team of 100 amateur cleaners working like mad for only 4 hours a week. I wish there is a way to fix this, but not sure how easy it is to change the business model.
I almost wish there is a way for me to hire my own cleaner, but let the PM company take care of the rest of the rental business.
Hi Mike. One thing you may consider (or already have) in your decision process is marketing and renting of the property. Despite their poor reviews, both Seibert and Sandbridge tend to be the go to for available rentals, holding the majority of available properties in Sandbridge.
I live down the street from Sandbridge, yet we rent a home there usually a couple times a summer and always through one of those two PMs.
Curious if you've run the numbers on the properties in terms of net rent vs. expenses. My wife and have also thought of buying there because we love it so much, but I'm wondering if it pencils out as an investment that makes sense. My gut tells me that because there are always so many available for sale that they might not make the best investments (but hoping I'm wrong). Something I've been meaning to explore further but haven't yet. Would love to hear others thoughts on this too.
@Cary McGuckin I was born and raised in VB and have considered a STR there too and the numbers never work well in the deals I've analyzed (even with the possibility of self managing). I'd be curious how the OP is calculating the numbers too.
@Mike Leng Get in touch with @Sierra Alderman, she manages STRs in the area.
@Amy H. Thanks for sharing your experience. Sandbridge is such a great area. We love the family atmosphere. If I can ever find a deal that makes sense we would love to be owners, until then we will continue to rent. Maybe the numbers work better on the mega-houses, which appears to be where the building trend has gone.
Hi, Mike, I sent you a message, I can help. Also, I lived in Sandbridge for seven years, grew up in the area for a long time and know it like the back of my hand.
@Taylor Bishop as a STR as an investment, have you seen the numbers pencil out? Or is it best to buy there if your primary objective is owning your own beach house and then using STR to help offset the expenses? Any thoughts on the really big homes vs the smaller ones? Thanks for your perspective
So here is an example of what it could like buying a property in Sandbridge. Now this is generic and there could be other factors that could change this, but I based this off a recent property in Sandridge. However, I switched things up a little bit not putting the exact information from that property. Also, it depends on how you would finance the property which is another factor.
Vacation Rental Analysis in Sandbridge VA Beach, VA
AVM: 500,000
Listing Price: 510,000
Sale: 490,000
Market time: 5 months
Sq ft: 2400
Approximate taxes: 5172
Conventional Loan @ 3.05%, no jumbo needed, under limit.
Home Sale: 490,000
Down Payment: 10 percent 49,000
Loan Amount: 441,000
Monthly Mortgage Payment: 1,871.19
PMI: 0.75% >>>> 275.63 a month
Taxes Monthly: 431
Homeowners Insurance: 2,500 >>>>> 208.33
Flood Insurance: $ 785 annual >>>> 65 a month
Final Mortgage Payment: 2,851.15 including all other expenses
_________________________________________________________________________________
Monthly Rent for Property
Vacation Rental Time Starting May 1 to September 30 totaling to 153 days
Vacation Rental Price>>>> 350 Dollars a Night (153 days * $350)>>>>>> $53,550
Winter Short Term Rental Starting from October 1 to April 30 >>>> totaling to 212 days
Winter Short Term Rental Price >>>>> $ 1,800 a month>>>> (1,800*12)/365 >>> $ 59.17 a day
Continued >>>> ($59.17 * 212 days) >>>> $ 12,546 total
Total a year with Winter/Summer>>> $66,096>>>> then divide $66,096/365>>> $181.08 a day
Continued>>>> $181.08 * 30 >>>> $5,432.55 a month approximate
_______________________________________________________________________________
Income Estimate “Example”
Property Management Fee: 10 % of monthly rent
Total Months for Vacation Rent>>>> Around 5 months>>> total charged PM 5 months>>
PM Monthly Payment Vacation>>>>> $10,500 * .1 >>>>>> $1,050 a month
PM Summer total Payment PM>>>> $ 5,250
Total Months Winter Short Term Rental>>>>> Around 7 Months>>>> total charged PM 7 months
PM Monthly Payment Vacation>>>> $1800 *.1 >>>>>> $180 a month
PM Winter Total>>> $1,260
Total PM Yearly>>>> $1260 + $ 5,250>>>>> $ 6,510
Monthly Average for both Vacation/Winter>>>> $542 monthly
Possible other expenses>>>> Yearly $ 3,000/12 >>> $250
All expenses added up with mortgage payment>>>>> $2,851.15+ $542 + $250 = $ 3,643.15
Final Income Estimate>>>> $5,432.55 - $ 3,643.15 = $1,789.4 extra in income a month
Thanks for sharing the detailed proforma. If I read it right it’s based off 100% occupancy. In your experience what is realistic to expect?
Cary, it really depends on many factors, how the property is financed, can your Realtor find you a good deal and be on top of things, if a really good bargain comes up it can go pretty quick, I had it happen the other day with an investor I work with. He hesitated only a day on going forward lost on a great deal. However, most single family homes in Sandbridge are going to be at least 400k and above, except for condos or units you can find them for cheaper than 400k, so even a good bargain most likely will not goes a fast as other potential investment/rental properties in other areas of Hampton Roads. I would say trying to get a decent bargain is a must, but you do not want something that needs so much work that it wouldn't qualify for a traditional loan. I would not buy any kind of unit or condo in Sandbridge they might be decent for Vacation rentals, but you would also need to have a short term rental plan for the winter and I think single family residence does much better overall for Sandbridge.
With a conventional loan you do not have to be occupied in the home if you tell the lender upfront. Of course, there are many factors that come into play, the example above would be owner-occupied for 12 months and then rental income could start. You could do a second home conventional, but the property would have to be 50 miles away from the first home I am pretty sure which requires at least 10 percent down and cash or assets in reserves for 2 or12 months depending on dti and credit score. For an investment conventional it would be around 15 percent with cash or assets in reserves for 6 months. There are other ways to finance, but I am not going to go to far into that, because I am not a loan officer.
As mentioned above, there are many factors that come into play, but if done correctly I am guessing you can make over 1500 a month maybe much more depending on the situation. It is really hard to say without looking at the circumstances. I am sure you could make less or even nothing if you went in without some kind of detailed plan.
Taylor, thank you so much for the detailed analysis. This is why I like BP forums. :-)
To answer an earlier question from Amy and Cary, I am not treating this as a strict business deal. My wife and I have a sizeable nest egg saved and we are not comfortable leaving everything in mutual funds, so we want to diversify into real estate. It will also lay the foundation for us to live as "snow birds" when we retire in maybe 10 years. So we are not super-concerned about ROI or cash flow, as long as the rental income covers all the expenses. My back of the envelope math is following:
$600k upfront purchase (for simplicity sake, assuming no mortgage)
Expenses: $6k annual tax +$4k annual maintenance/upkeep +$3k annual utilities + $2k annual insurance for property and liability = $15k annual OPEX
Income: $1.5k per week in summer and $1.5k per month in winter (after deducting PM fee)
16 weeks in summer (assuming 80% occupancy rate, allowing me or my extended family to use it when it's not booked) and 3 months in winter (assuming 50% occupancy rate) = $28k total annual income
Gross profit = $13k
ROI = 2%
2% return will probably make most people run away screaming, but for me, it's not a bad deal. 2% is about the interest rate I can get from a long term CD, but I also get about $10k worth of usage out of the house which is not included in the calculation, nor is the potential appreciation.
In other words, for somebody like me whose primary objective is asset diversification, a house is a better choice than gold coins.
@Mike Leng one great way to find smaller, honest str PMs is to get on Airbnb and check out the hosts in your area. See which one has a few units that they are managing and send them a message. I manage units for other people and that’s how many have contacted me. Str management is not for everyone and some people say “you can easily manage with tools” not everyone enjoys having constant contact with guests. I hope you find what you’re looking for!
Sofia,
very good point. I definitely will look into that.
You brought up another thing that I have been wondering -- Weekly rental vs Airbnb. This may be a unique situation for VA Beach (and NC Outer banks) -- the rental properties are usually rented on a weekly basis in the summer, with all the rentals start and end on Saturdays. As I mentioned in my earlier posts, it creates a lot of logistical issues for cleaning the units, as well as traffic jam on the roads up and down the coast. I guess the benefit of doing it this way is to maximize the occupancy.
On the other hand, if I offer the property through Airbnb, the begin/end date can be any day of the week. One good cleaning crew can handle several properties if they don't need to be all cleaned at the same time. However, the downside is that inevitably there will be "orphan days" between one vacation and the next. I can require on Airbnb a minimum 7 day stay during the summer peak season, but it's still possible to end up with "orphan days" between customers.
I am wondering if anybody on the BP forum had experiences dealing with that. In high demand areas during peak season, what's the better rental strategy: fixed length rentals or Airbnb?
@Mike Leng thanks for sharing your approach and perspective. I agree that diversification is important, as is family vacation time :)
I think your numbers look pretty conservative, so potential for some upside perhaps and would imagine there are also tax depreciation benefits not factored. Best to you in finding your ideal property. Would love to hear how it goes, once you find one.
@Taylor Bishop Sorry to revive a cooling thread, but your responses really caught my interest after doing a cursory search on "Sandbridge." I live about 10 minutes from there and have been taking a very intentional look at whether Sandbridge could be a good opportunity. This has been especially true lately given that most of the single family LTR's on the market right now in VB are just not cash flowing at these list prices (which are getting multiple offers first day). Either diversifying or pivoting into STR there may be advantageous.
A few follow up questions to your example proforma.
1. I believe you listed a PM fee of 10%. Is that realistic for a Sandbridge rental PM? What's the range?
2. How do you think the variables change for properties that are in the $1mm value range? Higher/lower occupancy? Higher % maintenance? Higher PM fee? Better appreciation than lower priced properties over the next 5-10 yrs?
3. From what I gather, Sandbridge is exempt from VB's restrictions/burdens on STR, but I believe there is a lodging tax of 8%. Is that passed along directly to renters or is that absorbed into the rental fee?
Thanks again. Great info!
Russ.