Investor · Austin, TX · Member since 2019 · 229 posts · 229 votes
Hey BP, hope everyone is doing well.
My question is simple, Where Do I Start? A little about me, I've been in the investing industry for about 2.5 years now. Have virtually wholesaled deals all over the country from my couch, but I'm ready to get some cashflow going. I currently live in Austin, TX and I do have a LLC registered here as well. I'd like to get into the STR space, specifically AirBNB but idk where to start. What resources are you guys using to do your market research? I've viewed what going rates are from the consumer side and getting to see the available days so I think I have a general idea of the #'s, but of course "general ideas" and investing don't go together.
Don't start or end with Arbitrage, this is not RE investing.
I would say start with buying a place and renting it as a LTR.
how is it not? I put up a deposit on unit (investing), I pay first months rent (investing), I furnish (investing), I pay the utilities (investing), I pay "management" fees to AirBNB for connecting me and the customer (investing), I pay cleaning company to clean my units after checkout (investing), all in hopes for a larger return so I can recoup what I spent and put some money in the bank (investing).
You are buying into a job. You are not buying equity or wealth. The actual owner is buying wealth an equity as you make his mortgage payments for him every month.
The owner can decide to take his property back at some point as you are just a tenant.
If you are looking at gaining some additional income through arbitrage it could work, but as other people have mentioned, it can be risky and not worth it. My husband and I had 2 in San Antonio that did really well until COVID. March - May were brutal. Thankfully we found a LTR to take over the remainder of the lease for one of them, but we were stuck paying rent and utilities through November with hardly any business for the second one. It hurt. However, when it was good, it was easy to maintain. My husband managed rates, adjusted them a few times a week. He's a Director of Revenue of a hotel, so it was easy and quick for him. I had messages I copy and pasted at check in and check out. The only item I would change is the keypad code because we would update it for guests. Every Sunday I would write my reviews of guests for the week. I coordinated with our cleaner who cleaned those houses and 1 we owned and rented. He was our cleaner/handyman/landscaper. Then shopping for cleaning supplies was done ever month to every other month. Automating ourselves like that helped. We really didn't spend very much time "working" on that side business.
As far as where to start, here are a few things to consider - 1. When looking at properties, confirm if you have to get a permit and if you will have to pay taxes. Do the math with those taxes. When San Antonio started charging us 11% in taxes, it significantly cut into our profits. That could potentially make it not worth it. 2. Find a cleaner/handyman. You may be able to do it yourself, but then it's more of a job for you and not worth it. It's just easier to have someone else do it. 3. Figure out how much it's going to cost to fill the house (furniture, linens, kitchen supplies, tvs, etc.). I have a spreadsheet with basic costs for some of those items. We created that when we were considering getting more houses. I'm happy to share it with you if you'd like.
If you can get people relocating or groups that need a place to stay for weeks or months at a time, those are ideal, but not easy to get. We only have 1 rental now, and we've had a family in it since Oct because they had damage to their house and no hotel would allow their dogs. They take care of our house like it's their own, and because they've been there so long, we don't have to pay taxes.
My suggestion would be to save up to buy your own house and rent out a room. We had a 2 story near downtown and we would rent out the upstairs. It was super low maintenance and helped with our mortgage.
Join str meetups and facebook groups. That is a start. Interact with folks that are actually doing it. Most landlords won't allow for the str. You should meet folks that are doing it to totally understand the market. As a side note, I did the arbitrage idea with some properties near barton springs but I did it with landlords that I knew personally. I made a little money but it wasn't worth it, tbh.