STR Analysis (includes COC analysis of OBX, Smokies, St. Aug)

22 Replies

Currently, I am shooting to get an STR in OBX, Smokies, or St. Augustine for a self-managed. The goal is to get the highest COC return on a 450-575k budget that I am able to self-manage. I have found myself in analysis paralysis and know I need to jump on something soon. It has been challenging as my data conflicts with the suggestions given (i realize analysis is just an educated guess).

(OBX) On paper, OBX outperforms all areas I am looking into and it is an area I am most interested in. However, I will be self-managing remotely and I hear getting good cleaners and handymen are quite difficult in the area. Additionally, I assume upkeep on a house on the coast is going to be more than in the mountains. There is not much info on this area so would love to connect with someone

(Smokies) I have been told the smokies would outperform this area however my data says otherwise. With the prices inflated I am finding it hard to find a house that would produce the same COC returns but I also know my data may be lacking as I do not have experience in the area. I have found that 4 rooms are the sweet spot and at that point, it is the best performer however those are going for 800k+ (Possible for me but would have to borrow a good bit from friends and family and would have limited funds left remaining) Hoping at some point the market cools off as this would be the clear winner at that point.

(St. Aug) is going to be the closest location to me in distance and it seems lower risk as it is able to turn into an LTR and it is also a "driving destination". But the changes of the regulation up there are worrisome and its COC return is not as high. Logistically this is my prefered location however it does not seem too popular

With any property, I get I plan on working hard on making the listing stick out as much as possible which I know is a critical factor. 

Question: Can anyone give me any input on my COC analysis or what location they would rank as the best (best meaning highest COC within my budget that can be remotely self-managed)

COC Returns By Area Below (SELF MANAGED)

1. Smokies (2br 2bath 575k purchase)

  • -Average COC = 22.13%
  • -Top Performer COC = 39.28%

2. OBX (3br 3bath 575k purchase)

  • -Average COC = 24.12% 
  • -Top Performer COC = 43.54%

3. St. Aug (2br 2bath 540k purchase)

  • -Average COC = 22.10%
  • -Top Performer COC = 35.00%

      It’s a single family home. Not a big deal. Just buy one and go. 

      On an actual vacation market…. The question is not 

      “Will it make money?” 

      the question is 

      “Can I handle drunk people in my house doing gross stuff from 600 miles away”  Which by the way is super easy for me but maybe not for you as I’m sure you’re good at things I am not.

      And furthermore. The lowest COC on your list is 22.1% Do you know of any other space that can come close to that? I don't. Stop nitpicking and buy one you like.

      I'd recommend St. Augustine for your first one. It is a great market and its closer for you.

      It's coastal and appeals to the history buffs.

      In 3-5 years you can have one in each of those markets, but not if you don’t start somewhere first. Your analysis seems good, but you will learn more in 6 months on managing your property then you ever will analyzing more deals or reading.

      All your numbers look good. I’d worry about the cleaner maintenance issue you already identified. That’s a real problem. The best location is the one you find first where the numbers work. @Chris Mury might be helpful identifying a house in St. Augustine. Your research is essential but a smart realtor for your first STR is probably more essential.

      Wow looking at OBX home prices was interesting. While the whole nation has appreciated like crazy in the past year homes there look pretty stagnant. 

      Some of them are listed for lower now than they were sold for in 2018.

      @Pearce Trenary

      I bought in Miramar Beach, Florida in February so this was my first year. Hit the spring rush and the summer was great. All said and done I'll probably fall around 25% CoC by the time the year ends.

      Be careful in areas that don't have consistent cleaners. This is the single biggest issue we underestimated with our str we just opened. Ours sleeps 16 and while we assumed some parties would be smaller and some larger it seems most gravitate towards larger rather than smaller parties. We set 5 hours between groups and we have a full time cleaner already on staff and we weren't even close. We ended up hiring another person just to deal with the bnb turnovers. Lesson learned and this one is 5 minutes from my house, I can't imagine if it was hours away. 

      @Wes M.

      10% down, 3/2 single family, sleeps 8, bought for $455K.

      2 blocks from the beach; amenities - 2 pools, club house, tennis courts, basketball court, gated community, etc.

      I agree with @Wes M. There are parts of theoouterbbanks that are ready to be washed away, further south. It takes constant maintenance of the beach and road. Understand that aspect too if looking there.

      @Pearce Trenary , I don’t want to sound like a broken record but I would go with the market you are the most comfortable with and have the highest probability of success. All these returns look great to me so why wouldn’t you jump into the market you are most familiar with and try to buy 2-3 of them?

      Side note don’t forget it’s been a while since the NC coast was crushed by a major hurricane. People tend to forget how bad the outer banks does in that situation.

      @Lauren Kormylo  thank you, didn't even think about that. 

      @Philip Williams I appreciate the feedback, helps me knock out OBX especially as I want this to be remotely managed.

      @Joe Prillaman I honestly do not know any of the areas I'm looking at well.  I have pulled as much data as possible to best understand projected performance however this forum has been incredible in showing me stuff the data does not. I have narrowed down between St. Aug historic distric and Gulf Shores

      Man that OBX market is wild.  Some of those beach houses are inches away from the water now or even in the water, when they were hundreds of feet from the water when built.

      Those ones right up on the water are like $480k for a 5 BR house on the beach.  Land value is $460k so the house is only valued at like $20k.  I don't know if it's even possible to insure those things anymore but they are probably rental machines until they inevitably get washed away.

      It seems like the differences in CoC btwn the 3 markets are somewhat marginal. I would look at the non-financial factors when making a final decision.

      As an aside, I launched my 2nd STR in Jax (1st was in Chicago) and have had a TON of success in Duval County. I started self-managing since I couldn't find a decent STR-focused property mgmt company in NE Florida and low and behold ended up creating a PM company!

      My firm manages 8 listings in Jax Beach that have done phenomenally well over the past 2 yrs.  Feel free to reach out if you have any questions about the NE Florida / St Augustine market! 

      @Eric Adler what’s your brokerage name,

      Or are you the broker ? I can send your way an owner also needing a PM for their Furnished property.

      Or are you meaning you are co-hosting owners listing on Airbnb ? As this home is not an airbnb property.