Are there Good STR markets in the Midwest/

[Joseph Goode]

I know that the big players in the STR market have been the Smokey's, parts of Florida and Joshua Tree but it seems like the price point are high and the bidding competition is crazy. Can you guys recommend some great STR cities at a lower price point in the Midwest, south or really anywhere that works.

[Joe Splitrock]

@Joseph Goode I operate a STR in the mid west, but there are two things you need to understand:

1. STR will do better in highly traveled vacation destinations. Warm weather, ocean and mountains are your top attractions. The other draw may be major urban areas that see high tourism like San Francisco or San Diego. Not that Omaha isn't a nice city, but you will get nowhere near the number of year-round tourists or gross revenue as you would in a vacation destination.

2. Price point of the property is irrelevant. I purchased my STR for $130,000 and I can gross $2500 in a good month. You could buy a place in the mountains for $600,000 and may gross $9000 a month. You may think, I will just buy 4X properties like Joe has and spend $450K to get $10K revenue. Now you have 4X the number of guests and 4X utility bills, cleaning, etc. The higher dollar vacation rentals will get more "bang for you buck" and will appreciate better than cheap houses in the mid west.

Like I said, I own a cheap house that is a STR in the mid west. If I lived in Sacramento, CA, there is no way I would buy a place in the mid west for a vacation rental. I may consider houses in the mid west for long term rental, but short term rental is too much work for the return on low dollar properties.

The reason properties cost more in some markets is because they are in more desirable locations.