What's it really like owning a short-term rental in VB?
Hello everyone, I hope all of you are doing well in this pandemic and hope all this COVID thing will be over soon.
My wife and I are not too far from retirement and started thinking of buying an oceanside or oceanfront property as a short-term rental for now and eventually moving in. We own a few rental properties in NOVA and we have a certain experience of owning rental property in NOVA. However, owning a short-term in VB seems an entirely different animal. I'm wondering what it is REALLY like of owning a short-term rental. How much enjoyment and headache we have to face if we own one.
Let's assume if we buy a $1M oceanside or oceanfront property without a mortgage. How much money (just ballpark) can it really bring in every year considering vacancy, utilities, HOA, insurance , and the cut from hiring a reputable management company, and many other costs I am not even aware of? Also, what does the management company do exactly? Do they do the cleaning, checking in/out like hotel staff so I won't have to worry about anything except the repair/replace bill? What's the risk of running into groups that will destroy the property and if that happens, what would be the solution?
There are so many new things to learn about owning a short-term rental in VB. Can any experienced Biggerpocket users shed some light?
Thank you very much!!
Originally posted by @Timothy Lou:Hello everyone, I hope all of you are doing well in this pandemic and hope all this COVID thing will be over soon.
My wife and I are not too far from retirement and started thinking of buying an oceanside or oceanfront property as a short-term rental for now and eventually moving in. We own a few rental properties in NOVA and we have a certain experience of owning rental property in NOVA. However, owning a short-term in VB seems an entirely different animal. I'm wondering what it is REALLY like of owning a short-term rental. How much enjoyment and headache we have to face if we own one.
Let's assume if we buy a $1M oceanside or oceanfront property without a mortgage. How much money (just ballpark) can it really bring in every year considering vacancy, utilities, HOA, insurance , and the cut from hiring a reputable management company, and many other costs I am not even aware of? Also, what does the management company do exactly? Do they do the cleaning, checking in/out like hotel staff so I won't have to worry about anything except the repair/replace bill? What's the risk of running into groups that will destroy the property and if that happens, what would be the solution?
There are so many new things to learn about owning a short-term rental in VB. Can any experienced Biggerpocket users shed some light?
Thank you very much!!
The big difference is that a short term rental is a time intensive business. With our long term rentals we can go months without talking to a tenant. With our short term rentals, we can have daily interactions with current guests, future guests or cleaning personnel. The upfront work to get things setup is more time intense, then it gets easier. You can automate some things, but when someone contacts you at 8AM to tell you the coffee pot isn't working, you need to line up someone to deliver a new one that day. It comes down to having a good network of people. A cleaner, handyman and tradesman (plumber, electrician, HVAC). Cleanliness is extremely important, as is getting 5 star reviews from every guest. That requires attention to detail and responsiveness. A property manager will do it all, but they take a healthy cut off the top.
I don't think you really provided enough information to say how profitable the business would be. You would need a to know the number of guests the property accommodates and look for comparable properties on AirBNB or VRBO to estimate rental income. Monthly revenue will be much higher than long term rentals, but so are your expenses. You are paying utilities, furnishings, linens and consumable supplies.
Hi Joe,
Thank you very much for the reply!
I'm not sure what I can get for $1M in VB for a good short-term rental. Is it possible to get a 5 bedrooms and 4 bath that accommodates 10-14 people oceanside or oceanfront? I feel a property like that can rent for an average of $600/day and about $5000/week with miscellaneous expenses added (in summer) on vrbo or airbnd. That's about $50-60k/summer in summer before expenses. However, how much vacancy should I expect during the non-summer time? I feel if the property can only be rented during summer, with all the expenses, it wouldn't bring in much after everything (I would expect 50% of gross income?). What would be the reasonable expectation on the vacancy if I try to rent it all year around?
Thanks again for your input.
@Timothy Lou it’s very hard to provide a ballpark without the specifics. Also, this really depends on the management company you hire. Do they offer dynamic pricing that maximizes your profits or will they just accept most bookings as they come to keep calendars filled. Here are my suggestions:
1. Call that reputable management company and ask them to send you comps for the area you want to buy. They should be able to tell you how much on average your future property will make. Then you can run your numbers
2. It will be more upfront work than LTR but, if you hire full house management, they can help do 90% of the work and still make your numbers work
3. Checkout my profile to see an article I posted on how to vet STR management companies, what questions to ask, etc to make sure you go with someone who knows what's they're doing
4. A well established full house management will do at least the following: guest communication, house inspections to check cleaning and that nothing is missing, claim support IF there are issues, guest screening and "party prevention", restocking of supplies, coordination for maintenance, safety and security of the house, work with you on city regulations, dynamic pricing, manage the listing online, cleaning management, monthly reports there is a lot ... but there are great STR management companies out there providing a ton of value.
Thank you Sophia for your input!!
I will start the homework. Although this is a different animal, I'm sure I will be able to handle.
Thank you & Stay safe!
Hi there also you can check out Airdna.com. You can enter in the zip code and provide the specs of the house and they provide an estimate on the rental income. That's also another quick and easy way to identify the revenue for that zip code. They pull data from Airbnb and VRBO.
Hi Lena, The website airdna.com seems goes nowhere, can you let me know the correct website? It would definitely be helpful. Thank you!
Nevermind, it should be airdna.co. :)
Hello, let me know if you would like to talk on the phone about our area and what to expect. Ive had Vacation rentals and represent other clients that have them in the area.
Krissie