Vacation Rentals (Airbnb etc) Where would you do it in the USA

14 Replies

Hi everyone, I live in Madrid, Spain and I have done several real estate deals abroad but I am really interested in the US market.  The opportunities I read about in the US seem a lot better than over here.  However I am a little bit confused on what location to look at.

I currently do Airbnb vacation rentals here in Spain.  Its pretty much the only viable real estate option here because tourism is carrying the entire economy.  I have thought about Florida because it has good tourism and weather, I have even read about people having success in cities like Kansas City, MO which to be honest I barely knew existed until reading about it on this forum.

The reason I am attracted to vacation rentals is because I have done it here in Spain so I know how it works and believe in it.  It can be a pain but the returns usually make up for it.  If anyone has any sugggestions or even better examples who are doing this business somewhere in the US I would be really greatful.

Thanks!

The answer here is simple, look at Sunriver, Oregon.   You get the best of summer (rafting, river, biking, hiking) and winter (Mt Bachelor).  Plus the fall and spring is beautiful there too which makes it rentable all year long.  No seasonal drops.  I see most houses rent for $300-$1200/night on abnb.

Hi Christopher,

I have a vacation rental in Seattle, WA and it does very well.  As Nathan pointed out, you want to make sure that your location will rent out fairly regularly all year long.  This is partially determined by weather, but is also massively impacted by the local attractions of the area.

Our 6 bedroom home is located close to downtown Seattle, in a very popular neighborhood called Capitol Hill.   It is booked around 95% all summer long (we rent it both as an entire home or as individual rooms, to maximize potential) and it slows down to about 40-50% in the winter months.  

Our home rents for between $650-950 a night, and this year we did $160,000 in gross revenue.  Unfortunately, the RE market in Seattle is about as hot as it gets, so buying here right now is very difficult and expensive.  If you have deep pockets, Seattle could work out well, otherwise I'd look elsewhere around the US for a more approachable price-point.  

@Nathan Miller

Thanks for the suggestion,  I never would have known about it.  I will definitely check it out because I like the idea of not relying only on one season.

@Andy Whitcomb

Those are some very impressive numbers! Seattles sounds great and its also a city I'd like to visit but for purchasing it would be out of my reach I am sure.

Nice numbers, 3 question

- what is actual occupancy?

- how much gross and net yield are we talking about?

- who is managing giving keys, checking property after and cleaning up? And how much they charge?

Christopher,

If you have not previously done deals in the US, don't necessarily let yourself get caught up in reading about it and think that the grass is greener. Spain, on the whole, is by far a much greater opportunistic market right now than just about anywhere in the States. After working in Sevilla for 4 years and keeping an eye on the US market, my wife (Spanish) and I (American) made a big move to the States to explore some opportunities there - though we had success in the consulting side of our business, our on-the-ground experience with investment opportunities turned out to be significantly different than what we were looking at online. Your experiences may vary, of course, but 9 months later we decided to bring our business and our investments back to Spain.

@David Hays

Its really interesting you should say that, to be honest I haven't been on the ground anywhere in the US yet to specifically look for something.  its just been online and I am originally Canadian so its not the same. I was looking in South Florida because I am mostly doing vacation rentals and it seems similar but with higher margins.  Although as I look more I do see more complications due to regulations etc. 

Some things give me pause when researching the US for vacation renting like HOAs, stricter laws, and also the fact that some neighbourhoods in the US with good deals are super high crime ghettos from what I can tell.  At least none of those things are a big problem here in Spain.  Although the numbers you see on here and elsewhere are still tempting.

What type of real estate do you do in Spain?  I'd be interested to connect if you'd like. I am really eager to expand and open to talking to people with different experiences.

Chris

Originally posted by @Christopher Griffith :

@David Hays

Some things give me pause when researching the US for vacation renting like HOAs, stricter laws, and also the fact that some neighbourhoods in the US with good deals are super high crime ghettos from what I can tell.  At least none of those things are a big problem here in Spain. 

Christopher, 

Well you certainly have HOAs here in Spain (at least they're totally de rigeuer in any building or complex I've seen here), and if anything the communities are more nosy into your personal affairs, but they don't seem to pull anywhere near the same legal nonsense that is so common in the States. As for laws, well those vary just about everywhere you go, though at least Madrid is working on cohesive federal regulation for short-term rentals (whereas that will never happen in the States), but I completely agree with your point on the good deals in high-crime ghettos angle - the concept of "ghetto" as it is in the States just does NOT exist in Spain, and personally I find that a much easier thing to work with in terms of identifying path-of-progress opportunities.

Our company offers a few different things, but right now we're working on rebuilding our property management division on the Costa del Sol, targeting purely vacation and short-term rentals (we sold this division last year when we got a tempting offer and knew that pending regulation was going to greatly shift the marketplace). Our primary investment focus right now is a hotel or hostal located on the coast, so it's a slow process ;-). Connection sent.

I found the key issue in US vs Europe is the operating costs, legal nonsense and legal risks. You have high taxes, high HOA fees and everything falls apart every few years - maintenance costs are very high. Example in Florida, Roofs melt down under the sun and you need a new roof every 10 years. In Europe you never change roofs. Then you can only do short term rentals in specific communities, where there are specific rules and HOA fees even higher. So I decided not to do that.

@Christopher Griffith Also beware that there are differences among the states and mainly specific expenses. For example, Florida which you mentioned has incredibly high hurricane insurance which will run thousands of dollars every year, and it might very well consume all your returns.

And how do you want to handle the property management for airbnb property from abroad? Did you come across a company specializing in this?

Originally posted by @Caroline Barnett :

@Christopher Griffith  

And how do you want to handle the property management for airbnb property from abroad? Did you come across a company specializing in this?

Caroline,
What makes you think that that is so complicated? It just comes down to proper organization and automation. Though it sounds like a stereotype, I have literally managed my vacation rental properties from a beach in Thailand, and I have absolutely no problem managing other properties remotely.

I lived in a few places in Europe before, and would agree with David that they are far nosier than American neighbors! LOL! I think the main hurdle is the cost of a good property in the USA (we just had a $1.2M duplex listed in Podunk, MT). That's not to say you can't find a nice, well priced property. But you really need to do some digging to find it. And then put some effort into making it marketable to STR's. You should be, at minimum, familiar with municipal zoning laws, gossip about the town or area's attitude to STR's, and insurance and legal issues regarding operations and mortgage clauses. That's about it in my book! If you pay a lot of money, you can buy a functioning STR, but your margins will be slim. The real money, as always, is in property analysis, and developing your business from the ground up.

Where I would look: STR's flock to National Parks. Look in a town near a large National Park, near a major freeway or highway, preferably close to an airport, with some culture, and nightlife. You will never go wrong. Luckily, there are a ton of places like this in the US. Add in some bonus point such as a hot market, University, and a thriving economy, with a YOUNG age demographic, and now you're talking about <10% vacancy year round. On top of all this, my town has 3 world class ski resorts within an hour's drive, and almost unimaginable outdoor experiences. We have 22 MILLION contiguous acres of public land. So you could use my town as a template, but good luck finding anything under $1M. Locals have the STR market on lock down out here.

I'm seeing a continued strong interest in Maui for investment properties, whether short term/vacation rentals or long-term. Obviously, the numbers have to make sense. But prices are still reasonable and it is a destination, for Americans and Foreigners. In spite of the currency imbalance, the Canadian buying activity is picking up.

Especially for an European (because of the strong cultural connection)-Miami. We are in top 3-5 airb&b rentals, according to their site. If interested, please reach out. Am selling a fourplex & have gained lots of unique knowledge during the process.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here