Condo buy & hold investment in Branson.
Purchase price: $190,000
Cash invested: $45,000
This is our first vacation rental. We took it over in the middle of the high season with lots of reservations already on the books! It's a 2BR/2BA unit in a very popular resort in Branson, MO.
What made you interested in investing in this type of deal?
I have always loved the hospitality industry. I love pampering people and facilitating memorable vacations. I have many years experience working in hotels and restaurants from front desk clerk to restaurant manager. This seemed like the easiest path to owning my own "hotel".
How did you find this deal and how did you negotiate it?
I worked with a local Realtor who was recommended by my management company, Evolve. Since the market is very hot (like everywhere else), we offered full price and waived the inspection contingency. We were also the first to submit an offer. Luckily, the sellers felt compelled to accept our offer based on these points. It's very important to note that this deal made sense at full price. We are still looking at a +9% cap rate and very strong cashflow.
How did you finance this deal?
We first tried a vacation home loan, but our debt to income ration did not work. We ended up getting a commercial loan through a local bank. The interest rate was higher than for residential, but it still worked.
How did you add value to the deal?
I do not know why the previous owners sold after only one year of ownership, but my guess would be they were not making money. This is a VERY popular unit, (1440 sf, 2br/2ba in a very busy resort) but their property manager was taking 25% and was not marketing the property well. I calculated the occupancy rate was only 36% through July 6th of this year which is quite a bit below the average of 51%. We changed management companies and immediately upgraded some of the furnishings and amenities.
What was the outcome?
We just closed, so no concrete outcome, yet. I'll let you know!
Lessons learned? Challenges?
I learned a lot buying this rental. Here are the top three lessons: 1) Apply for your business and tax licenses immediately upon a signed deal. 2) Make sure you are aware of ALL association fees when buying a condo. We have COA, POA and Golf association fees, all of which did NOT show on the realtor.com listing. 3) Know your market. This unit in a different part of town would not gross the same amount of money. We relied on our property management company to steer us to the most profitable resort.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Bill Beck - Realtor with Worley & Associates, Branson, MO - vacation rental owner
Shannon Steinert - First Community Bank of the Ozarks - vacation rental owner
Taylor Clark - Robbins Insurance Group
Danielle Murphy - Evolve Property Management - vacation rental owner
Shawnee Jones - Branson Family Cleaning
Hoping this is the first of many STR's for you. Cheers & best wishes!
Thank you! Great post and great information and suggestions.
Congrats! I own one in at The Lake of the Ozarks with very similar specs. We are always 100% full (out of the two seasons we have owned it) during the summer and if we manage the price, tend to stay full enough to cash flow in the less busy season. Keep up the good work. These vacation condos are awesome!
Wow, nice @Deanna Lawrence !
Congrats! looks fantastic! So glad you pointed out that full price still worked.
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