Our First STR and Out of State Investment Property

Eric Schroeder · 2022-08-16T19:44:56-07:00

Investment Info: Single-family residence buy & hold investment. Purchase price: $325,000 Cash invested: $32,500 Vacation home purchase in Tampa, FL that we have set up as a short-term rental. How did you find this deal and how did you negotiate it? I used a real estate agent we found on Bigger Pockets. She helped us locate a property that would work as a short term rental. How did you finance this deal? 30 year fixed - 10% down How did you add value to the deal? Replaced the deck and some cosmetic work on the interior. Furnished it from top to bottom with Amazon and Ikea. What was the outcome? At the moment breaking even. Being the hottest part of the year in Florida this was expected. We're looking for more bookings in the Fall/Winter/Spring time, once we've built up reviews. Lessons learned? Challenges? The house is a 100-year-old bungalow. This comes with its own challenges. We had a full inspection done, but things that were okay at the time of inspection have come up since. We had to replace some pipes in the yard due to the ancient trees in the area. The A/C runs a LOT. So make sure the HVAC has frequent maintenance. Investing out of state, we used some referrals from our investor agent and found a fantastic contractor/handyman. For some other minor issues, we've used Google search. Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others? Agent Kristina Kuba - Tampa, FL

Dmitriy Fomichenko

Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes

4y

Nice @Eric Schroeder !

0 Reply

J-Ryan Stewart

Specialist · Tampa, FL · Member since 2017 · 36 posts · 30 votes

4y

You might be surprised what you could accomplish sourcing much nicer furnishings than Amazon & IKEA. Usually we spend equal or less for sturdier items just through sourcing experience. If you know what you're looking for on Amazon, about $1500 in the right silk plants alone could make this place book out for higher rates all year.

Make sure your handyman tightens every piece of furniture in that place every couple months or you'll have dozens of bolts working themselves loose. Overall you should only expect these furnishings to last about 18-24 months before reinvesting. Our business is essentially to put residential properties & furnishings to commercial use, so make sure to budget for regular updates or your nightly rates will flounder, especially in shoulder & trough seasons.

As far as HVAC, get a Nest or similar digital thermo that allows you (or your STR management) to PIN-lock guests from setting it below 68. This will protect the system & keep them from freezing it over & getting their money back from the booking platform for something they did.. If there's even a shadow of a plumbing issue, spend the money on new pipes before taking reservations. These guests will flush everything & you'll just keep dealing w it & losing reservations.

3 Reply

Wale LawalBusiness Member

Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes

4y

@Eric Schroeder

Great!

You need a team of local professionals like property inspectors, property managers, contractors, agents etc. to ensure that you are not missing anything during the deal.

A local Investor-Agent can help shorten your learning curve and save you a lot of headaches as they tend to understand the market better.

All the best!

[email protected]832-776-9582 Podcast Guest on Show #469

NETWORTH BUILDERS5236 Reviews

Website View Page

1 Reply

Matthew Tregoning

Property Manager · Melbourne, FL · Member since 2019 · 551 posts · 188 votes

4y

Looks great! Awesome job.

0 Reply

Jared Prevost

Lender · Tampa, FL · Member since 2020 · 113 posts · 119 votes

4y

Quote from @J-Ryan Stewart:

You might be surprised what you could accomplish sourcing much nicer furnishings than Amazon & IKEA. Usually we spend equal or less for sturdier items just through sourcing experience. If you know what you're looking for on Amazon, about $1500 in the right silk plants alone could make this place book out for higher rates all year.

Make sure your handyman tightens every piece of furniture in that place every couple months or you'll have dozens of bolts working themselves loose. Overall you should only expect these furnishings to last about 18-24 months before reinvesting. Our business is essentially to put residential properties & furnishings to commercial use, so make sure to budget for regular updates or your nightly rates will flounder, especially in shoulder & trough seasons.

As far as HVAC, get a Nest or similar digital thermo that allows you (or your STR management) to PIN-lock guests from setting it below 68. This will protect the system & keep them from freezing it over & getting their money back from the booking platform for something they did.. If there's even a shadow of a plumbing issue, spend the money on new pipes before taking reservations. These guests will flush everything & you'll just keep dealing w it & losing reservations.

I will second that buying off Amazon and IKEA does make a huge difference in your listing (guests can tell right away). Also, it will increase the headache factor when furniture breaks and guests complain and lead to higher maintenance costs over time for replacement. I've always looked on estatesales.net and Craigslist for big-ticket statement items that will get a lot of use. I can frequently get very high-quality furniture and statement pieces for 10-20 cents on the dollar if I shoot out enough messages and this stuff will last decades.

However, there's a tradeoff for time and convenience. I would imagine that might be difficult to do successfully while investing long-distance. As many investors have discovered doing STR in Florida, there's not much of a moat for your business model. Unless you're taking the risk to put up an Airbnb in a restricted area, the only way I've found to exceed average market returns is to have a very unique property or experience or having impressive interior design and attention to detail.

I've always found there to be three types of Airbnb investors who make money:

1) The second-home investor - has a second vacation property that is very nice and furnished elegantly where the owner lists it on Airbnb when they aren't there. Typically underpriced and always booked with glowing reviews

2) The passionate investor - Has a duplex, ADU, or small SFR listed that is immaculate and listed for a high price. The host pulls out all the stops and makes sure the guest has a great experience, but the host does nearly everything themselves and never looks to scale.

3) The 'drag and drop' investor - Looks at Airbnb solely through the lense of generating cash flow and scales the portfolio through a management company and using the same Amazon products at all the rentals. Focuses on making the listing look good and frequently skips the details to '80/20' their investment. Typically commands median prices and occupancy and in my opinion can get hurt by bad reviews or increased competition.

Although not easily, if an investor can manage to be both #2 & #3 (a lot of time husband/wife teams) these are the people that seem to have incredible, rather than marginal, success with Airbnb.

0 Reply

Our First STR and Out of State Investment Property

Our First STR and Out of State Investment Property

Most Popular Reply

5 Replies