Our first STR, great automation, breaking even

[Victor Noriega]

Investment Info:

Single-family residence other investment.

Purchase price: $260,000
Cash invested: $100,000

4 bed/2.5bath home used as STR purchased in 2022. Listed on Airbnb, VRBO and booking.com.

What made you interested in investing in this type of deal?

We needed a home we could stay in while visiting our family. And it made sense to go the STR method. We rent it out for the majority of the year. We researched the market and stayed at other STRs in the area. We found that there was a need for a large home vs 3bd/2bath homes. We knew it would cost more to furnish it, but felt strong in our numbers. The strong market meant that we would see appreciation, and our existing strategy was to convert to a long term rental.

How did you find this deal and how did you negotiate it?

Found using investor friendly realtor in El Paso. Market was strong for sellers in 2022, the home was built in 2008 and had very little cosmetic issues. We needed something w/o any major rehab. The home made sense, the location, size, and prices.

How did you finance this deal?

Used a 30 year mortgage. Put 20% down and then used cash to buy furniture,

How did you add value to the deal?

We completed the cosmetic updates, which included base boards, ceiling fans, window blinds, deep clean, and backyard landscaping. The following year we made upgrades, by changing the kitchen island, and adding a backyard patio and bar.

What was the outcome?

The home is generating income and we have peak bookings during the fall thru winter. We saw it appreciate by $30k to date.

Lessons learned? Challenges?

Our initial research was correct, the home fits a niche with large families that want to stay together. We see many multigenerational families booking our home. The difficulty is with occupancy, the entire area has limited visitors, however, we are breaking even on cash flow. And our mortgage is being paid down. We have had one major maintenance repair, the HVAC unit for the second floor had to have a part replaced, and it was using older refrigerant so the cost was significant.