Galveston STR.... nice or basic?

Question

I closed on my first house in Galveston in Feb. 2019.  It's in the Historic District.  It was a STR for 4 years before we bought it and we had stayed there several times.  I wanted it for my personal getaway, but also want it to pay for itself.  It's been doing good so far.  I'm wanting to invest in a second property that I won't care as much about, if that makes any sense.

Is it better to just stock the next house with basic items and run a large amount of guests through to get the numbers? I have always tended to skip past rentals that are bare bones, but I understand that other potential clients may only care about a low price.

In our first house, we have things that we enjoy ourselves, such as nice mattresses, linens, etc.  We're in the Historic District so we get a pretty good clientele that aren't party animal, beach bum type and they take good care of the home.  I was wondering if any of you that have multiple STR had any tips on the next property for me.  I'm wanting something that ok for families to just pile in.   Something to keep occupied at any cost.

I notice a lot of the STRs listed on Airbnb and homeaway really reduce their rates in low season, do you get a different sort of guest at that rate? Do you have problems?

I guess I'm wondering if it is worth it to have a "pile in" house or if it will just be a headache.

Any ideas would be appreciated!

Timothy Church · Answer

@Leisa Neal

It really depends on the situation and how you present things. Going for a higher number of guests is a good way to be able to pull in a higher rate but how you do it can dictate what kind of guest you get. For instance, there is a big difference between making a room into a bunk room that can sleep 4 guests and adding a bunk bed to a dining room! If you have a large enough room, I have done two queens with full beds bunked over them in a built-in setup. It is in a property that primarily gets used for family reunions and larger events and it works perfectly for that!

As far as what you provide for guests, there are the bare basics but there are also a lot of small one time purchases that make a large difference. A spice rack, wagon for beach toys, and luggage racks for the rooms are all small one time purchases that make a big difference for the guest.

With pricing, using a dynamic pricing tool and adjusting prices based on occupancy works wonders. While your rate does drop, it opens you up to more potential guests. I currently have a traveling nurse who is staying in one of my 2 bedrooms for 3 months because the rate worked! As far as bad guests, they come at any price point. Recently had a guest who paid over $300/night for a west end property and was by far the worst guest I've had!! Your house and its state tend to be what attracts the correct guest. If you run your prices dynamically, you can help to keep a higher level of guest!

I would recommend getting things set up and stabilized through property pricing. Afterward, if you feel that you are attracting guests that are a bit rougher on the property or not to a quality you would like, make improvements to the property to drive up the price as you move forward.

Since you are still in the shopping stage, I'd recommend looking towards 3-4 bedroom properties. The number of 2 bedroom rentals on the island has risen and caused the rates to become more competitive. Once you have 3-4 bedrooms you are typically dealing with 2 families or couples and can pull a higher rate. Don't be afraid of smaller properties with more bedrooms as long as the layout works. I have a 4 bedroom that is only 1150 sq ft with a great layout and it has become one of the best performers!

Christina Johnson · Answer

The gas pays for the cleaning. I own a cleaning company and I’m in education Reynolds as a licensed realtor here in Galveston. I have also been selling vacation rentals for well over 10 years of my career. I am definitely one of the only real tors that actually runs her own management team here on the island.  Hello has to die mine is Steve Cleaning. If you buy the right property maintenance also should be covered in your profits. Our owners clear about 20,000 a year and a one bedroom but you have to have a manager that is willing to change your rates daily and watch them just like a hotel does

Timothy Church · Answer

@Leisa Neal

I'd be happy to! If you'd like to grab a coffee next time you're on the island, we can sit down and talk about the market. The more I talk real estate with other investors the less I bother my wife with it!

Leisa Neal · Answer

lol that would be great!

Leisa Neal · Answer

Thanks @Timothy Church!  That was very helpful.  Would you mind if I sent you the link to my current property so you can tell me what I may need to do differently?  I appreciate your input!

Leisa

Christina Johnson · Answer

Can you refresh my memory? Your question depends on the property and location and both. I have tests both options since I manage so many at one complex. However these days you have to stand out as we begging to see too many  vacation  rentals sit empty. Buy where you have year long amenities

Leisa Neal · Answer

Hi @Christina Johnson,  I am a Realtor myself and have actually been in contact with you in the past.

Thanks for your input.

Leisa Neal · Answer

Thanks @Ken Barton,    I probably didn't word my question correctly.

Do you find it more profitable to run large numbers of guests through a basically stocked home with a lower rate or fewer guests in a nicer home at a higher rate?   I can see that cleaning and upkeep would cost me more, with more stays.   I feel like with the wide range of properties and clients in the Galveston area, I may be missing an opportunity to appeal to a different clientele.  I was just wondering if it was worth the headache.

Thanks!

Galveston STR.... nice or basic?

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