Finding Value via STRs - The Lighthouse

Real Estate Deal Analysis & Advice
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Finding Value via STRs - The Lighthouse

Tyler MunroePro Member
Boston, MA · Member since 2017 · 84 posts · 42 votes

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $450,000
Cash invested: $10,000

First short term rental investment! Extremely unique house shaped like a lighthouse located two minutes walking to the beach and about seven to the train to Boston/Airport.

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

STRs have great value in a city like Boston as we have year-round demand for short term housing due to a diverse economy. This property is in a unique location that allows access to the city and airport while being just a short walk to Revere Beach. Hoping to capitalize on the demand for proximity to the city AND attract seasonal guests when the weather is warm.

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

Found on MLS and offered asking. Could have done a better job negotiating this, to be honest. Upon reflection, the property was on the market for quite some time so probably have room to negotiate a better price.

How did you finance this deal?

Traditional bank financing, 25% down.

How did you add value to the deal?

Repositioned property as a STR. Thoughtfully designed the space to appeal to beach-goers and city travellers alike.

What was the outcome?

Both units have only been active for a couple months, but current rents have already been more than long term rates and the winter months are the least busy in the area. Long term gross rent for property would be around $3,500/month and expecting at least $6,500/month with the STR model during peak demand.

Lessons learned? Challenges?

First property I didn't spend much time in before renting, so there were some kinks to be worked out with the first few guests which resulting in lower than ideal ratings. Worked out all the issues and am now churning out five star reviews, learned some lessons for the future! This is also the first property where I assembled a small team to help with cleaning, repairs, and snow removal.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I represented myself in this transaction as I am an agent. My portion of the commission enabled me to effectively cancel out the cost of furnishings!

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  • Jingru Sui
    Real Estate Agent · Atlanta, GA · Member since 2014 · 683 posts · 317 votes
    6y

    Very nice! Great job!

    0Reply
  • Lien VuongBusiness Member
    Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
    6y

    Wow this this really cool! Can you share pictures? How have you been able to manage the cleaning and check in process? Any mistakes along the way?

    [email protected]
    The Elle Group5154 Reviews
    WebsiteView Page
    0Reply
  • Dario FurmanPro Member
    Miami, FL · Member since 2017 · 42 posts · 10 votes
    6y

    how did you manage to only put 10k in to the deal but financed 75%

    0Reply
  • Joe P.
    Philadelphia, PA · Member since 2017 · 824 posts · 1k+ votes
    6y

    Wouldn't your cash-in whatever 25% is, plus your closing costs? You listed 10k; just seeing if I missed something. Congrats on your investment!

    0Reply
  • Tyler MunroePro Member
    OP
    Boston, MA · Member since 2017 · 84 posts · 42 votes
    6y
    Originally posted by @Dario Furman:

    how did you manage to only put 10k in to the deal but financed 75%

    The 10K represents the furnishings.  Spent about 7K on the larger unit and only 3K on the lower level.  The smaller unit is essentially like a studio so didn't cost much to fit up.  House itself didn't need any renovations as it was in great shape.

    0Reply
  • Tyler MunroePro Member
    OP
    Boston, MA · Member since 2017 · 84 posts · 42 votes
    6y
    Originally posted by @Joe P.:

    Wouldn't your cash-in whatever 25% is, plus your closing costs? You listed 10k; just seeing if I missed something. Congrats on your investment!

     I did have some closing costs, these were round numbers to summarize the deal.  All in all, though, that 10K represents my out-of-pocket with everything factored.  I acted as the agent in this deal so got about 11K back at closing which offset closing costs and fit up for STRs.

    0Reply
  • Joe P.
    Philadelphia, PA · Member since 2017 · 824 posts · 1k+ votes
    6y

    @Tyler Munroe the point we're making is you put down 25% cash for your down payment, right? That means its $112,500 cash, plus your closing costs, plus your 10,000 furnishings, correct?

    0Reply
  • Tyler MunroePro Member
    OP
    Boston, MA · Member since 2017 · 84 posts · 42 votes
    6y
    Originally posted by @Lien Vuong:

    Wow this this really cool! Can you share pictures? How have you been able to manage the cleaning and check in process? Any mistakes along the way?

    Hi Lien - you can check out the listing with pictures here and here! I've come a long way with the check in and cleaning process.  I was initially doing it myself but realized the 20-30 minute commute every time was unfeasible, so I put out some ads for local cleaners and found some awesome help.  Coincidentally, they handle snow removal as well as handyman services so kind of lucked out.  Definitely some hiccups along the way - there were some issues with the heating system which I didn't find out until it got cold, so had to work through that.  Biggest thing is anticipating problems before they happen so when they do (they will) you can have options.

    0Reply
  • Tyler MunroePro Member
    OP
    Boston, MA · Member since 2017 · 84 posts · 42 votes
    6y
    Originally posted by @Joe P.:

    @Tyler Munroe the point we're making is you put down 25% cash for your down payment, right? That means its $112,500 cash, plus your closing costs, plus your 10,000 furnishings, correct?

    Everything on top of the down payment netted out to about 10K, so about 122,500 all in. 

    1Reply
  • Joe P.
    Philadelphia, PA · Member since 2017 · 824 posts · 1k+ votes
    6y

    Got it, very cool @Tyler Munroe, keep us posted! Have you had enough months of operation to estimate your monthly CF?

    0Reply
  • Ben Simon
    Real Estate Agent · Member since 2019 · 32 posts · 11 votes
    6y

    @Tyler Munroe are there Airbnb regulations or restrictions in Revere? Given your experience so far are you thinking of getting a second property? 

    Just wondering would you buy again to Airbnb in Revere or are there other interesting areas in Boston?

    0Reply
  • Dan K.
    Rental Property Investor · Boston, MA · Member since 2012 · 257 posts · 139 votes
    6y

    Great work @Tyler Munroe

    I really like the fact that you are upfront with the "cons." You might want to address child safety. As a parent of young children, the open stairs and the big gap in the closet under the stairs seem dangerous.

    A  couple of questions:

    1) Do you know the difference between your net income leasing vs. STR? Obviously it's early to get all of the data.


    2) Does your lender and insurance carrier know about the use as a STR? Curious what their reactions were if they are aware.


    -Dan



    0Reply
  • Account Closed
    Property Manager · Boston, MA · Member since 2014 · 194 posts · 73 votes
    6y

    @Tyler Munroe

    Great job. The apartment itself looks like fun and for its uniqueness of being a light house makes it for a good story that people would be signing up just to have bragging rights. I mean how many people anyone knows that stays in a light house. In all pretty awesome

    0Reply
  • Tyler MunroePro Member
    OP
    Boston, MA · Member since 2017 · 84 posts · 42 votes
    6y
    Originally posted by @Ben Simon:

    @Tyler Munroe are there Airbnb regulations or restrictions in Revere? Given your experience so far are you thinking of getting a second property? 

    Just wondering would you buy again to Airbnb in Revere or are there other interesting areas in Boston?

    Hi Ben - as of now there are no restrictions in Revere which is why I chose to make this investment. I'm hoping it stays that way, but there's been A LOT of changes with STRs in the Boston area so it is a bit of a risk. However, the long term rents would still make this property a viable investment so I was OK with regulatory risk. As of now, I'm not looking to expand the STR model but I am looking to buy another multi for a BRRRR investment. I'd prefer to not have a STR heavy portfolio as you're essentially in the hotel business which is more dependent on a good economy to prosper. This property was a unique opportunity for STRs so hoping it will pan out!

    0Reply
  • Tyler MunroePro Member
    OP
    Boston, MA · Member since 2017 · 84 posts · 42 votes
    6y
    Originally posted by @Dan K.:

    Great work @Tyler Munroe

    I really like the fact that you are upfront with the "cons." You might want to address child safety. As a parent of young children, the open stairs and the big gap in the closet under the stairs seem dangerous.

    A  couple of questions:

    1) Do you know the difference between your net income leasing vs. STR? Obviously it's early to get all of the data.


    2) Does your lender and insurance carrier know about the use as a STR? Curious what their reactions were if they are aware.


    -Dan



    Thanks for the input, Dan, I'll make a note of that in the listing. So far (and this is only since November) my net income has been about what I would have had for long term rents, which is not ideal since there's so much more work that goes into the STR operation. My hope is that income will be at least 2x long term rental rates from April - October, so we shall see. If it's not worth the effort, I'll revert to long term rentals and due to the flexibility of the STR model, I can time the listings perfectly to become available at peak market times.

    In terms of insurance, I'm exclusively listing through Airbnb due to the insurance coverage they provide on STRs. They've actually been great about paying me out for damages, extra cleanings, etc. as well.

    1Reply
  • Tyler MunroePro Member
    OP
    Boston, MA · Member since 2017 · 84 posts · 42 votes
    6y
    Originally posted by @Account Closed:

    @Tyler Munroe

    Great job. The apartment itself looks like fun and for its uniqueness of being a light house makes it for a good story that people would be signing up just to have bragging rights. I mean how many people anyone knows that stays in a light house. In all pretty awesome

     That's the idea! I'm hoping the uniqueness of the space has some draw.

    0Reply
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