Journey to Short Term Rental Investing- It's not for everyone!
Living and working in Southern California the past 15 years the housing market there caused me to WAKE UP to understanding property Investing. This journey as I'm sure most of you know can be scary and more of a thrill then the tallest roller coaster.
I read everything I could get my hands on. Lived on Bigger Pockets and listened to every single podcast even downloaded all the older ones. Myself, my kids and anyone around me was learning right along side me because my excitement could not be contained.
Then the big day came. We settled on an area to invest. St George, UT. WE vacationed out there, saw some properties, made an offer and was on our way. Our first investment property was a short sale in an awesome small community that rented above the 1% rule. It was magical. Took 4 months to close, mold in the bedroom bank had to remedy, $5000 in renovation costs, We were up and running. So excited to have renters pay my mortgage and some nice income left over.
So I did it again. Another home in that area became available and I scooped it up turn key and rented it right away.
Then that day comes when you wake up to a refrigerator replacement. There goes most of the profits. So I started looking into multifamily to increase income margins.
Since I had proved the formula works - I kept investing in Out of State and bought a few homes where I grew up in Huntsville, Alabama and have those managed by a management company.
BUT then I saw a TV commercial in CALIFORNIA of all places for Gatlinburg, TN. I remember growing up and our family visiting this awesome place for family reunions. So I checked it out.
The excitement I felt in the very beginning was BACK. SHORT TERM RENTALS. OUT OF STATE. This new and exciting investing strategy so I read and listened to everything I could get my hands on. Researched Licensing, area maps, area attractions, rules and regulations for all the areas.
You might think Gatlinburg is one place like Vegas but it is so much more. Gatlinburg is old town walk the streets with shops and eateries, then there Is the Ski area. Pigeon Forge is a southern style Disneyland with tons of shows, arcades and attractions. Wear's Valley is Mountain High getaways Private cabin retreats, resorts and The best Hiking in the US. Great Smoky National Forest is the World's most visited Park. Needless to say I WAS EXCITED. so much so
We bought our first one and I had it rented on Airbnb before we even closed (not advised). 2nd one was less then 6 months later. Next one was a Mtn top property that had 2 cabins on it.
NOW FAST FORWARD. I self manage 5 cabins on Airbnb, Homeaway, Tripadvisor. It is NOT Passive but a full time job. This is the path I chose because I'm also a licensed REALTOR and Property Manager for other Investors.
SIDE NOTE: These investments could be passive if you have them with management company. I just have found my current passion.
Each cabin generates way more (sometimes 10x) then the standard return for LTR and feels like it's always on fast forward. More guests, more repairs, more risk, more reward. The start up costs for STR for me were comparable to LTR. Purchasing process was also the same. Once closed is when things get especially different. You need a team on the ground willing to share and help you. Your Cleaning crew is your eyes, and ears. They tell you when something needs repair or replaced, how the guests kept the cabin after their stay, If you find a good one then they feel a slight ownership of the cabin as well because their livelihood also depends on the success and quality of your cabin.
There are tons of areas where STR are growing but then some are being squashed due to regulations so be smart and do the research.
I know this is just a quick snippet but I'm having so much fun in the process. I know there are points I should have mentioned or strategies I could have ventured into. Send me questions. WE should never stop learning and growing with real estate.