New York City, NY · Member since 2016 · 470 posts · 348 votes
7y
I posted about this the other day in response to someone else’s question:
I've spoken to a few STR investors in the Poconos & here's some things they've warned me about:
1) Super low occupancy rates: you can rent for full weeks in summer but that's your only real guarantee. If you're super close to one of the ski resorts you can also rent for winter weekends (though the ski season has been getting shorter recently). Fall & spring are apparently super tough - very low demand - both weekends & weekdays. 75 annual rental days is considered good in the Poconos and 100 is considered excellent (so 20-25% annual occupancy). Compare that with Gatlinburg, TN & Florida spots that get 80+% occupancy year-round
2) Apparently there's a shortage of good cleaners in the Poconos. I've had numerous Poconos Airbnb owners tell me this shortage of quality labor is causing real problems.
3) Expenses can run high, which is a real problem with only 20-25% annual occupancy rates to produce income. Very high power bills, increasing property taxes, costly HOA fees, snow removal costs, hotel tax, septic & well maintenance costs, etc, etc
4) Perhaps most damning is this: I've talked to quite a few Poconos investors who are looking to sell after only 1 or 2 years of operating. To me this is a huge red flag. When I talk to STR investors in Pigeon Forge or across Florida, they're looking to BUY more STRs not to sell what they own! It worries me that so many Poconos STR owners sell so quickly after buying.
New York City, NY · Member since 2016 · 470 posts · 348 votes
7y
I posted about this the other day in response to someone else’s question:
I've spoken to a few STR investors in the Poconos & here's some things they've warned me about:
1) Super low occupancy rates: you can rent for full weeks in summer but that's your only real guarantee. If you're super close to one of the ski resorts you can also rent for winter weekends (though the ski season has been getting shorter recently). Fall & spring are apparently super tough - very low demand - both weekends & weekdays. 75 annual rental days is considered good in the Poconos and 100 is considered excellent (so 20-25% annual occupancy). Compare that with Gatlinburg, TN & Florida spots that get 80+% occupancy year-round
2) Apparently there's a shortage of good cleaners in the Poconos. I've had numerous Poconos Airbnb owners tell me this shortage of quality labor is causing real problems.
3) Expenses can run high, which is a real problem with only 20-25% annual occupancy rates to produce income. Very high power bills, increasing property taxes, costly HOA fees, snow removal costs, hotel tax, septic & well maintenance costs, etc, etc
4) Perhaps most damning is this: I've talked to quite a few Poconos investors who are looking to sell after only 1 or 2 years of operating. To me this is a huge red flag. When I talk to STR investors in Pigeon Forge or across Florida, they're looking to BUY more STRs not to sell what they own! It worries me that so many Poconos STR owners sell so quickly after buying.
@Eric P. You made my doubts a lot clearer now thank you so much, now I can focus on other locations....have a great long weekend !
Happy to help, Lorraine! If you want to focus on locations with 80+% occupancy rates rather than 20%, here’s a few folks who have been super nice to me along the way:
Rental Property Investor · Queens, NY · Member since 2019 · 94 posts · 27 votes
7y
@Matt "Roar" Gardner, hello Matt any places you would recommend for short term and long term in Florida? I’ve been hearing a lot of Rumors that Destin is a good place, but homes are pretty pricey there with the research I’ve done.
Real Estate Agent · Tampa, FL · Member since 2018 · 464 posts · 452 votes
7y
@Lorraine Patterson I have a STR in Destin and a flip in Crestview that I'll hopefully be listing in early June. The STR in Destin has been going really well. We bought it for $565K, and are goal is to gross between $70-80K this year. I'd love to help you out if you are still interested in the area! There are cheaper options as well, but generally, the more 'heads in beds' = higher ROI.
Rental Property Investor · Queens, NY · Member since 2019 · 94 posts · 27 votes
7y
@Matt "Roar" Gardner yes I would really appreciate your guidance.... purchasing of my first Rental Property I would not like to purchase that high in cost, high 200,s or Low 300’s..... should I look elsewhere? Keep in mind I’ve only begun this investor Journey just a little over a month...any advice from an experienced investor will help.....taking notes .....thank you again....
Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
7y
Buying a short term rental far away from you, if it is your first, is a really bad idea. You cannot imagine all the different things that can go wrong when you were a thousand miles away and can't do anything. Short-term rentals far far more complex than long term rental.
you're in Queens. Can't get a modest property like in Suffolk County or something?
@Matt "Roar" Gardner yes I would really appreciate your guidance.... purchasing of my first Rental Property I would not like to purchase that high in cost, high 200,s or Low 300’s..... should I look elsewhere? Keep in mind I’ve only begun this investor Journey just a little over a month...any advice from an experienced investor will help.....taking notes .....thank you again....
Rental Property Investor · Queens, NY · Member since 2019 · 94 posts · 27 votes
7y
I do not think a short term rental in Suffolk would bring in any cash flow, I would not consider that a vacation spot per se, as oppose to Destin Florida where there are beautiful beaches, please correct me if I'm wrong...
@Ken Latchers thanks for the advice, will a good Property Manager take care of what I can't from far away?
You will need a good property mgr + great handyman + great cleaners. Many people invest & manage remotely bc much of the country is surrounded by areas that are either illegal for STR, about to be illegal for STR, or only get like 20% STR occupancy rates which makes it not really worth it to invest locally in STR in most areas
Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
7y
You are not guaranteed a good property manager. The problem is that starting out with no experience in something that is complex. And expecting to do this remotely
Some people here over simplify this and make it look easy
You may get a bad mgr. Or bad cleaners. Or an emergency. Etc. And being far away what will you do?
Why are you not starting with a ltr you can manage locally first?
I just looked at the Hamptons and Suffolk County on Airbnb and vrbo. I just think it is a better idea to do something closer to you.
Contractor · Milltown, NJ · Member since 2016 · 297 posts · 213 votes
7y
@Matt "Roar" Gardner Hey Matt, thanks for providing some good info for the new investors on here. Bringing up Destin brought up some questions for me as well. I currently own a vacation rental in Ocean City, MD, however FL has always been in the back of my mind. Do the vacationers in Destin primarily fly or drive there?
Real Estate Agent · Tampa, FL · Member since 2018 · 464 posts · 452 votes
7y
@Robert S. - it's a fair mix. We get a lot of clients who drive in from all around the South Eastern US but also a large continent of people fly in from the North Eastern/Midwest states. We even have some clients who have flown from China and Japan to our place.
Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
7y
Thanks @Eric P.! Happy to help however I can! @Lorraine Patterson I own 16 doors across Tennessee, 5 of which are vacation rentals. Happy to answer any questions you have on getting vacation rentals up and going if you need it!
Thanks @Eric P.! Happy to help however I can! @Lorraine Patterson I own 16 doors across Tennessee, 5 of which are vacation rentals. Happy to answer any questions you have on getting vacation rentals up and going if you need it!
Hi Avery. Are you self managing the vacation rentals or do you use property management and what made you choose one vs the other. Also how many days on avg are your rentals occupied?
Thanks @Eric P.! Happy to help however I can! @Lorraine Patterson I own 16 doors across Tennessee, 5 of which are vacation rentals. Happy to answer any questions you have on getting vacation rentals up and going if you need it!
Hi Avery. Are you self managing the vacation rentals or do you use property management and what made you choose one vs the other. Also how many days on avg are your rentals occupied?
Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
7y
@Brian Kehoe all of our rentals, both STR and LTR are self managed. What made me choose one over the other is that if I paid a PM even 10% of my gross income on my STR's, that's over $25k a year. That's a down payment on another property for a gig that is the equivalent of answering text messages. Occupancy rate will be determined by your market and the size of the property, but mine hit about 80% a year. @Luke Carl can expand on that as he is the one who actually manages ours (on the side, with a day job). @Julie McCoy is also a pro at self management.
Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
7y
Thanks for the shout-out, @Eric P.! And I second what @Avery Carl says. For a vacation rental, the normal PM rate in my market is 30-40%. That's my entire profit. (think about that for a minute, too - my profit is right around 40% of my cash flow!) Aside from a couple of weeks of getting the property and listing on its feet, operating my properties takes hardly any time, and once you have your personal system down, you'll find parts of it you can automate, too.
Occupancy is definitely dependent on a property's market but mine in TN are >80% occupied (probably closer to 85%)
Property Manager · Wisconsin and Florida · Member since 2017 · 346 posts · 227 votes
7y
Hi Lorraine,
Are you looking to use the property as a vacation destination for your family too or mainly an investment? I own 3 properties in FL; 2 of them are near Disney. I like FL for being a year round destination but it also can be expensive to buy one and get it up and running. I was told about 10% of the purchase price is the average gross yearly rent in the Destin area. I believe it's closer to 20% or more in the Smokies but that would but @Avery Carl@Luke Carl and @Julie McCoy 's expertise. Our house near Disney is in its first year and we have about 15% gross so far. I expect that to continue to rise as the reviews grow and the repeat business grows.
Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
7y
@Wendy Schultz is correct, 18-20% of purchase price is a good rule of thumb for gross revenue in the Smokies, though of course there are always variables involved just like with any market. One of the things I love about the Smokies besides it being a really consistent, high-demand market, is the region is powered by tourism - and as a result, regulations are favorable, and there are a number of excellent cleaning crews, handymen, and other service people who not only perform good work, they are very accustomed to working with long distance owner/managers. They will be your eyes and ears on the ground; there is no need for a local property manager who will take 30-40% of your income. Hope this helps, @Lorraine Patterson!
I posted about this the other day in response to someone else’s question:
I've spoken to a few STR investors in the Poconos & here's some things they've warned me about:
1) Super low occupancy rates: you can rent for full weeks in summer but that's your only real guarantee. If you're super close to one of the ski resorts you can also rent for winter weekends (though the ski season has been getting shorter recently). Fall & spring are apparently super tough - very low demand - both weekends & weekdays. 75 annual rental days is considered good in the Poconos and 100 is considered excellent (so 20-25% annual occupancy). Compare that with Gatlinburg, TN & Florida spots that get 80+% occupancy year-round
2) Apparently there's a shortage of good cleaners in the Poconos. I've had numerous Poconos Airbnb owners tell me this shortage of quality labor is causing real problems.
3) Expenses can run high, which is a real problem with only 20-25% annual occupancy rates to produce income. Very high power bills, increasing property taxes, costly HOA fees, snow removal costs, hotel tax, septic & well maintenance costs, etc, etc
4) Perhaps most damning is this: I've talked to quite a few Poconos investors who are looking to sell after only 1 or 2 years of operating. To me this is a huge red flag. When I talk to STR investors in Pigeon Forge or across Florida, they're looking to BUY more STRs not to sell what they own! It worries me that so many Poconos STR owners sell so quickly after buying.
Hi Eric, thank you for the info. It is super helpful. Though I read that there are different areas in Poconos. Some of them are really low in occupancy rate, but those closer to resorts (ski, water parks) are way better. What are the areas the experience you shared is related to? Or such a low occupancy is common for Poconos? Thank you!