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.
Yeah it really makes you question your faith in people trying to make things work out there. Getting things working in the Poconos can be a bit like eating a bowl of broken glass for breakfast, if you can't stomach that I'd recommend just buying somewhere else.
Thank you! I think I'll make it a stand-alone post on the STR board since it's kind of long and I think it will help a lot of people just starting out.
I see you are also in the Pocono's area maybe we should connect one day, it's hard building a network out here and I'm always looking to meet people doing Real Estate in the area.
Real Estate Agent · Poconos, PA · Member since 2021 · 59 posts · 57 votes
4y
I'm a realtor who specializes in helping folks find vacation homes that they can also rent. Much of what is referred to the as the Poconos was started in the 1970's when families started getting second cars and vacation homes became affordable to the middle class. Developers bought big tracts, created manmade lakes and surrounded them with vacation cottages. These stayed as private communities with Property Owner Associations (POA/HOA) supporting the amenities like beaches, pools, etc. Add a few ski resorts, a casino or two, some indoor water parks and you do get a decent shot at 4-season business.
As some comments identify, owners are not just investors, many rent for only part of the year. Snowbirds may rent to skiers and return for summer. Those with season passes or kids on a ski team may rent for the ski season (10-12 weeks) and that data doesn't show in AirDNA and the others. You've got Pocono Motor Speedway in Long Pond which in the past has had 2 NASCAR stops. They have other races and an air show, each can bring a surge of rental guests.
Proximity to NY/NJ/CT and Philly are both a blessing and a curse as just about everyone drives to get here, so long weekends bring high room nights, but longer stays require some creative marketing and property management. Many of the houses are small which makes adding office space for remote work a challenge. You can offer discounts for weeklong and boost occupancy, or keep rates high and have mid-weeks empty.
A couple of other quick observations - thanks to fracking, we have abundant natural gas in Penna. and may homes have supplemental propane. It's a cheap way to heat. A few communities do have central sewer (Penn Estates, Lake Naomi, Lake Harmony, Split Rock, the Hideout, parts of Arrowhead Lake) so if you worry about that, there's hope. At the same time, getting your system pumped once a year solves a lot of problems and that costs something like $400. What's your city sewer bill?
Taxes - Pennsylvania breaks property taxes into county, municipal and school. Depending on the municipality its school district your taxes can be $3,000/year or $8,000/year for a $300K house. Penn Forest Township is running such a surplus on the state RE transfer tax that they've suspended their municipal RE tax, so if you hate taxes, we have a place for you. Yes, there is a 2% transfer tax on each RE deal, buyer pays half, seller pays half.
Vacation homes and rentals have been a significant part of the regional economy for 50 years now and it's extremely unlikely that this will shift. Wise investment in quality homes that are in well-run communities will generate nice income. You won't get rich quick, but you can do pretty well if you are smart and have trusted local partners.
My family purchased a vacation home in the Poconos during peak COVID and we STR it when we aren't using it. The house is doing very well. It is lakefront and newbuild - high purchase price but that has fortunately translated to strong rents. Lots of great info in this thread, thank you to everybody. There is a risk of more supply coming to market because of others doing the same, and also a drop in demand as vacation habits return to the pre-COVID norms. That said, the market offers great outdoorsy second home opportunities at a lower price point than anywhere else within driving distance from NYC (Hamptons, Catskills, Jersey Shore etc). The area is being rediscovered and I believe this will underpin values (if not rental demand).