Luck is a good servant but poor master. If you're the type of investor to leave lucrative vacation rental investment to luck, then this post is not for you..It is intended for those that are looking for a fool proof strategy and tips to finding, assessing and buying an STR in the mid to near term.
1. Have a clear & concise visions for the type of property and guests you'd like to host. How many bedrooms, location and general amenities/experience you want guests to enjoy. The underlying theme should be a home that is shared with guests.
2. On your vision board are likely a few locations that hopefully hold a fond place in your heart. If you're expecting guests to visit and pay for the privilege, it's best if it's in a location that you personally would visit or an attractive destination.
3. When moving to any new community it is best to learn the lay of the land. There are some fantastic online resources but no substitute for boots on the ground. Whether browsing areas or specific properties, touching, tasting and feeling the property and it's surroundings are essential data points. Having to book your own AirBnB is a great tool for direct insight into demand, rates and competition.
4. Permitting. Planning. Permitting. We've sold over two dozen coastal and luxury Oregon Coast STR's the past three years and our entire day is invested in keeping up with the rules and regulations regarding short term vacation rental usages. Cities and counties are constantly updating their policies, waitlists or processes and eligibility will likely be the key ingredient to desired usage. An experienced investor or vacation rental real estate professional familiar with local application processes and 'loop holes' can simplify the geographical areas of priority. For high value prospects, email and call the planning department that supervises where the property is located. Regardless of what your RE PRO or the listing broker tells you, verify from the horse's mouth directly and ideally in writing that the property is eligible and the specific application process.
5. Once it's determined that a property is eligible for STR usages, an in-depth analysis and Pro Forma should be developed with help from online tools and estimators (such as AirDnA), real world rental experience, local PM companies, lenders and RE Broker. When possible, if the prospects are active vacation rentals, it's best to request copies of full financials or bookings. Cross reference these with projections from a local propriety manager and/or your own protected daily, occupancy and operational costs.
6. Short term rental property shopping can be a lot like fishing. There's a lot of preparation, a ton of patience and when it's time to strike, very little room for error and a lot of action all at once! Successful fisherman know that 90% of their time and effort goes into planning and keeping equipment ready to perform and not actually hooking or reeling in the catch..often closing on a popular or active vacation rental (often in a competitive market) happens along the same lines (no pun intended). The point is you never know when the listing (fish) is going to list (bite). Anglers and buyers need to remain alert and the more time the bait is in the water (at the right place) the higher chances of bringing home a delicious reward. Buyers should have a strong investor focused lender and updated pre-qualification letter dated within 90 days and a team on the ground that can facilitate short term (sometimes virtual) showings and responsive/creative dealmaking ability. Being even one day late on a hot listing can mean the investor is a dollar short. Time is in fact, money.
7. We're all guilty of overthinking..so when it comes to the final decision, always trust your gut. When you can't decide, make the offer. It might not even be accepted on your initial terms and most states have buyer focused contingency periods, or a statutory period of 7-14 business days to remit the deposit, perform inspections, organize appraisals and generally renegotiate or cancel without risk to the buyers earnest money deposit. My advice when a property that checks the majority of your boxes that is permittable (finally) comes to market is to win the offer, and then justify your offer during due diligence. If there are concerns or issues with the property condition or capacity as a vacation rental figure it out within the contingency period and accept, compromise or cancel. Look at it as an ounce of pain or a pound of regret..you're not going to win every offer and every prospect isn't going to check out. On the usually short list of STR prospects, timing can be the difference between hosting this summer or next.
8. Discipline and enthusiasm. Doing what's best for you isn't always easy. That's why investing is hard, until you start. To be great at anything you have to be a little obsessive and real estate investment is no exception. I quite literally know every single listing on the Oregon Coast and which of them is eligible for a STR permit. It's a weird passion, that so far makes investors STR search easier, but it's up to them to fully commit. On average it takes about 90 days from when an investor contacts me to closing, but searches can take up to six months or even a year to find that perfect beach house. Prolonged enthusiasm can be exhausting (failed offers, tours, travel) one way to remain engaged is to stay connected and in constant communication. Join local FB groups in the areas you're interested in, follow a local Realtor, visit the area again and set up a showing or two just for reference, generally always be 'training' to carry the boats!
9. Don't forget to have fun..Particularly in coastal Oregon vacation rental homes serve dual purpose as a secondary sanctuary, and it is best investors don't part with their peace arriving.
We've sold nearly $20M worth of coastal vacation rentals the past two years, in a regulatory environment that is increasingly challenging with the majority of operators meeting or exceeding expectations. The point is, it's very possible and profitable to invest in STR's if you're persistent and passionate enough to overcome when STR searches get tough and create your own luck.
How did you find your first STR? Was it quick and smooth or extended and frustrating?
