All Forum Posts by: Andy Whitcomb

It's always important to consider potential STR regulations, and I always recommend checking with city and county to see if there is anything being considered. With that said, my gut tells me that area is very low risk of passing any regulation that would prohibit STR's entirely.

There are some good suggestions here. If it were me, I'd look into subject-to and seller financing. It's a bit trickier to find, but if you can get it it will give you the most flexibility. You might even get into a property with no money down. I'd hit up some of those local meet ups and start networking with other investors. Ask if anyone knows of an investor with an STR that they'd like to get out of, you may find a win-win scenario there. Of course you can also go to the MLS and look for properties that have been sitting a long time and start pitching sub-to and/or seller financing. But you really need to understand those strategies so as @Phommala Songkhors mentioned, watch some Pace videos and he'll get you up to speed. He has a group of mentees called Subto's that he pours into and he encourages people to connect with those folks to help with their deals. So you may want to try and find a Subto person in your area to help or even partner with. 

When you say "with potential STR regulations" are you saying that you've heard Bentonville is proposing regulations? Or are you just speaking generally?

I've never been to Bentonville but I have a buddy who moved there several years back and loves it. He's also doing a really cool vacation rental project out there, so it seems like there is a demand. 

From what you say, it sounds like the big draw is mountain biking so I'd lean into that. You'll want to determine your "guest avatar", which means figure out who your ideal guest is, why they'll be staying there, and what they'll be doing. From there you pick the property and design their guest experience based on that guest avatar. As I mentioned, I've never been there but gut tells me that most people are not mountain biking in the city center. If it were me I'd be looking at more rural properties near the trails with a house and a few acres of land, then add a tiny home or two. At that point you'll have 2-3 rentals which would be much more revenue and could make the deal much more appetizing. Depending on where you buy in that area, my understanding is there is little to no zoning requirements so you would have a lot of flexibility to build what you want. I have to say that's VERY appealing to me, coming from WA state where you need permission from the government to do the smallest things.

HELOC is going to be more risk with a high, variable rate. You could lock it in but that will cost you also. So you're rolling the dice on the rate market one way or another. Another consideration is how are you planning to pay that loan off? Given the higher rate you're going to want to have a plan to pay it back sooner than later. In that case you may consider a BRRRR for your next deal.

Refi is going to be less risk, and you don't have to worry about paying it back right away. So you'll have to weight the risk vs rate that you can get.

Nice work! Looks like a fun project, gotta love the seller financing deals, and opportunity to add more from the seller's portfolio! That's the sort of thing I dream about at night. 

We have three cabins along a river about an hour north of Seattle. We are 95%+ booked for the next 4 months, and around 80% booked until the end of 2023. We've been putting a lot of people on a waitlist in case we get cancellations. 

I currently self manage and I have quite a few concerns about shifting over to 3rd party management. Here are some of them:

1. Marketing/brand: We have built a strong brand and following around our properties, is it possible to maintain that brand with a third party manager and if so would they manage the brand as well as we do?

2. ADR and occupancy: Like many I am concerned that the manager would not maximize the pricing of the units appropriately and would sacrifice either price or occupancy. We feel we sacrifice neither one, but maybe that means we are leaving money on the table since we are 90-95% booked. However our prices are very high for our market.

3.  Property quality and upkeep: We spend a lot of time adjusting and tweaking the property to be the best it can be. This includes improvements to the design, functionality, and guest experience as well as general property maintenance. 

Some reasons we WOULD do property management:

1. Managing cleaners: This is a HUGE pain in the butt. We use all local independent cleaners who live in the neighborhood, this is great because they are very close by and are familiar with our properties, but communication is nearly constant.

2. Maintenance and repairs: If we had a manager who had a solid team in place to quickly and efficiently handle property and hot tub maintenance, that would be great. As long as they actually did it and did a good job. Our properties are fairly rural so timely accessibility is an issue.

3. Managing guests: This one hasn't been that bad because we only have 3 properties right now, and typically our guests are pretty awesome. However, as we scale this will be something that needs to come off my plate.

You can definitely jump in now and be successful, but there are SO many variables. I disagree with the notion that theres no such thing as over-saturated markets, I think there are oversaturated or supersaturated markets and if you are a mediocre operator or have the wrong strategy you will not be successful in those markets. However, a good operator with the right strategies can definitely be successful, especially if they designed their business correctly from the beginning. 

With that said, as new STR investor coming in to the market right now you'll need to not only identify your market, but also your strategy for that specific market. When I say strategy I am referring to all aspects of your business plan. Start with knowing your competitive advantage (for example, my background is in furniture design so my advantage is design) and your guest avatar (who is staying at your property and why), then design your business around that. From there you can narrow down which market, location, and property is best suited for that business plan. It will give you clarity when looking at properties and running your numbers.

Yes, I think right now is a great time to be a nomad if you're able to.

However, I think this is only temporary. Many of the investors who purchased STRs in the last few years won't be able to continue at these prices, and will most likely need to sell or convert to LTR if at all possible. The market will balance itself out with a little bit of time. 

@Natalie Schanne I would love to have my cleaners do it at home, but most of my cleaners don't have the ability to do that for a variety of reasons. Also, yes it is quite a lot of laundry.