All Forum Posts by: Chris Watson

No regrets...owning and operating STRs is like managing a sports team. You want each property on your team operating at peak performance. Sometimes players need physical therapy (rehab), some need more 1-on-1 coaching (optimization/advertising) and some to be traded (1031 exchange). Your goal as the coach is to have star performers and it is your job to get them there. If everyone else's STR team around you does win and your team of STRs still fail to perform then the issue could be the manager/coach (you). Either get with the game and fix you, have someone else manage (if still profitable) or get out of the STR game. Alot of people who jumped on STRs in the last 3 years would be a Rockstar coaching other types or real estate investing teams but are not great at coaching STR teams. We see this when college coaches go to pros and fail. They are still great coaches just not in the NFL or NBA. You need to know when you need to move on to other investments. Me I am always managing my team and want to have championship rings every year so everyday I am looking for ways to improve my teams performance (ADR/Occupancy/optimization/rehab/improving my coaching skills)

Love are owner rights, our laws and our sheriff in Florida

https://www.foxnews.com/video/6349761883112

We have used Ownerrez for a few years.  The biggest problem I see is people trying to setup properties themselves.  Pay for the Proconnect and they set it up. Then the learning curve is very little.  There are facebook groups where other Ownwerrez users help each other with issues.  They are slow to roll out new features because they want it to work right the first time. Never used the other because at the time when I was the deciding there were several issues with others API integrating.  That may be solved now.

There are a couple factors at play and each play a role:

1. COVID cash is gone. While this plays a role it really dried up at the consumer level about 1.5 yrs ago so this is a less of a factor for 2024. The COVID cash girlfriend left us over a year ago and she is not coming back so we need to suck it up and move on.

2. Inflation is worse than the govt portrays it and higher interest rates are bleeding away the money people spend on vacation. Remember alot of Americans have a large amount on credit cards and they have seen thier rates go from 8-12% to 12%-19%.  That is bleeding the consumer by several hundreds a month.

3. Layoffs and business closures are being kept out of the news. Monthly New Job market numbers are initially released high and revised down a few months later to camouflage the issue. Less money for non-essentials like vacations.

4. Most STR owners joined the game during/since COVID and does not know what normal looks like causing newer owners to panic and drop rates to rock bottom (4 bedrooms with indoor pools during spring break art $229 a night when the Holiday Inn Express is $249 a night). Fear based management.

5. Consumer confidence is down which means they do not trust splurging today for the fear of the unknown tomorrow. In the markets I am in we are seeing more last minute (within 14 days) bookings.

6. If your target demographic (upper middle class/upper class/government workers) for your STRs are less impacted by these factors then that market will produce a better return now.

7. We are still seeing people travel overseas and cruise more this year since they couldn't during COVID.  Airlines and cruise ships are having another gang buster year.

8. While not being political or partisan the leadership of the nation not being strong and reassuring produces fear in the consumers.  While they try to dress it up by trying to reassure the consumer, the fact is people are afraid. It is like the husband who beats you and then says I love you, it causes fear and confusion. They don't trust and therefore expect the worst.

Now when people are afraid it is the time to buy if they begin to fire sale (seeing this starting to trickling in) BUT make sure you keep your cash reserves to keep you buckled to your seat as we might experience more turbulence on this STR ride.

I sent a letter to Governor DeSantis last week requesting a veto.  The bill itself does not bother me, but after serving almost 30 yrs in the military I know government rules are like kudzu, it is well meaning when planting but after a few years can turn into a nightmare.  It is interesting that Sevier County TN (smokys market) has a new more intrusive ordinance requiring inspections. There I am hoping it weeds out some poorly maintained properties.  In my Florida market I don't believe about 30% are operating properly and submitting tourism tax.

As for profitability I have picked up magnificent cashflowing properties in FL over the past 3 yrs. Profitability depends on location, product, pricing, marketing and management. If any one of those five things is not good then profitability could be effective. In my Florida market I see most failing due to marketing, management and pricing. Since management usually controls marketing and pricing you could argue it is a 3 legged stool Location-Product-Management. So if you have a great location and a decent product for the area then it is a management issue (self or professional). That is the largest elephant I see STR owners do not want to address. Firing professional management or accepting they are failing at their job as a self manager.

Jacob,

Chaplain here. I retired last year.  I never paid for a course. There is so much info already out there. Listen to the BP podcasts on STRs Short Term Shop podcasts and go back to the beginning. Also listen to financing podcasts. As for markets you need to do some recon and gather Intel on different markets. Everyone will promote their market or if they are protective of their Intel, they will keep their market to themselves.  

Five years before retiring I bought my first STR and was astounded that the property had made me more profit than my retirement pay would give me. That have me the desire to go full throttle.

I heard I am mentioned in a popular book on short term rentals.  I am the one who was operating STRs and building STRs in the US while deployed in Afghanistan.

Here is some things to consider:

1. Try to buy before retiring.  You have W-2 income and it helps.

2. Get rid of all car loans. Don't pay off the loan...sell the car and buy a beater. This is a short term action for long term gain. I drove a 20 yr old car with rusted doors till I retired even though I could have paid cash for all the cars on commander's row.  That qualified me to buy/build more properties. I bought my dream car after retiring (Tundra) and use it for business.

3. Bounce any decision info off of me.  I am a chaplain by heart and will give you my honest assessment of the market or deal.

4. Partnerships are like marriages so tread carefully as you have seen alot of marriages end badly. Personally I do not do partnerships. 

5. PRO NOTE: VA loan has no cap now. If you currently do not have a VA loan there is no cap. The amount is determined by your DTI. I did a $2M VA loan for a beachfront home on the Emerald Coast before retiring. Imagine a $2M loan not requiring a down payment. I put 5% down because I wanted to remove the funding fee due previous use of a VA loan. We lived there for 2 years and just recently moved and are converting it to a STR.

Where are you wanting to retire to?

Will you work after retiring?

Are you looking to do Skillbridge?

AFSC?

 I get all the listings everyday and all pending/sold.  I have seen the ones you are talking about go pending and then back on market. $500k for a 1 bedroom even with a view is a stretch. I expect appraisals keep coming back too low for financing and they go back on market. If they wait too long on keeping the price high (above $459k) the appraisal for the 1 bedroom will not top $400k in a few months. 

There are a lot more listings lately in the area market but I am not sure if that will taper as summer comes. I call it the Winter Fear. Low returns like pre covid numbers coupled with low price/high headache guests have scared people to sell. They do not think the juice is worth the squeeze. Now take that and add the new inspection requirements and higher commercial property taxes. It is a perfect storm to separate the wheat from the chaff in the Smokies STR market.

Branson is a little behind the Smokies (PF/GB/Sevierville) market.  This is exactly what has happened.  So to be in the top 10%-15% you need the quirky.  I was one of the first in the area to build a modern home about 6yrs ago, now people are looking at me wondering why my new builds are not modern.  Modern is now over 50% of the new builds. Next trend is A frames.  They will be over built too. You either need to be quirky or accept you will probably not be in the top 10%-15%.  It is interesting to see in the Smokies 8 to 12 bedroom homes are not getting that much more income than 4 to 5 bedroom BUT has 4 to 5 bedroom been overbuilt as they represent majority of the building permits? Possibly as they also represent a large percentage of new builds. All this to say, numbers must work without a quirk because today's quirk will become a non quirk as people look at their competition and one up each other or copy what they see.

 The reason I haven't switched to streaming at my properties is my banker complained that when she stayed at another property in my market they had streaming and her large party of professionals couldn't watch an SEC football game and they had to watch it on their phones. 

While I am looking for ways to be more efficient this year across my STR properties I will not skimp on sports and it must be an easy guest experience. Oftentimes I have guests message me and ask "What channel is this game on?" I quickly google DishTV or DirectTV channel for Cowboys/Ravens/Hornets etc... and message them back.

 For my price range and guests we attract sports provided by me is a must.  I have looked at YouTube tv or streaming but would need a way for guests not to be able to logout.  I currently stream for myself and am annoyed how many times I have to relogin to apps and last thing I want to deal with on a Friday or Saturday night our with my family is talking on the phone a non-technical guests how to relogin to an app.