All Forum Posts by: Chris Watson

It depends...I have a beachfront condo and beachfront homes. The condo building I bought in is the only one I would buy in in my market. With high HOA fees ($2k month) I am still cashflowing nicely. I also bought the condo at a discount of 20% off due to the HOA fee. If buying a condo research the HOA health, engineering study, last 5 years of HOA board and meeting minutes and last three years of HOA financials/reserves. Then buy at a discount! Throw in low offers and some people will be motivated to sell due to life circumstances. There are alot of condos but few beachfront homes. With media giving Florida condos a bad rap right now it can mean finding the best deal in 5 yrs on one. As for the Media scare, I saw one news article touting a $100k special assesment on a HOA and when I pulled up the building the average cost of fire sale condos are $3M TO $5M and part of the special assesment was to cover new unneeded landscaping. This is a wealthy retirement community where 80% of owners hardly blink at the special assesment. Doesn't mean all condo buildings are great, probably 10% are sitting nicely right now and you have to find out which ones are.

My major recommendation is get insurance quotes first. Even just a few doors down my beachfront properties insurance rates vary almost 200%.  The better built one (concrete pilings/floors/walls) was the higher one by $12k! I also picked up a home cheaper because the insurance quote the listing agent was giving out was $13.5k and I was able to get it at $6.3k.  I actually had my insurance agent get me a quote before I even called my real estate agent to setup looking at it.

All this said, do your market research and you will find a great cashflowing properties if managed properly. I would be looking for a deal right now where you gain $100k to $300k instant equity and cashflows. 

Leave atleast two rolls per bathroom.  For actual bottomline impact it will cost you at most $4 per guest if they used it all. With 60 guests a year you are out $240 additional. You could raise your rates by $1 a night if you don't want it to impact your cashflow.

As for linens not on beds: imagine a family packing for a vacation and cramming everything in a car, dealing with screaming kids on the trip, dealing with nightmare traffic and finally getting to the place and unpack all the crap.  They had a hard day already but now before trying to go to sleep they have to work more and make their beds.  They have been agitated all day and this will set them off.  I know in NC/SC when I looked at STRs a few years ago I have seen some saying we would have to bring our own linens. What has happened is the consumer expectations has changed and now owners who are use to a different consumer must change or deal with complaints and/or low occupancy. I recommend changing your business practice to meet today's consumer.

Talk to your CPA as ias it may effect how all your income from the STR is taxed when you add substantially services. I would rather put more effort to higher ADR/Occupancy and scaling to get more juice from the squeeze.

I have built several in Sevier County and operating costs vary widely. I have 2 4,500 sq ft indoor pool homes just finished up and because of material selection and sprinkler system the insurance is less than my 3 bed pool home a 1/4 mile away. Now it would have been double but I called around and found a better policy for 1/2 the price. If you have a pool will it be heated and if so gas or electric? What is the insulation R-value? 14.3 Seer HVAC or 18 Seer? City water or well water? If well add $100 a month for maintenance. Septic or sewer? How many will you sleep (more people a little more in monthly utilities). Gas grill where you supply the propane at $40 a month. Gas fire pit or not? Depending on the property my electric goes from $120 a month to $790 a month. One property with propane pool heat and just a gas fire place I used 1,150 gallons last year (x $3.29 a gallon).Do you have a large area needing grass cut or small area? Will you provide cable/satellite or make people stream? Who will be your internet service provider and their current costs? Will you put up seasonal decor (Christmas) or pay someone to do it?  How much will pest and termite control cost monthly? I know it seems overwhelming, but just make a list and estimate high.  

I own, live and actively buy in Navarre area.

I am sorry most people didn't answer your question on what to charge for services to STR owners. As for what to charge, call around to see what competition charges. I am not in your market so I am not sure what to charge. In both my markets Lowes and HD is over an hour roundtrip and my maintenance people costs has to cover thier time.

As for the off topic responses on management, it appears those in the management business are more sensitive on this. For me the military has taught me everyone is replaceable. I don't say that in a demeaning manner to anyone, but a true honest reflection on "service/solution/goods" businesses (which is most businesses). In the military as I visited different units as the chaplain, most would voice the same sentiment in a round about way, "the only way the mission succeeds is based on what we do and without us their would be mission failure." While in Afghanistan during the prep for withdrawal we started getting rid of certain career fields on base and the rest of us started doing what they did. We had to figure it out and we succeeded...sometimes better than those replaced and sometimes worse depending on the person who left and the person picking up the responsibility. As for STR management it is the same. Some professional managers are great and some are not. If a self manager replaces a bad professional then they are making a wise decision for them. Could they have searched for a better professional manager? Maybe, but that is their decision and depends on their current goals (cashflow/networth vs time recapture). I have 9 properties and always have self-managed for 8 yrs and even while in Afghanistan. It is hard to find managers who can get: 1) the same of better gross/net 2) care about individual properties 3) Treat you as a business partner and doesn't charge fees (admin/booking) that are not shared to pad their pockets and not both of ours. Trust me I eventually want to turn everything over (9 properties and growing) to a manager for time recapture, but it is hard to find a good one in which I would want as a business partner (management should be considered a business partnership mentally). For the professional managers I recommend they take an honest look at their business and make the adjustments to make it harder to replace them and make everyone want them. I know of cleaning companies with a wait list because they are that good...managers do you have a wait list? If not, why and what changes do you need to make to become the most desired management company for your area? Remember growth (number managed) does not equal success and look at Vacassa as the prime example of this...they manage alot but are poor at it.

It is funny as the OTAs are trying to get people to stay on platform, but are giving everyone every reason to go off platform. With Google image search trick getting out, more and more people will go to direct booking sites to avoid fees.  The OTAs are biting the hands that feed them as food (money) is getting scarce.

I will first say I am an outlier when it comes to this. I removed my remote thermostats years ago, but our nightly pricing is on the higher side. I have set the range from 67 to 80 on thermostats. My mom keeps hers at 68 due to health reasons so I figured give people an extra degree. 

Now place me in your guest's shoes. I personally never want to talk to my hosts as it reminds me of managing my own. I overlook alot of things when I am the guest, but if I have to ask permission to lower the thermostat to 68 for my mom then you would get a 2 star review from me.  I recently retired from the military and I don't want to ask for permission to do something reasonable anymore since I had to for 29 yrs.

As the owner your little bit of energy savings and wear and tear on the unit will cost you hundreds if not thousands in lost revenue. Bottom line increase your range of the lock and most people will never know because they will not try to go outside a reasonable range.

Matt Penland with State Farm was able to get me better coverage and cut my rates over TN Farm Bureau.  I will say depending on the cabin build depends on the savings (log vs hardieboard). My true log was not as much savings but he doubled my lost income at the same time.  I believe alot of owners in the area are under insured especially when it comes to loss of income and rebuild costs. 

Quote from @Todd Goedeke:

@Kyle Smith if you are spending 400k to build a 2 bedroom cabin you are overpaying. 

On a build I am finishing up and am furnishing this week in the Smokies the well, pump, storage tanks and filtration system alone is close to $75k. If you hit rock trying to put in a septic system it could jump your septic from $15k to $25k. Depending on the lot if it is in the county's critical slope designation the foundation is required to be engineered. These costs don't change much regardless of size. This is why $400k for a 2 bedroom on a mountain in Sevier County is realistic. I have some land on the bottom of a mountain and the neighbors wells are only 200 ft deep, not on critical slope and it use to be farm ground with no rock to hammer for foundation/septic so when I eventually build there my costs will be greatly reduced and $130 to $180 a sq ft build cost could be realistic outside the cost of the land.