All Forum Posts by: Cliff H.

STRs ROI is almost entirely driven by the accuracy of your occupancy rate, which is also notoriously hard to approximate due to vast differences in pricing strategies, management effectiveness, and goals of owners/managers, not all of whom wish to rent a place out 365 days/year, but rather block it off for any number of reasons, even sometimes by errors in their channel manager tools.
Your best estimate is pairing the high level dashboard data with a property by property breakdown of the micro community you’re looking to invest in, understanding that just because someone has a place priced at $1k/night with 3 days open a year does NOT mean it’s renting out at that price. 

I’d recommend steering clear of qualifying based on income type, which risks running afoul of fair housing law. Define your qualification criteria, find a system that apply it universally, and accept the best match to your public criteria. 

A great way to have guests exceed your standard allowance for heat (of any kind) is to charge a standard allowance for it. 

To start, read between the lines of what AirDNA’s latest reports are stating: 

https://www.airdna.co/blog/air...

Comparisons are being made to 2019 data. Why’s that? Because 2020-2021 data was, as others have already said, banner years. 

Here in my neck of the woods of the rural Northeast I suspect many newer STRs investors are about to find out what occupancy looks like when there’s 2-6x more inventory, rapidly-increasing regulations, and small towns worried their “character” turning to a new industry of site scrapers to auto-enforce local ordinances/regulations on occupancy caps and others. 

Is the sky falling? No, just correcting the unsustainable expectations of overnight millionaires that over-leveraged or paid/expected/predicted pandemic reality was a new normal. 

@Glenn Hoffman where did you land on this one?

@Will Cruz 70% occupancy in New England is extremely optimistic. Across the borders in other parts of New England 50-60% for vacation rentals is doing very well. As others have called out in the STR forums, northern climates have built in shoulder seasons. In my experience, April, May, June, September, November, and most of December are dead months. That's 6/12 months you can expect minimal income, meaning you have 6 other months to cover the full 12. While that's generally not an issue for a well-run STR, it does change the math to a 50% baseline vacancy rate, which you can then layer applicable ADRs, CapEx, and fixed vs variable costs atop.

Additionally, since the property's already being used for STR, ask for P&Ls, same as you would for traditional LTR investments. Sellers should have those or you can walk them through how to export them in AirBnB/VRBO/etc. Blocked dates on a calendar are no indicator of occupancy, they could just as easily be manually blocked by sellers for any reason.

As you have undoubtedly seen from the forums, many investors have flocked to more southern regions with greater year-round demand. Areas that, with a larger lakefront property like this, can do quite well given sky-high rental rates. I'd just caution that you calculate conservatively on ADR and liberally on vacancy rate. That's particularly true with the bitterly cold winters that Maine is known for and that Ed, rightly, calls out with the reference to frozen lakes and snow mobilers.  

Hope this helps and let us know how things turn out in the end!

No.

Not to split hairs, but you do realize AirBnB just tweaked their front page to specifically feature those unique homes, which is a feature about two weeks old now? As an example, I just pulled up the site, they're showing me a $8500/night Cliff mansion in Joshua Tree with zero reviews. Translation: zero income, zero bookings, zero profit. Frankly, I have no idea who rents an $8500/night 3BR house, but it's no one I've met, know, understand, or much care about as a STR operator.

I've seen plenty of these types of listings around my rentals in New England, most with sky high prices and few reviews. While it's tempting to assume those reviews came from the listed prices we all know how easy it can be to tweak those prices, snag a few good reviews, and then bump pricing after the fact to make it look like they're killing it. Doesn't mean it's a great or sustainable business. Finding the right balance of ADR and occupancy takes time and rarely is it indicated by a handful of spotlight listings AirBnB has a vested interest in promoting for their own branding.  

Agree with others. Tennis had its day and there’s a reason courts across the world are falling into disrepair. In fact the problem is so big the USTA will give you consultants to keep your court alive: https://www.usta.com/en/home/c...

I help run a small HOA with a couple tennis courts in poor shape. It's $50k just to tear them up, likely another $150k each to rebuild them. Far too much for the value they offer.

Lots of great advice here. While I totally agree with building unique spaces with local flavor, I’ll just say that a UFO hot tub is exactly the audience I do NOT want in any of my rentals. Let the instagrammers catch their spaceship to the moon. I’ll take the families who just need a relaxing vacation where the host thought about all the things a family might need, come back year after year, and don’t need expensive hot tubs and inflatable flamingos to have a five star vacation. Know your target market. Then build relentlessly around that persona.