All Forum Posts by: Tim Schroeder

MUCH higher returns than long term rental (and more work, too)

I bought a 6br for 500k (which will probably cost 600k now) that sleeps 16 or more.  It's very profitable. I get big family groups, so even at $300-800/night (seasonal changes) it's affordable because there are usually multiple families chipping in on it. 

I also bought a 4br that isn't as nice but I got a good price on it (foreclosure). I haven't done my books for a while but I reckon it nets between 50-60% of the 6br.

So for me I like the big places. There's also less competition, people stay longer, have more money, and cause less damage and trouble. It also books up further in advance. There are thousands of 1-2br's out there and I think (but have no proof) that they will suffer more in the coming recession.

I am toying with selling the 4br and moving up to another 5+

As far as remote management, being further away means I can't do anything myself, I have to pay someone. i.e. installing a towel rail costs me $50 labor for a handyman to go do it. But a lot of people probably wouldn't do it themselves anyway. Just have to build that into you ROI. You can't shop around for furniture, you have to buy things sight unseen and have them delivered and hope they are good quality. This also means you tend to pay more for everything than you otherwise would.

Day to day management also becomes a PITA sometimes (guest complaints, questions, steady flow of maintenance issues) but that is a function of self-managing a STR not whether it's local or remote. But if you don't want to pay a PM 30% or more of gross, those hassles are the price you pay for stellar returns. It's not for everyone, but if you can devote some time it's well worth it.

You don't want to move there. It's a zoo of tourists. Which is why it's so profitable. Avery was my agent on my 2 cabins there and it's worked out very well - I live in Denver. Managing remotely is a hassle sometimes, but it works.

The RV rental site provides the insurance and pays for it out of their cut. Your own insurance and the renter's insurance are both worthless and do not cover rental situations. It's imperative you have special RV rental insurance through the rental site or you are playing with fire. Currently rvshare.com only insures up to 15 years old, so my 2004 became uninsurable through them this year, which is why I only use outdoorsy.com anymore.

I have a 29' Class C Winnebago in Denver that I rent out on outdoorsy.com and rvshare.com, it's a 2004 and worth about $15k.  In the past two summers I've grossed about $6-8k per year renting it out. And that's summer only because I don't rent it in the winter due to snow. If I had more free time, I'd buy a couple more of them.

Yes it's common, and yes, the $5k was $2500 treatment and a $2500 lost booking. 

Yes and No. I have two cabins in the area, got help getting started from @Luke Carl. 

First of all, yes, you can do it - like Luke says. I live in Denver and have a fulltime job and a family like Luke. I am making great money, approaching 50% ROI.

Secondly, no, it's not easy. Even once you get a team setup (realtor/cleaner/maintenance/HVAC/plumber/pest treatment/and more) there is a constant barrage of issue that need attention. Guests asking questions, guests with issues, leaky faucets, broken BBQ's, TV remotes with dead batteries, etc. Cleaners and handymen take care of all that, but you have to communicate with the guest, text the problem to the handyman, pay him via PayPal, let the guest know what time he's coming, follow up later, etc. It's not HARD but it does require some remote INVOLVEMENT that adds up. Then there are occasional crisis: HVAC went out: $4000 repair. Well problems. I've had bedbugs several times. Each time it costs me $3000-5000 and LOTS of stress to resolve. 

But in the end, I am looking for more not less properties, despite the hassles.

@Ken Latchers it's not a ridiculous request. Perhaps he just needs somewhere to start, like we all did.  When I needed a contract I didn't write it from scratch, someone was kind enough to share what they had. I then modified it as I saw fit. If I was really on top of things I'd run it by a lawyer - as everyone should. Hopefully I'll get around to that eventually. FYI it contains macros you'll need to change, and it was designed for use with rental cabins in the Tennessee mountains. Here it is:

https://www.dropbox.com/s/811v...

This is why you keep properties in their own LLC. So you're limited to losing that one property, not all of them as well as your own personal assets.