All Forum Posts by: Account Closed

I wish more members would share their figures.  Without them, the forums are significantly less useful and just full of ads that it's always a good time to buy.

 You could probably figure out a way to do it anonymously....

I will play some of the game. I have 2 sets of STRs (2 units in each set). I will cover the long time STR. My more recent set of STRs is also having some cash flow issues.

Some items, last year I changed PM companies and lost thousands of reviews. When switching to the new PM, we rehabbed the units and the timeline went ruefully wrong. What should have been a knockout year was largely blown. Then one STR unit, despite being an STR since 1999, did not get chosen in the STR lottery that went into effect in May.

Location of property: Mission beach duplex.

Occupancy rate: last year had long down time for rehab. Last normal year was 2019 and frankly I do not remember the occupancy rate but it was very high (over 90%). This year I suspect occupancy will be ~75% on the one unit that is STR. The MTR will have higher occupancy but at a losing money rent rate so it does not matter if it had 100% occupancy it would not cover the bills.

Year purchased: 1999

Price paid: $375K

Current property value: ~$1.8M

Gross yearly income: In 2019 it had $160K rent. Every year since has been less for one reason or another. The reasons include significant COVID lockdowns, poor rehab timeline, one unit not getting an STR license and having to be converted to MTR the same time as ~200 other units in area had to convert to MTR (our unit MTR rent does not even cover the PITI for this unit which means large negative when including PM, utilities, maintenance/cap ex, misc).

Yearly expenses (if can be broken down, even better): largest is 25% for PM.  Utilities are a ~$350/month.  cap ex/maintenance varies.  My misc is larger than most for various reasons including expensive umbrella policy (for various reasons I expect my umbrella to possibly be near highest on BP per the amount of coverage and I have decent amount of coverage).

Net yearly income: If it had never been refinanced it would be having outstanding cash flow. However, it was refinanced in Dec 2021 (not the first time) at max LTV. It is my view that the duplex when properly allocating for maintenance/cap ex is not going to have any income this year. Furthermore, I doubt it will have income for next year. The last year with clear cash flow was 2019. It is my belief that occupancy is not only below last year, but below 2019 however some of this could be the result of having in the 10s of reviews (we are below 100 reviews on both units on both primary OTAs) rather than in the 1000s of reviews. Fortunately, I have made a fortune off this place previous to the last few years and enjoy using it on occasion and letting friends and family enjoy it. I enjoy owning it. In addition, it has continued to have some appreciation; last year may have only been ~$50K or so but overall it has had outstanding appreciation.

Personal insight from their experience: We can afford to have this property underperform. Ideally its performance will improve, but if it does not I have the resources to not have concerns (I have plenty of properties that are producing). I would not recommend someone trying to enter this market today if they need positive cash flow even if they could be assured of an STR license (which in reality they would not get an STR license in this market).

I have made a lot on this property but have not had any noticeable cash flow in the last 3 years (since 2019) and suspect most of the last few years I was negative and will be negative for 2023 (due in large part to having to convert one STR to MTR).

Clearly, I did not sugar coat anything. Hopefully this makes clear that there are challenges in some markets with STRs and not every STR is going to be a Homerun (even though I consider mine a homerun since purchase, it is not a HR of late).

Good luck

Bought in late 2022, for a personal vacation cabin that we’d rent when not using. That alone took pressure off from needing to make a ton of cash flow. 

We bought at peak interest rates, not because we were naive, but because the timing was right for our family.

10% down, $370k cost,  we will gross about $57k our first year. Super happy with that. That’s included about a dozen personal stays.

A reminder, real estate has historically been a long game. The idea that you can buy 2 properties and cash flow enough to quit your day job was mostly born out of luck in a post COVID world. I think most will be happy to break even in the early years, and profit in the long run.

I hear you. I bought a property in North Phoenix a few months ago, to make it into an STR. I found a super deal (distressed) off market, where the ARV appraisal was $750,000 and I negotiated to buy it for $525,000. It has a view, a pool and is in a nice place under Shadow Mountain. We've fixed it up. Complete with furnishings. It now values at $780,000. It actually went up in value, in a "down" market.

The surprise was in how expensive it is to furnish a high end 5 bedroom house and create an inviting pool atmosphere. I way underestimated costs and time. It sure is pretty though. ;-)

In January AirDNA said it'd rent for $545 a night at 67% occupancy, $11,000 a month. What's not to like, eh? Reality is now the surrounding STRs are getting between $145 to $300 a night with about 50% occupancy, $6,000 a month at the high end.

Is it a "Summer in Phoenix and 115 degrees heat" problem? Maybe, but I think it's probably simply overabundance. Ours isn't at the high, high end, but it isn't low end either. And I thnk the market is price sensitive right now.

We're putting it on the market instead. ;-)

When I checked, there was a drop of about 586 STRs in Phoenix from June 23 to Aug 29

Phoenix Active - 7,872 - June 23, 2023

Phoenix Active - 7,286 - Aug 29, 2023

and similarly in Scottsdale about a 570 decline

Scottsdale Active 7,671 June 23, 2023

Scottsdale Active 7,103 Aug 29, 2023

Were these numbers just "summer break"? Meaning, "who wants to go to Phoenix in the summer, so business is slow now", "I'll go offline and relist in the fall" or are they people getting out of the market entirely? We should know in a month or so.

Take a peak into Tampa Bay

I think the biggest hack since you're not a FL resident is to use a 2nd home loan with only 10% down to buy something. I just did this for an investor in NY for a 2.5 million dollar STR on Indian Rocks Beach and it grosses 400k per year. In his situation, he only needed about 250K plus closing costs as his entry point and he will net more than his very first year.

So your 80k will get you a 700k home which will easily gross over six figures.