All Forum Posts by: Dan Maciejewski

Quote from @Annchen Knodt:

@Christopher Knibb thanks for starting this thread - it resonates with my concerns and clearly others as well! I additionally wonder about over-saturation in the STR market with SO many people getting into it, but from reading other threads on this forum etc, it seems like there's good reason to believe that demand for STRs will continue to be healthy, and as long as you can work really hard to stand out from the competition you should be ok.

 If you want to see oversaturation, look to Orlando and surrounding areas -- they are definitely in a bit of a pickle.  They are competing on rates while occupancy is lower.

It will definitely depend on the area.  In my area, there is no room to build (without increasing density) more housing that will be good for short term rentals, so we can't run into the Orlando situation.  Price appreciation, on the other hand, will definitely start to limit returns.  All the people that wanted to wait for the market to cool 1-2 years ago are now effectively priced out of my market.

I would be interested to see what the OP is looking at because the ROI on STR in Pinellas is still shockingly high. Some people have unrealistic expectations, though. I see he's using CoC and looking for 20% in year one. I would say that is impossible anywhere, but ¯\_(ツ)_/¯ YMMV. I tend to use cap rates to compare investments (some people hate that SFR isn't traditional commercial, but IDC, it's apples to apples without worrying about debt service and credit scores and APRs, etc. . . )

They're surprised because Apollo beach is not traditionally a vacation spot.  From my research, the homes with boat access should do very well.

The smell isn't Red Tide, and it "shouldn't" be the power plant -- it is most likely the suppler smell from the phosphate plants.  You'd have to decide where it's bad or not, though -- I wouldn't trust 3rd hand reports!

The boating communities in Apollo Beach are great and should be great for luxury short term rentals!  The rest of the area -- I might not recommend, myself.  BUT, the best vacation rentals are the ones that owners love, too -- if you like to vacation there, then there are others like you that will pay to stay there, as well!

Quote from @April Pun:

Just to piggy back off of this - I recently called the Tampa Bay city zoning and was told that there's a 7 day minimum for STR. I'm a bit confused since I don't see that on AirbNB and haven't seen other folks talk about it on bigger pockets. I haven't followed up on Plant City and Temple Terrace. Can anyone provide additional info for Tampa Bay area?

Yes.  Tampa as a city is very lax and doesn't seem to care about the 7 day minimum.  It's on the books, but nobody really seems to follow it.  The last I called the said to "try to keep it to a 7 day minimum."  And all of my clients that try get the same response!

Even if you have to strictly abide by the 7 day minimum, it shouldn't affect returns much -- nobody wants to deal with 3 turns in a week!  And the slightly longer stays are usually better guests. . .

Check your contract -- ours does buyer say until close to satisfy financing unless that's changed by the parties.

Like Joe said, as the buyer, you would have no incentive to remove it.  

The ding to your credit from a hard pull is like 5-10 points and it bounces back in a month.  

You should 100% talk to a lender or mortgage broker to find out what you can afford, and what that will look like as far as your PITI payment. Make sure you know your taxes and insurance, too. Taxes will go up (sometimes significantly) at purchase, and investment properties will often have higher insurance premiums.

You don't need a full approval if you're just window shopping, but a pre-qualification will help you to dial in what you may be looking for.

I can't tell you how many people think they can afford X, but after the payments come to light, they want to stay around X-50%.  Or they actually aren't approved for as much as they thought.

You can make great money if you know what you're doing. 

Arbitrage is not a wrong, description but what you're talking about is a Master Lease situation.  If I was you, I would already have some idea of what exactly I'm asking for as I call landlords and propose this to them.  And by that, I mean, I would already have a master lease drawn up with terms in it.  Hopefully by an attorney.

And you'll have to have some idea of why they would forgo income that you'll be able to earn when they do this.  Because if you came to me and asked to take a master lease on one of my properties, I would say, "What's stopping me from just turning my property into a short term rental myself?"  There are answers to that that may make sense, but in my case, I know it's not complicated at all to run an STR.  Although I have the benefit of being in the space, and a partner that has been in hospitality management in the area for decades.

Some ideas (BTW, these are what to look for in a short term property manager):

You know exactly how to turn a property the fastest and most economical way, and have the best inspectors.
You know exactly what the guests are looking for in terms of arrival experience, cleanliness, and decoration.
You know exactly how to adjust rates to be the most competitive and maximize ADR.
You monitor your comp set daily and adjust rates and minimum stays accordingly.
You area a business owner and run forecasts and P&Ls like a big business.
You handle the purchasing and renewal of soft goods, and the owner won't need to worry about that.
You can increase their cash flow with zero extra work on their part!

Also, neither Clearwater nor St Pete allow less than 30 day rentals (St Pete will allow 3 less than 30 in a rolling year).

Most condos don't allow short term rentals unless they are purpose built.  There are a few (like 2) that do really well in Largo, close to the beach.

The beach condos that are short term rentals are a little pricey!

And keep in mind that anything that allows STR will need 20% down.  They will not qualify for a conforming second-home loan (I've had people try for this but it won't work!).

As far as your zoning, Largo allows STR -- it;s the condo itself that you will have to worry about!

Originally posted by @Edward Moore:

@Dan Maciejewski Just out of curiosity, I have read on these forums that in multiple areas around the country, different areas have different restrictions on the number of nights you are allowed to rent out as a STR. My question for you and the community here, is who is monitoring that? Who's to say, to your example, you can only do 3 rentals of less than 30 days annually. What if you did 3 a month during the prime season, who would "catch you"?

Your last question is legal under the St Petersburg code -- 3 months is over 30 days.  The city allows tenancies of over 30 days, but inly 3 of less than 30 days in a rolling 365-day period.  They also happen to allow transient rentals unlimited in an owner occupied home.

The city and county and state is the "who."  The municipality you are under the jurisdiction of either will or won't have codes on the books that address tenancy laws.  Florida is tourist-driven, so we 100% address transient tenancy at all levels of government.  In 2011 the state passed a law that made the cities not be able to regulate or restrict short term rentals any further that the laws that were already on the books.  In my area, in Pinellas County, almost all cities had laws on the books.  If your town is in the 21st century, they should have their codes on Municode.  (here's the codes for your city)

It's the city that own the ordinance's responsibility to enforce their own laws.  Depending on the size of the municipality, anyone from the actual police to code enforcement can initiate the process.  Civil infractions incur fines.  If you don't pay the fines, the city will put liens on your property.  It's the same as any other code violation.

Whether the city uses resources to enforce is another issue.  In my area, St Petersburg (pop. 262,167) and Clearwater (pop.118,812) are the 2 biggest cities in the county.  Clearwater, in particular, 100% has code enforcement officers spend time browsing bookings and citing violators. 

Here is one example that resulted in a $35,000 fine.  I know them -- they're doing fine.
Here is another.

Originally posted by @Kayla Collura:

@Dan Maciejewski Awesome! Thanks for reaching out. We’re open to the beach areas around Tampa. I know St. Pete can be very strict for STRs. At least that’s what I’ve read. I’d love to chat with you more!

 Yes, St Pete allows only 3 rentals of less than 30 days in a rolling 365 day period!  But you can still do well there with snowbirds, travelling nurses, and longer vacation stays.  You can also hedge your bets there with a small multifamily in a good neighborhood (if you can find one!).  That way you can get a mix of long and short (30 days+) to medium term tenants.  

We get a lot of people that stay for a month or two at a time, especially with working from home becoming so prevalent among the finance and tech industries. 

The rates for second homes are going up to almost match investment loans very soon.  A lender just told me they will rise on Monday (2/7/2022) and the internet tells me April -- soon either way.

The requirement for a second home is that you have to personally use it 14 days out of the year.

And you are able to get investment loans for single-family properties as low as 15% down (vs 10% for second home loans) -- I have a few lenders checking into investment loans at 10%, also.

So, they aren't that different, and will soon be basically the same!

INSURANCE in Florida.  Basically the worst in the country.  you can read my rant from a year ago about AOB, but honestly, we are going to have to regulate or legislate something soon, or insurance will really get out of hand.  

For STR / short term rentals, the rates are going to be higher. the only way around that would be to not tell your insurance company, but fraud lays you wide open to all sorts of bad things.

There are companies that won't insure roofs older than 15 years.

There are insurance companies that won't do STR at all.

But your best bet to lower rates (besides shopping around with a lot of brokers) is to reduce their risk.  Have a whistle-clean 4-point.  Get all the wind mitigation discounts.  Stay out of flood zones.  Ask your insurance broker what else you can do, but insurance companies aren't in the business of losing money, so they are going to charge what they can get away with!