All Forum Posts by: Dan Maciejewski

Quote from @Nazanin Boojar:

Quote from @Dan Maciejewski:

Quote from @Nazanin Boojar:

I just realized that the housing growth was insane in Florida this year. I feel wasted. If I invested in the market, I’d get a 38% return on my investment. 🤯 Is this for real?

Yes, it's been a few years of crazy appreciation in many markets in Florida.  Most people think that the "crazy" numbers are done and that we should settle down to a manageable number.  Depending on the market segment, at least in Pinellas, you can still see homes listing above what they "should" appraise for and selling 5-10% above that.  Other segments are seeing things settle to almost balanced market conditions.  Price reductions are back in those segments!

Gone are the days you could buy any shack and sell it 3 months later for an 8% profit, though. I would definitely not purchase thinking you could get a 38% ROI on appreciation alone!

Well, I'm not insisting on investing in Florida. Obviously I'm not looking for those state in which things are settling as well.
Which state would You recommend for property investment then?

 All my investments will continue to be in Florida.  I did not say to avoid Florida.  I said that if the investing you're planning on is an Opendoor buy then sell flip, the market for that is gone.

Where to invest depends on what you want. If you want a long-term 4 cap rental, almost anywhere is fine. Long term SFR to mid market multifamilies are projected to float around sub 4 caps for the next little while.

Short Term rentals from single family to 10MM motels are all delivering around 9 caps right now and should continue in the future, as long as you buy in the right location.  In my market, you will need to start looking at around average price points and above to get that, whatever the asset type you're looking for.

Commercial will heavily depend on who's leasing and where.

Quote from @Ryan Moyer:

Everything else AirDNA/Rabbu are a decent starting point, and you can also comb through calendars of listings that are similar to what you're interested in and get an idea.

 This is your answer.  To elaborate a little:

1. Municode is your friend.  Here is the link for Kissimmee.  Each city will call it something different, from transient rental to vacation rental to something else.  

2. A vacation rental HOA will have it in their CC&Rs that they allow it. All the owners will have purchased as investments so there's almost no way they are going to change anything, if they are even allowed.

3. The answer above is it.  Do your own research.  FL is seasonal, so check your exact property type you are looking at and check the rates for each month.  Check competition that have been doing it awhile and adjust rates a few months in advance.  I always emphasize doing the work up front so you're not sweating later.  The more numbers you run the more you will know the market and now have questions about whether or not a property is worth asking.

4.  Yes, the market there is pretty saturated and may continue to be.  There's a lot of land out there -- land to build newer and better.  You will want to be in the top 5-10%.  Figure out as many ways to stand out as you can.  Theming, as said above.  An Instagram-able wall or 2 (with your contact info on it) so your guests advertise for you.  As many unique things that your guests can enjoy as possible.  Make sure each stay is a Plus Plus Plus stay!  The founders asked themselves what would make it a 5 star experience, and then kept asking.  

Quote from @Nazanin Boojar:

I just realized that the housing growth was insane in Florida this year. I feel wasted. If I invested in the market, I’d get a 38% return on my investment. 🤯 Is this for real?

Yes, it's been a few years of crazy appreciation in many markets in Florida.  Most people think that the "crazy" numbers are done and that we should settle down to a manageable number.  Depending on the market segment, at least in Pinellas, you can still see homes listing above what they "should" appraise for and selling 5-10% above that.  Other segments are seeing things settle to almost balanced market conditions.  Price reductions are back in those segments!

Gone are the days you could buy any shack and sell it 3 months later for an 8% profit, though. I would definitely not purchase thinking you could get a 38% ROI on appreciation alone!

For an investment loan, they can count long term rents, even if they can't count short term rental income. There are a few lenders that can qualify STR purchases based on long term estimated rents around me and on here.

There is a lender on here that says they loan based on STR estimated income but nobody has used them for me yet, so I can't speak to whether or not they can close a good deal. I think it was Visio Lending.

It will depend on your price point.  In Tampa, the areas near attractions like Riverwalk and the Arena and Armature works do pretty well.  You can run the gamut of price points depending on the neighborhood you choose.  A lot of people have been investing in Seminole Heights for years and done very well -- others visit and decide that area's not for them!

Across the Bay in Pinellas, there is a ton of opportunity from "on" the beaches to a little inland to a lot inland. Best ROI will be turnkey more (3+) beds and baths closer to the beach with a pool. Those will be around to above average priced homes. Luxury is still doing very well, as are the million+ homes on the beaches.

Not sure about your market, but in mine, 550-700 is in the average home range and luxury starts above that.

Generally speaking, and especially in the current/coming recession, you'll want something that's at least in the average price range for your area and has the amenities that will do great for STR. The above median renters will still be travelling while the people that are on the bubble will be cutting back on luxuries like vacations.

In the Southeast, at least for everywhere that I talk to, you'll want a pool, and either a great location, or very updated and on-trend with the area.  Honestly, you want to start with the great location and then add all the amenities you can.

Without taking the economy into consideration, you can make money at most price points in my area.  But, the lower price points are going to get hit first and hardest.  You can buy a few mid-tier rentals and wait for the economy to return or buy a luxury rental and hit the ground running.  

Also, check in with other STR investors and PMs in your ideal market to see what they are seeing at different price points right now and in the 1-3 month booking window.

Assuming you have a decent property in a great location.  

Your occupancy for summer should be above 60%. Beach hotels are still running at 80-85%. My partner's hotels are at 85% and 97% at her 2 limited service hotels. That doesn't directly correlate to a single STR, but it should give you an idea that people are still coming. And leisure travel is up!

Overall Occupancy should be similar to Pinellas at about 75% as an average. We have been beating that for the past 2+ years for STR, but for a rolling decade, 75% is accurate. Your area in Tampa will probably take a slightly bigger hit on occupancy through the recession, especially since the house doesn't sound like it's catering to luxury renters. But you should have a solid occupancy and the ADR shouldn't take too big a hit.

If you closed a year ago, you should have more than a half dozen stays/reviews.

You are probably at 15-20% YoY appreciation, so you could definitely sell and walk away with some cash.  But, you may want to try some of the suggestions here.  

First, I would drop the PM.  Make sure you have professional photos and a compelling description.  Do everything you can to get your ratings up in the next few stays.  Use welcome baskets and free coffee cards!  And if you can, get something unique and "instagrammable," like a mural or something that the Zoomers can take a pic and post about on their vacay.  With you in full control, you'll have a much better idea of what's going on, and you'll be in a position to talk to all your guests to see what they are lacking and liking.

I suspect your PM isn't doing you the best they could. They should have a very candid reason for the low occupancy, and, I'm guessing, the low ADR. Not every property is a great STR, but I suspect you did a bit of research before buying and thought this should cash flow.

Another option would be to try to get a medium term tenant in there, but honestly, if you're not cash flowing as an STR in this market, I'm not sure you should be cash flowing as a mid-term or long-term rental. STRs should be getting 30%-50% more than other rentals.

You can always go the cruise ship/hotel route and use a system that allow you to convert two twins into a king.  Best of both worlds.  

You don't want to alienate two couples that will need kings, but you also don't want to lose families like @Michael Baum

Adult bunk beds are becoming a thing, also.  Even in the luxury world. . . 

I would at least get a quote for a new one.  If it fits the budget, go ahead and redo it.  A spiral staircase is already going to eliminate some guests.  No reason to rule out more.

2% is much better.  It's always best to be the top offer in every area that you can be -- even if you can't be the highest price.  
Again, not sure what's happening in your market, but in mine, yes, we are asking for POF that covers all closing costs and any written appraisal gap.  $280k is well below median in my area so things change a little, but it's still a best practice.  It's pretty rare that a seller prices under FMV (expected appraisal) so that usually doesn't factor in.  And you probably don't want to tell them that they are underpriced if that's the case! 

The market is slowing all over -- there will be some properties that start to sit longer. Unfortunately, the properties that will do best as an STR will always be the most in demand and in the best locations, so they will be the last to be affected by a a slowdown!