All Forum Posts by: Deanna Lawrence

My property management company gave me income info on similar units they were managing in the same area.

@K F. When I was shopping for my STR, my management company said a good rule of thumb to go by is yearly rental income equal to at least 10% of purchase price. After looking for a while and analyzing many deals, I found I liked a 12% minimum better.

Hi Nate,

What market are you in?

Hi Jordan,

I wish I had your dilemna! As a conservative investor (I don't mean politically ;-) ) I personally would keep the property, make sure I have a minimum of 3 months worth of property expenses in the bank (6 is better), get a HELOC for no more than a combined 80% LTV and use that money to acquire the next one. Of course, it still has to cash flow at 80% LTV.

Hi Brandon,

You pose a very good question. I'd start out by asking how many other people are getting those leads and how are they collecting them. Is the seller filling our a form? Are they scraping the info from other websites? If you and 100 other people get the same leads, what do you think your chances of getting the deal would be? 

I'm not saying I wouldn't do it, but know exactly what you're getting first. If there is a trial subscription, that may be the way to go starting out.

Hi Joanne,

I invest in vacation rentals in Branson, MO. The DOM is starting to creep up a bit, but it could be because we're coming to the end of the busy season. The prime properties are still getting snatched up quickly, but some of the others are not.

Thanks for the comments @Dmitriy Fomichenko, @Will Pieper and @Laura Tokgozoglu!

Investment Info:

Condo buy & hold investment in Branson.

Purchase price: $190,000
Cash invested: $45,000

This is our first vacation rental. We took it over in the middle of the high season with lots of reservations already on the books! It's a 2BR/2BA unit in a very popular resort in Branson, MO.

What made you interested in investing in this type of deal?

I have always loved the hospitality industry. I love pampering people and facilitating memorable vacations. I have many years experience working in hotels and restaurants from front desk clerk to restaurant manager. This seemed like the easiest path to owning my own "hotel".

How did you find this deal and how did you negotiate it?

I worked with a local Realtor who was recommended by my management company, Evolve. Since the market is very hot (like everywhere else), we offered full price and waived the inspection contingency. We were also the first to submit an offer. Luckily, the sellers felt compelled to accept our offer based on these points. It's very important to note that this deal made sense at full price. We are still looking at a +9% cap rate and very strong cashflow.

How did you finance this deal?

We first tried a vacation home loan, but our debt to income ration did not work. We ended up getting a commercial loan through a local bank. The interest rate was higher than for residential, but it still worked.

How did you add value to the deal?

I do not know why the previous owners sold after only one year of ownership, but my guess would be they were not making money. This is a VERY popular unit, (1440 sf, 2br/2ba in a very busy resort) but their property manager was taking 25% and was not marketing the property well. I calculated the occupancy rate was only 36% through July 6th of this year which is quite a bit below the average of 51%. We changed management companies and immediately upgraded some of the furnishings and amenities.

What was the outcome?

We just closed, so no concrete outcome, yet. I'll let you know!

Lessons learned? Challenges?

I learned a lot buying this rental. Here are the top three lessons: 1) Apply for your business and tax licenses immediately upon a signed deal. 2) Make sure you are aware of ALL association fees when buying a condo. We have COA, POA and Golf association fees, all of which did NOT show on the realtor.com listing. 3) Know your market. This unit in a different part of town would not gross the same amount of money. We relied on our property management company to steer us to the most profitable resort.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Bill Beck - Realtor with Worley & Associates, Branson, MO - vacation rental owner
Shannon Steinert - First Community Bank of the Ozarks - vacation rental owner
Taylor Clark - Robbins Insurance Group
Danielle Murphy - Evolve Property Management - vacation rental owner
Shawnee Jones - Branson Family Cleaning