All Forum Posts by: Ivan Aldana

I think less about exit strategy and more how you will pivot. ie: move from STR to MTR, or LTR. Example: If there are too many STRs and you can't get the occupancy high enough then you could switch into MTR. If it makes sense financially converting it into a long term rental could be the way to go. People always need housing and speaking of MTR there will always be insurance claims and traveling medical professionals. In the case of a nationwide shut down like we saw, if that happened again, I personally don't think we'd see a such a massive pent up demand from vacationers, and could see people operating as normal if any more mandates are imposed, but it's hard to say. There are places that are constantly popular with tourists. For example here in St Augustine, most of the year is steadily busy. I think you want to pick markets which have a strong following and year round tourism, that you know and have visited and that have clear demand. We have already seen a cull in STR as a lot of people pivoted in the last 18 months, so I think what you'll see in the market now are people that are serious about this business.

Quote from @Ivan Aldana:

Hey BP fam! I'm still doing market research and can't decide what would be a less riskier option for me, is it better to find a property in a vacation destination that's more rural and outdoors or a property in a more urban/metro area? I'm thinking that in more rural areas there's less exit strategies, like what happened when COVID hit, everybody stopped taking vacations. So since it's not really in a metro area you can't really convert it to an MTR or LTR if you had to. The only exit strategies I see is only STR, sell, or go through reserves until vacations would pick back up.While in a more metro area you can convert to MTR or LTR if need be. What do you guys think? Do you any of you guys have properties in both kind of markets? If so, which are performing better in your experience?

We have 18 ltrs in a metro area scattered throughout, have had since 2010. We have 2 str in ocean lakes resort and campground which is a Beachfront resort- because it's a campground it's str are pretty much invincible and protected against str rules.

did 140k last year out of those two houses.

my advice is metro for ltr, we have had almost 100% occupancy even through covid - we are not a slum lord. As far as str, get in an area like ours where you have sun, sand, no str restrictions and a water park doesnt hurt either( as we also have that) and you will be successful as long as you buy them right.

I want to point out something about what @Theresa Holl said.

All those things are very cool and would be nice to offer, but they would constitute significant services which will change your taxable status.

So you really have to balance those sorts of special experiences or offerings. Many things listed would be considered significant services and would have you losing much of your tax deductions.

I know of a couple of STR owners who had to eat a big tax bill due to this and they had to nix those sorts of offerings.

That doesn't mean you can't create the wellness space, golf simulator, upscale game room, etc to enhance the space. You just don't want to bring in people to train folks or do yoga or whatever.

That means even if you don't pay them but created a relationship. It isn't the same as us telling folks where to rent a boat.

@Ivan Aldana

I have LTRs in a metro area, an STR in rural hiking/rock climbing area and an STR in a beach area next to a large metro area.

I will say we have so many more hoops to jump through and regulations at the beach STR even though most of the area is STR's and welcomed. So many more eyes trying to hinder my operation.

The rural one has zero STR regulations or code enforcement but is a regional and attraction and driveable from several airports. Much easier to do business there in terms of regulation but harder to come by a reliable cleaning/handyman/PMteam and smaller pool of contractors.

You need to decide what is important to you.

Another thing to notice is who the experts say are making money in 2024, which are luxury and eco/experience type properties.  Don't be just another vanilla (forgettable) $190 ADR listing with cell phone pictures, no SEO and the same hot tub and fire pit as everyone else.  You can do something simple like transform a garage or unfinished basement into a "wellness center" for about $10K and then make business connections with local yogis, wellness practitioners, hold meditation retreats and specialized events. Upcharge for spa boxes, maybe a massage or concierge services, etc...Those marketing strategies will boost your bookings and top line revenue, plus make you more memorable.  Think a bit like a boutique hotel owner.  The stay is just the beginning of the revenue stream, like a base line. It gets a guest in the door and you build the experience from there. 

Be creative and see what's missing from the market you're interested in, fill the gap and think of it as a business, not just an Airbnb.  

Hi @Ivan Aldana, so you are a not really informed based on some of you statements.

First off, COVID drove people to vacation at STRs all over the place, but especially in more rural areas where they can get away from it all. Most of us saw record occupancy and nightly rates during the pandemic.

Urban STRs were hit harder due to the heavier restrictions in larger cities.

Regarding the rural vs urban, I believe in beaches, lakes and mountains for any STRs I look at. I almost never look at urban places.

In an urban/city you can expect STR restrictions, unreasonable regs (sometimes) and an overall dislike of STRs in general.

In a rural area, you can expect more acceptance due to the distances between homes, the taxes STRs bring in can make a real difference (plus the places people visit drive revenue) etc.

There are a ton of folks converting their STRs to LTRs due to outright bans in the bigger cities.

Buying your STR in the right area will be important. Plan ahead if you buy in a seasonal area. We are very seasonable and planned accordingly. No problems making a profit.

In Los Angeles, our 1 bedroom and 3 bedroom properties have the most demand. My theory is that 2 bedroom units are too much for an individual or a couple, while being too small for most families. 3 bedroom homes should perform well in most markets as they appeal to the typical American family size. 

There are many other factors to consider besides bedroom count and of course you need to research your specific market. There could be a market where 2 bedroom units do better than 3 bedroom, so take the general advice you get here and dig into the specifics for your situation =)

We have 2 arbitrage in the Bay Area. We decided to stop arbitrage and continue getting PM leads instead due to regulations and risk. Also, in the areas we like, rents went up too much compared to STR income.

I know one person doing arbitrage. He has 40 on the peninsula. 

Zeus living ceased operations last month so you can expect many of their units to become vacant as their guests leave.