All Forum Posts by: Julie McCoy

NLV is not a good part of town anyway.

If this is your first venture into STRs, don't start in Vegas.  While it's possible to execute them, there's a lot of things to navigate and a high level of risk (which, being Vegas, seems appropriate!).  

Start in a friendlier part of the country to learn the ropes, then if you're still interested in Vegas, you can try it with your more advanced knowledge.

Oooh they are tricksy, they prompted me to sign up for a monthly plan when I completed the test of my bot, and the page they showed me looked like this: 

But now I see if you click the little arrow on the left it will reveal the free plan!

Thanks for clarifying!

Well @Jon Crosby this is excellent stuff, just spent some time setting it all up... and ran into a snag: Automate.iO is no longer free!  :(  The most basic plan is $7/mo, which isn't bad, but means I'm going to look for something with additional features besides email automation.  (though, I may come back to this anyway, since I may have difficulty finding a service that will automate for both VRBO and AirBNB)

Both @John Underwood and @Jon Crosby have given you A+ advice.  The finishings don't have to be top-notch if the location and building quality don't demand it, but some western character will probably be helpful.  Based on it being in a nice part of town, I'd suggest making attractive but inexpensive choices.  (as a friend of mine puts it, "be Target, not Walmart and not Nordstrom")

List on AirBNB!!!  It's free to list (unlike VRBO), they charge 3% of each booking you make, that's it.  You can sync your calendars up so that they "talk" to each other and prevent double-booking (unless, like just happened to me, you get one guest on each platform requesting the same dates within 15 minutes of each other before the calendars synced!  Fortunately one was nice enough to cancel his request when I asked).  

Good luck!  I'm starting to see an upswing in my bookings for the spring/summer now that the holidays are over, hopefully the same will be true for you. :) 

@Luke Carl Don't lie, you wouldn't know what to do with yourself if you didn't have guests to complain about.  LOL  

@Paul Sandhu has a great business model but, if you don't already know, his clientele are traveling blue-collar workers for the local factories who would otherwise stay in motels - so if you're targeting vacationers or white-collar businesspeople, you'll want to outfit your properties quite nicely.  (that said, I've spent more than a little time imagining how to replicate what Paul has done.  It's not my wheelhouse, even if I lived in the right kind of area, but he's found an awesome niche)

Listen to what @Rick Pozos and @Michael Bowie are saying about regulations and staying ahead of them - 18% hotel tax is no joke (how is that going to impact your profits?) and if they're taxing you like a hotel, what other hotel regulations might be imposed on you in the future?  Urban areas are more prone to imposing restrictive legislation on STRs than tourism-driven areas (where both my VRs are).

Finally, when considering what size of house to get, if you move forward - the numbers usually look pretty on the bigger houses, but consider the additional costs involved too: you have to furnish all those bedrooms, pay utilities on the larger house, incur more damages from larger groups, have a higher risk of unauthorized parties, etc.  And think about what your target audience is: families?  Groups traveling together?  How likely is it that such a demographic will provide year-round demand?  I avoid bigger properties for these reasons.

Solid advice in this thread.  And @Sara Peak for someone just starting out, it sounds like you're off to a great start!  

Re: cash flow, the reality comes down to many factors, but it's certainly possible to cash flow on Vacation Rentals as much or more than LTRs - IMO, if a VR is bought as an investment and it doesn't cash flow significantly better than a LTR, it's a poor investment.  

The main difference is with a VR, beyond the fact that you have to set it up fully furnished/equipped, is that it requires more ongoing attention - that is, you're making yourself responsible for guest communication, cleaning arrangements, possible maintenance calls from a distant location, etc.  Like @Robert A Garcia said, the internet makes all of these things pretty pain-free (as long as you have a great housekeeper!  Essential!!) but it WILL be something that requires your ongoing attention.  Or you can hire a property manager, of course, but that will cut into your profits (I've seen VR PMs charge anywhere from 20-40%).  

As for personal use, even when I intend to go to one of my VRs to just relax, I always find myself working on the property anyway (I'm not very good at being idle, and I enjoy tinkering with the house).  I'll have no trouble truthfully saying I spent no personal time at my VRs!

But the thing that struck me most about this thread... there's a Homeaway show on A&E now @John Underwood??  LOL I'll have to watch today... 

@Matt B. I provide the down payments myself and finance the rest. Personally, I wouldn't want to also finance the down payment. I don't currently have them in an LLC, but that is definitely on the agenda to discuss with my CPA to see if the new tax law incentivizes that structure (seems like it does to my layperson's eyes).

In reference to what @Tyler Work said about Clearbanc - I've discussed financing a VR purchase with them and found their methods and costs prohibitively expensive.  Of course, feel free to do your own analysis, but their fee structure is crazy IMO.  

@Michael Bowie Ah, if your properties are commercial then that makes sense.  (are these STRs that have to be zoned commercial?  If so, do you mind if I ask where they're located?)

@Michael Bowie That's very fascinating about your community bank - just to make sure I understand correctly: as long your overall debt-service coverage ratio (same as debt-to-income ratio, yes?) is at least 1.25, taking into account STR income, they'll continue to offer you loans? I love that! The issue I ran into on my last purchase was they wouldn't consider the income of my already-operating STR when figuring my DTI, and if I'm already running into that, I'm worried about how I'll expand with any speed.

@Luke Carl I *believe* that banks won't consider Schedule C income but will consider Schedule E - however, I am perfectly willing to be wrong on that!  Can a lender or someone with direct experience comment?

Banks are not going to consider short-term income when they evaluate whether or not to give you a loan, unless you have it established on two years of tax returns on Schedule E.  So, make sure your debt-to-income ratio is going to support the mortgage, regardless of what you use as a down payment.

As for using a HELOC or LOC as the down payment, consider the risks just as you would if you were using them for any other kind of property purchase. Personally, I wouldn't; too much expense/risk for my blood.

As for which bank, in my experience it doesn't matter where they're located - my first VR was financed through an online lender who I had a great experience with (piles of paperwork, though).  My second VR was financed through a small local bank - which was located in a totally different part of the country from the house!  But, if you're looking for flexibility in terms, you probably want a bank local to the property you're buying (RI, in this case).  Shop around, don't rule anything out just because they're not in the area.

Good luck!

Hey Stephen!

I love the idea, but I do want to caution you: unless you use a local property manager (who will take a big chunk of your profits), managing a VR from abroad will be a daunting task.  Once you've navigated the local rules and regs (which you'll want to consult a local attorney about once you've decided on a location), how are you going to arrange housekeeping?  Repairs?  Replacing consumables like toilet paper? (answer: you'll want your housekeeper to do this)  Do you speak the local language and have a reliable way to communicate with the locals you'll need to be your representatives there?

I think this is likely more trouble than you'll want to deal with for a personal-use vacation property.  My advice: just rent someone else's fabulous vacation home when you want to take that nice vacation.  Then you don't have the hassle, and you have the freedom to travel wherever you want without feeling obligated to return to the same spot over and over. :)