All Forum Posts by: Kayla Prange

@Kayla Prange

I have a couple of STRs for a few years and more experience with my LTRs.

My short term rentals are much more unpredictable compared to my long-term rentals. Also I have to get things fixed in a hurry on a short term rental where my long-term rentals I can wait a day or two. Understandably, if people are only on vacation for three days to five days, they don’t want to wait a day or two so you end up spending more money for rush jobs. (water heater, HVAC, appliances, insects/pest, hot tub/pool repair), etc.

Other expenses are replacing the linens, replacing furniture if you can’t get a stain out, pillows,

appliances etc

Does it make money now with you not doing anything to it and just using the current revenue?

Would it make money as a long-term rental or what are your other exit strategies should life get in the way?

Can you do your upgrades as you go or do you have to bring it off-line and could you do that during the slow season with less impact to revenue?

Post and let us know if you go for it!

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@Kayla Prange I do LTRs. But I pour out my heart and soul into them and get them renovated to the very best of my ability and THEN worry about the cash flow and profits. I view the costs to get them to that point as the initial expense that I will hopefully get out at a later date and move forward from that point.

Maybe I’m just not like other investors but the plan seems to be working well for me. I don’t have many calls for repairs once I get done with units or buildings and my cash flows are solid.

If I was to put my buildings on the market today I could get out my original purchase price plus everything I have put into them. The cash flow would be gravy on the cake.

I think if you want to pursue this deal because you feel good about it then you should. Following my heart has gotten me several solid deals since I started and only you truly know what your best interest are.

I've been bold and aggressive several times and it's worked out well. If this is a good market for STR then I say go for it and make your upgrades. It may take a little time to recoup your investment but you will get there. Trust your instincts.

we had 11 rate hikes fed will cut rates when they do the sector should kick ***...

Everything in there looks way too low to me. I bought an STR fully stocked and furnished and I've spent well over $5k replacing things that were simply junk, and not even creating this dreamland destination you allude to in your original post. Capex & repairs $11.25 per month? Just as an example, my house is in Four Corners, Florida. Last year I spent over $1,000 on pool screens alone. Granted, there was a hurricane, but even without that I've had several busted screens this year from guests pushing a chair through it or some rugrat running up against it, where you didn't have any way of proving anyone specifically damaged it so the cost is on you. Forget about anything else I needed to repair, such as the irrigation system a couple of times, a clogged drain on the HVAC, a toilet that needed replaced. $100 utilities is dreamland unless it's a condo with everything included, in which case you're missing HOA fees.

And when you're setting up for the first time, even on a place that's supposedly turn key, you will be shocked at how much the nickel and dime stuff adds up. $30 for a cheap blender. $50 for extra pillowcases. $19 for a can opener. $12 for dish towels. ETC. We spent almost $4k in the first month largely just replacing soft consumables - missing or worn out mattress covers, mismatched bedspreads, etc. Just imagine buying all the things you need to run your own house, and then imagine buying enough of them to handle however many guests you expect your property to serve. 

As for your revenue, I'd be curious to know what market you're buying a $300k house in that's going to average $225/night over 60% of the year. There are a lot of market experts here, so I'd just reveal that if I were you because you can get some real data on what to expect. 

Overall I think you're way off the mark, but it's impossible to say without more information. 

1. What do the comps say? Are they valuing it based on revenue (STR value), or recently sold comps?

2. What are the new STR restrictions? Are you sure the license will transfer?

3. Reno costs seem low at $10k. What all are you planning to do? 

4. $5k for furniture seems low.

5. $22.50/mo. repairs and capex budget ain't gonna cut it. Bump that up to $250-500/mo. IMO, if everything is in great condition as is. 

Good Luck! 

A few things that come to mind for me:

-I wouldn't put the cleaning fee as a monthly line item at $400. That should be a pass through cost where the guest pays roughly what the cleaner asks. That said you should account $100/month for random fixes, plus another $100-200 for CAPEX.

-I'd expect utilities to be more unless it's somewhere with perfect weather year round and cheap rates. Sounds cheap for power/gas, water and trash 

-Agreed that your insurance will be much more than what you are accustomed to. Also not clear if property tax is included in your mortgage?

-Depending on the property you might need lawn care, exterminator and other misc stuff that is easy to forget about 

-Consumables: TP, PT, bar soap, shampoo/conditioner, laundry pods, garbage bags, coffee, coffee mixers etc add up. I estimate $80/month for a 2/1 with Costco grade stuff. I keep the bulk of it locked up but leave a bit extra that is accessible so that guests don't run out. I could be a bit scroogier without pissing guests off, but don't be that host that only leaves 1 roll of TP and 1 spare garbage bag. 

-$10K renovation still seems light even if it's DIY, at least to the extent where it will make a significant difference in the appeal of your listing photos and command a higher ADR. IMO, although I could be wrong depending on the property and market 

Overall I think the numbers look decent-to-good, especially at that entry price. If the location is good and you feel good about the property and market then  it sounds like a good entry level property. If it's doing well in a saturated market then it could probably do better with a facelift and good management, all of which are under your control. 

The bottom line is the bottom line: can you make any money with this property? As someone who has both long and short term rentals STRs are a ton of work comparatively speaking, and you can drop a ton of money on a STR. You really need to explore your expected return on the property before you do anything else.

Pretty much here to echo them. You gave us the rundown of how much you love it and what you want to do with it, but never told us how you think it could perform and how to manage risk in the event you need multiple strategies with it.