All Forum Posts by: Levi Bennett

To be honest Kaitlin, I would use their rental history as justification for your price. If it were me, negotiating on your behalf, I would use a cap rate system.. estimate a net revenue with the real gross revenue they provided, and then get a cap rate. I would shoot for a double digit cap rate to start. Also, airdna doesn't work as well when there are few comps. However, it's also very possibly (yay, likely) that they owners are underperforming. Most operators do. Find reasonable ways to improve the property (hot tub, mattresses, strung lights, professional photography, etc..). So much of rental return in the STR space is UP TO THE OWNER, and NOT the market. It's not like long term rentals in that way. You have more control, but with more control comes more mistakes by most people. However, if you grab it by the horns and maximize it's potential, you should do way better.

I've made my entire career analyzing/consulting/underwriting/brokering STRs in NC. I think what people need to realize is that Charlotte and Raleigh are both top 10 cities in growth in the whole country. That's a pretty amazing stat. Additionally, the UHAUL report just released for 2022 showed SC and NC as the #3 and #4 most moved to state respectively. 

There are two points I try to get my clients to consider when thinking about investing in their booming cities/state.. 

1) Obviously, with more people are more weddings, graduations, visiting family/friends that will want to stay somewhere fun and unique to the location (For NC.. think loft condos, woodsy cabins, etc..) I cannot stress the "uniqueness" factor enough when investing in an urban area. If you get a good opportunity on a property that is bland, or blends in with everything else and is low on the "unique" scale, consider making it a fully-furnished medium term rental. Most of my clients in Charlotte have switched over to all medium term rentals and are almost always rented with a way above market rate compared to LTR rates (and they're way easier). There is more to unpack there, but I'm actually not the biggest fan of investing in urban areas since it's considerably more competitive unless you're getting something very unique, or looking to capitalize on the high-demand space of medium term rentals.. which leads me to my next point..

2) Understanding the TYPE of people moving to your city, and what they like to do.. and then taking that information and finding where they will go on quick vacations.. For instance, in Charlotte, there are so many people who have moved here from up North and they brought their skis. The only respectable ski resorts anywhere near Charlotte? Banner Elk (Beech and Sugar). There's a reason prices spiked 50% there in 2022. It's because rentals have gone through the roof up there. Beach properties too have seen a huge surge in rentals and appreciation. There's a lot of new people moving to SC/NC and they want to see the whole state. Looking at the vacation areas that NC offers has been a very reliable investment strategy. There is a boom happening in NC tourism, and there are more opportunities than people realize. 

I'd be curious if you have updated your listings since the big algorithm change with Airbnb. MANY people have noticed a change, and most people on the short end of the stick didn't update their listings to reflect the new way that Airbnb was serving options to tenants on the app/website. This has created chaos with the algorithm management in all the 3rd party management because a big percentage of hosts never did anything but noticed a huge drop in bookings, but didn't change the prices. Obviously this affects Airbnb hosts more than any other platform, but if that is the primary platform, then I would guess this has something to do with some of the unpredictability. 

 My point here is that many drops in occupancy/revenue were related to the actual listing and the new algorithm that airbnb is using instead of price. People dipping lower to get bookings are often still frustrated. Meanwhile, people maximizing the algorithm change have RAISED prices and are still seeing more occupancy. So, it's not always about price in this case is my point, and there could be more going on here than just the 3rd party dynamic pricing software.

I've always loved Daufuskie but admitedly, I don't have experience there yet. I had some clients that were interested in going in on a property there, but they didn't get organized. Are you using a paid or free version of AirDna? The paid version will show you the actual comps they're using, as well as performance on each of those so you can see if the algorithm is skewed with some ridiculous performing one that isn't comparable to the one you're considering purchasing. 

My instinct tells me that you would want either a very small cabin, or a very large house to perform well. 2-3 bedrooms will likely underperform there from my experience, although I could be wrong. Since it's ferry-only, you want it to be self-sufficient and may want to offer more amenities than a regular bnb (like stocked pantry, etc..) and you may crush there. I typically warn people about beach properties being a first investment, but if you do it right, you can certainly do well. There are other markets that are more consistent tho and more beginner-friendly. 

Sorry if this isn't super helpful, but I thought it was an interesting post and I hope you find someone (preferably an agent that KNOWS STR and knows how to research and get real performance) to help you out!

I cut my teeth in real estate back in 2014 selling STRs around Disney. This area has a lot to choose from as it's the largest and oldest STR market in the world. I would strongly suggest working with an agent that knows it inside and out. I moved back to my hometown in Charlotte, NC, and broker STRs in NC now.. but I still have a lot of connections to the STR brokerage world down there, and I'm happy to have a conversation with you about it and set you up with someone that's been doing it for 10 years and knows that market better than anyone.

1st of all, every HOA is different, usually the higher HOAs have more amenities to offer your guests. Second, proximity to Disney is a HUGE part of performance. Windsor Hills is one of the oldest communities, and closest to Disney, but has some of the more dated amenities. Location in this case would probably trump amenities. It's very common to sell fully-furnished turn-key properties down there, but you need an agent that can hound-dog actual rental records and use it as a negotiating tool. This separates a regular agent from a great agent. You can also find many STRs that are underperforming and get a good price, and put in some work getting it into shape to be a "first-click" property and outpace your neighbors.

The name of the game at Disney is interior design. You do NOT want to skimp on this, because there are plenty of investors who have figured out that "high design" generates significantly more revenue, and you will be competing with these. So looking at the market overall, be sure you are looking at specific examples of the type of property you are wanting and comparing it to the top producing properties that are comparable to yours in size and location, and try to emulate what they're doing (in your own, better way) and you should outperform every projection. 

PM is another huge part of it. Whether you self manage or hire someone, it makes a big difference. When I was down there I spent a great deal of time building relationships with PMs and learning what they all did well, and what their strengths and weaknesses were.. you need an agent that has done that and can recommend a PM that will be best for the type of property you have. Not every PM is strong in every part of the market. So again, it depends.. Anyway.. lots to unpack there, it's a great market because it's consistent, but it differs a lot from almost anywhere else in the world, so be sure you're working with someone who knows their stuff. 

Sweet, are you a licensed broker in NC?

 I would bet that most people have no idea how incredibly valuable this information is! Amazing response, thank you!

I helped clients with 4 LTRs into STRs with 1031 in 2022. Since STR's is all we do, let me know if we can help. We utilize a suite of paid software to qualify/disqualify properties and help with consulting, contractors, and underwriting.

My thoughts on this are a little contrarian, but basically I think the best time to buy is when everyone is saying to not buy. It obviously depends on where you're looking to invest, but there are tons of great tools out there to help you evaluate a market (AirDNA, Rabbu, etc..). Personally, my experience is in North Carolina and Florida and despite numerous claims of "over-saturation" my clients have performed very well. It's not a matter of getting in at the right time as much as it is positioning your asset in a way that will not go out of style, and will always be the first click for a booking in a given market. 

Regarding the recession, and everything else we're hearing.. interest rates have stabilized somewhat, and they're not expected to keep going for more than 2 years either way. I think around the time of the next presidential election cycle, you will see a steep decline in interest rates to get back to the Fed's goal of 2% per year. Again, that's my opinion, but then layer in the fact that builders are building at a pace that is far less than necessary to keep up with new families and homes. For instance, most Millennials buy their first home at age 31, and for the next 5 years, 5 million Millennials will be turning 31. Add to this migration trends to the South from the North, and you have an interesting brew that seems pretty recession resistant. There is a lot of pent-up demand in the market right now for people who need a home. There are simply not enough homes. The problem is affordability, and that will eventually correct itself once lending becomes less stifling. I'm expecting a surge in appreciation once interest rates ease. 

Regarding travel during a recession, this comment about less travel is a common misnomer in the investment community. As an example, Walt Disney World park reached record attendance and profit from 2008-2011, at the bottom of the recession. The more miserable and unemployed people are, for some reason, the more they travel to distract themselves from the economy. Add to this, despite the horrible "recession" everyone has mentioned, airbnb and VRBO continue to set monthly and quarterly records in overall growth and market cap. More people are booking STRs than ever before, and that trend doesn't seem to be slowing. Again, depends on the market, and many other factors, but it's a market large enough that, if you make the right moves and work with the right consultant, you can easily win at as long as we don't have an entire market collapse. 

Great post! I've worked quite a bit around the Asheville market for STR investors and I can say that, from an investor perspective, the entire area is full of opportunity across a wide array of investment strategies. To add a little color to the STR strategy.. I'm glad Jarad mentioned the STR restrictions (I wrote a blog around this shortly after the STR laws were clarified by the North Carolina Superior Court in the Wilmington case earlier this year) as they are changing quite quickly in certain mountain towns. 

To be clear, if you're in Asheville city limits, most likely you cannot STR a house unless you're in a hotel-friendly zone, and then you need to meet hotel code requirements (open space, common areas, etc..), but the Asheville city limits are not massive, and even some Asheville addresses are not in Asheville city jurisdiction. Here is a very useful link if you're unsure if it's in Asheville city limits or not. 

Many of the surrounding towns have benefited greatly from this restriction and have totally revitalized their downtown areas due to the influx of tourism over the last 10 years. A few towns that have been historically very friendly to STRs: Black Mountain, Fletcher, Fairview, Mills River, Hendersonville*, Swannanoa, Clyde, Waynesville, Candler, Canton**, Mars Hill, Weaverville, Maggie Valley, Brevard, to name a few. 

*Hendersonville did try to pass an STR restriction but failed. There is interest in the community to limit or ban, so proceed with caution. However, due to the proximity to the Blue Ridge Parkway, I-26, the Biltmore and the Breweries, many have found success and pushed back on this. So far, they've remained friendly and seem to be leaving it alone, but proceed with caution here.

**Canton has a notorious paper mill downtown that produces an odor almost 24-7 that usually travels north-east across town unless a weather pattern turns it to the south, but in general, people vacationing here for the lower prices are displeased. In general, I advise people to be cautious with investing here because this is the #1 negative comment from people visiting here. 

Towns around Asheville that I'm aware have new STR restrictions in city limits are: Sylva, Webster, Highlands, and Woodfin. This list is growing as this has become a very popular topic among town hall meetings. There are attorneys state-wide that are pushing back on this, but in general, make sure you work with a realtor/consultant familiar with regulations on STR and know how to qualify at the county, municipal, HOA, and deed restriction level.