All Forum Posts by: Mindy Nicol

Since posting my STR for sale on a STR Facebook page, I have been bombarded with requests for financials.

The financials are not bad: Asking price is $485K. The property produced $48K gross over the past year. I include the operating costs and a month by month gross/net, NOI, cap rate etc.

I'm just wondering why all the financial requests. I send them, and then get crickets.  

Will these people work as hard as I did on the property to get bookings?  

Do they think this will just happen on auto pilot and they can attain the same as me?

They don't ask about context of the bookings and the types of bookings I took (including one mid term tenant).

They don't ask about the POTENTIAL and where I see the opportunities? Or questions about the market, visitor stats, comp set?

Nobody is asking for a showing either.  It's like the real estate (cute bungalow) and opportunity for growth doesn't matter.

Has anyone else experienced this?  Why is the decision based solely on what the past owner did or didn't do?   As a realtor, I review these financials all the time and I find them more misleading than helpful.  There is always CONTEXT.   Past financials is only one part of the picture.  Don't we want to seek growth and create further opportunities for revenue as investors?  Even if it was a low performer (which it isn't), isn't it part of the game to reimagine, see the potential and make it a success?  That surely would be the upside.  

I would love some perspective here.  Thank you!

Investment Info:

Small multi-family (2-4 units) buy & hold investment in St Augustine.

Purchase price: $230,000
Cash invested: $200,000

Two homes on half an acre. CURRENT FOR SALE.

Homes were in disrepair and needed immediate renovation.

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

Attracted to 2 homes on unique wooded property.

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

MLS. It was a cash purchase.

How did you finance this deal?

Cash

How did you add value to the deal?

Major rehab on the land and both homes over 1.5 years.

What was the outcome?

Stunning transformation

Lessons learned? Challenges?

Major lessons learned in all areas. See my video on this for more info.

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

I am a real estate agent.

Hi Andrew,

Great points and I'd suggest perhaps a good, better, best option. Offer them 3 tiers. Most people tend to go for mid or higher level service when given that choice. Groom them into full service clients. New entrants to the market don't know what they don't know until they get into this. Love that you're thinking of how to address the current STR owner challenge and ways to add value given financial constraints many are feeling.

I believe that the marketing and guest acquisition side is overlooked by PMs and people think STR property management is easy. It is an big responsibility being in charge of the profitability of the business and so many PMs (like real estate agents) have just ridden the wave for years. Not possible anymore in this market and I expect many will be forced to leave the business if they can't step up and evolve to the needs of the customer.

Mindy

Congrats Philip.  This listing looks great.  It will take time to get bookings and to get higher on the Airbnb algorithm. Sept is also low season in FL, and we are going through an over saturation of hosts in many areas.  I agree with everyone about pricing.  How saturated is your market and how closely are you following your comps?  I love Pricelabs and work on it every day, tweaking with long and short term pricing strategies.  It has been the answer for me.  I also like to have my phone handy showing the final comp set pricing on the traveler view on Airbnb at the same time.

I think starting out slow is good. You can really focus on the feedback, tweak your product and I would definitely set up a system that can allow you to automate guest messaging.   I use Lodgify but there are many others.  Agree with the others, Airbnb is one platform amongst many.  For the family market, you might want to do VRBO, Booking.com and you could also look at Furnished Finder to at least learn about the mid term market.  Facebook groups are great for people asking about furnished homes to rent due to relocations etc.

I would say getting reviews is your main priority right now so if you can price slightly under your nearest comps to build these up it will help you in the long run.  However, when it comes to peak season and holiday weekends keep a close eye on your comp set and go for premium pricing for far out dates.  Good luck!

Some of my larger homes are experiencing more guests than we can sleep.  I know this is an ongoing issue. I have tried asking guests to invite every adult staying into the Airbnb booking.  We send a message prior to check in about no parties and how we need to have everyone's names in the group.  My client has video cameras around the property so we are aware when there are many more cars or guests than expected.  Does anyone have a good way of addressing this?  Do we charge extra, tell them to leave?  Watch the cameras on check in day and count people coming in?  He is ready to call the sheriff but I honestly don't know if they can do much if there is no disturbance.  Thanks!

I’m getting this question a lot from prospective guests. I have updated my cancellation policy to make it clearer to people. I recently had a guest cancel on the day of arrival due to heavy rain in their area (not mine)!!! I declined to refund even though she tried to get me to do it several times! 

I make it clear that my policy is moderate (full refund prior to 5 days of arrival date), also that Airbnb has a no refund price, so that would mean no refunds under any circumstance if they book that. I encourage them to purchase travel insurance if concerned. For named hurricanes, cyclones and tropical storms and National states of emergency due to weather, and directed at NE Florida, we will consider on a case by case basis for cancellations within the 5 day window. if anyone has suggestions on a better way to handle I am all ears. 

I’m running a business but want to be reasonable should it actually be a legitimate major storm that closes roads and businesses. St Augustine is still standing after 500 years though! 

Hi James, I am super happy with the Lodgify platform and am using it for co-hosting clients as well. I have built a lot of websites in prior careers but what you will need is a way to show the availability calendar to sync with all your other platforms and the ability to take direct transactions through Stripe or Square.  To get a regular wordpress site to do this would be very expensive but the cheapest solution which still looks great is through a booking platform like Lodgify or similar.

Mindy

Hi Yiwei- yes, there are definitely cash flowing STRs if you are willing to put the time into revenue management and have a solid product, in a great location. It is not a cookie cutter answer, and really depends on the property, location and if you have consistent guest demand based on that. In most cases STR is the only thing that is cash flowing right now as it is hard for most LTR investors to get in at these rates. Let me know if you want to look at opportunities in NE Florida.

Mindy  

It might depend on where you are, and this year things seem to have changed.  I used to get far more bookings from them.  I'm in St Augustine, Florida. As of this year my rentals are getting 90% Airbnb and very small number from VRBO, hardly anything from Booking.com.  

I have Moderate set up which is a full refund if they cancel 5 days or more before arrival.  However, guests still ask for a full refund despite the type of cancellation policy you have.