All Forum Posts by: Neil Henderson

@Mike Lambert It's absolutely my own personal preference, and I acknowledge that many people may feel differently.

I am answering his question with zero skin in the game. 

If he, and others, are comfortable investing internationally, more power to them. 

It is my opinion people often have a romantic view of what it is to own a vacation rental property in a destination that they like to vacation and there are plenty of people in the world willing to sell them on the positives, without completely helping them understand the risks.

@Dan Mumm Where is it? If it’s in North Las Vegas or Unincorporated Clark County it’s not allowed at all. If it’s in the City of Las Vegas, it might be legal. If it’s in Henderson, bonus!

To me, they are two very different types of investments.

Turn key. 

Pros: Can be passive(ish). You have more control over the asset. Open to non-accredited investors. 

Cons: Often not as passive as the provider would have you believe. Your credit is on the line for the loan. You are often buying at retail prices or better so there is very little forced appreciation. Not all Turn Key operators are created equal, vetting them can be tough.

Syndications. 

Pros: Completely passive. Your credit is not on the line for the loan. If you've bought the right investment, with the right sponsor, there can be a lot of forced appreciation, depending on the sponsor's strategy. The returns can be better than turn key. Allows for diversification across asset class, operator and geography.

Cons: No control, you're along for the ride. Typically only open to accredited investors. Not all sponsors or deals are created equal, it can be a challenge to vet sponsors and deals. 

25% in the stock market, 25% in a self storage syndication, 25% in an apartment syndication, 25% in a short term rental.

Congratulations! For the next one, hire someone to do the furniture build! ;o)

Looking forward to following your success.

Same thing I always do:

Buy an asset that cash flows

Buy with long term (7 year term plus, 25-30 amortization) and low leverage (75% loan to value or less) debt.

Have sufficient cash reserves to handle at least 6 months of PITI per property

First thing I would do is find out whether or not short term rentals are allowed in your area or whether there has been any discussion at the city, county, state level about implementing any new laws. If it's a high cost of living area that has not had a history of short term rentals, I would be hesitant. If you buy a property and your only viable business model is a short-term rental, you could be in a world of hurt if the local government bans short-term rentals. 

Have you considered a house hack of a duplex, triplex or fourplex? That is typically the strategy I recommend for new investors looking to break in. If short term rentals are legal, it can be doubly profitable.

As far as running a short-term rental while holding down a full-time job, it's not a problem, you just need to develop systems for dealing with guest communication, TURNOVER and any unexpected emergencies.

So, two things come to mind:

1. All proforma's are B.S. until proven otherwise. If you're going to buy this place, ask to see her financials from whatever hosting platform she is using. AirBnB, VRBO, etc all have reports she can download.

2. Double and triple check that the area is not talking about passing laws to ban short term rentals. Call the city. Call the county. 

Dealing with AirBnB is mostly a dream. Low fees for the host (for now). They do tend to take the guests side on most disputes, but just go in expect that and you'll avoid a lot of disappointment. 

There are a lot of vacation rental owners who are pushing direct booking. Great idea and I encourage any professional owner to do that, but don't expect a lot of your bookings to come from there. Marriott spends millions on advertising and I.T., and they still only get 5% of their bookings directly.

Running a short term rental is about systems, systems and more systems. It's much more like running a business than a real estate investment, though it can very much be both. 

We operate a short term rental out of a guest house on the property of our primary residence. It pays for our mortgage plus a little extra, and it's a 350 square foot room with no kitchen and no laundry facilities. We have interviewed several people who have used this strategy to great success. @Clint Harris Avery Carl, @J. Martin Zeona McIntyre, Mike Sjogren, and Michael Hamilton. 

It is an increasingly competitive space, but we have loved it. You just need to be prepared to compete on something other than price and be prepared to provide excellent customer service.

Whatever market you look to invest in, I would start with checking the laws around short term rentals in the area. Search Google for "short term rental ordinance" + "city name". See if there is any chatter about laws on the books or talk of laws.

Next, buy a report on the market from AirDna.co. 

Welcome @Matthew Consolo and fellow vacation rental owner.