All Forum Posts by: Rod Witmond

Key to vacation rentals is year-round usage if you really want it as an investment property. This is tough and Orlando is one of the few places that truly drives considerable year-round demand. I've heard many people say that they don't consider it an 'investment' as much as a 'family vacation home' upon which they try to break even. So, if Orlando isn't an option because you want the beach (and I'm in that bracket), next best is a mix of 'fairly strong year-round demand' combined with best possible purchase price. Regions where I've seen pretty good mix of price and demand (and beauty is in the eye of the beholder) include: PCB, St Augustine, Galveston, Gatlinburg, Palm Springs ...

@Samson Kay

Interesting post and pretty aligned with some of the activity I've seen in some markets (some are a lot better than others). I've talked to a number of homeowners who have entered into an agreement with a PM that allows the PM to rent the home out on a ST basis while guaranteeing a certain amount per month to the homeowner. For the homeowner that isn't a professional in this space (doesn't sound like you @Samson Kay), it allows them to get monthly fixed revenue. They are then able to use that fixed revenue as part of the value to help drive up price when it comes to selling the property. Similar to your concept - albeit not quite the same. Personally, I think it's very smart. As you have the time to take on self-management, I think your approach has even more upside. 

Risks I've come across include:

maintaining occupancy rates (seasonal risks and ST needs risks); paying occupancy taxes (or failing to do so)

@Mindy Jensen

I've seen all sorts of property manager/owner relationships, I think the thing that is consistent in the ones that are most successful is an arrangement where each has something to lose if they are not living up to expectations. In the case of a PM, that may mean, losing reputation in a local market or losing on a guaranteed income relationship. 

Basic things like a PM having their own crew, handling the relationship and having experience are hugely beneficial but having real skin in the game helps a ton.

@Lance Friedman Welcome to Bigger Pockets. Lots of good information here. There are several ways to get into the property management space without risking a large outlay of capital, makes sense to keep your options open as to the approach you choose. West Palm Beach is a pretty strong area and good place to start.

@Alex Guerra

Definitely work the local angles. I had a few friends with properties in Minneapolis and Wisconsin who were having similar difficulties until they found a  local provider. The one they found had a specific program and could handle 3-season VHs as well as cabins - among other things.

I agree with @Russell Brazil regards Property Management being a volume business. I think it's a space where there is going to be consolidation over the next few years as the bigger and stronger PMs (with economies of scale and ability to conduct dynamic pricing) will win out. The homeowners I work with have typically ended up working with PMs that are bigger and able to handle more risk - thereby getting more reward. The 'Sharing Economy' - inspired by Uber, Airbnb, VRBO - is underway. Professionalizing the sharing economy will come shortly afterwards.

HI @Maged Bishara,

My company works with homeowners and property managers across the US. Essentially, we align homeowners with property managers who are willing to enter into long-term guaranteed income deals - so turning the vacation rental into more of a long-term investment property for the homeowner. Working across the US, we have some insight into most markets. As usual, it all depends on purchase price and the markets are continually changing, but Kissimmee is consistently solid (no surprise), Gatlinberg and Palm Springs also seem to be pretty strong markets. PCB is very active - but lots of volume there so purchase price is really important. Happy to talk in more detail. 

@Nadav Givoni

Welcome. Great buy in Austin early stage. BP is a really informative forum - one of the best I've seen. Lots of really insightful experts very willing to offer help. 

Rod

@Tom MacDonald

Agree with the comment regarding the use of VA loan. I'm not familiar with the max of 180 days re Airbnb. One other thing you do need to be aware of is the regulation side. The good thing with Austin is at least the regulation is determined and there is a public information about it and the processes to pursue.

https://www.austintexas.gov/str

Like the regulation or hate it, at least there is clarity here and this isn't the case in many, many locations. 

The other thing that may make sense - but may not, based on the short-term needs of potential users - is to use a PM that is willing to guarantee income for the long term duration of the contract. That way, you would mitigate the risk of occupancy fluctuations. 

@Michael LeClerc

Interesting idea. I've been hearing about a number of ways PMs are looking to expand. I like the ones that treat investments like a portfolio and mix the risk/reward profiles. So, some outright purchases, some commission deals and some deals that are not commission-based but allow a PM to fully participate in the upside without taking on the full risk of purchase. If you are happy taking on the full risk of the capital investment - or have an associate willing to do so - then your idea sounds interesting if you don't need the commission as part of your regular salary.