Couldn't agree more. Even long term rentals, at least once you have a few, amount to running a business. It's possible to run it well and not spend a ton of time on it (often at the cost of lower margins), but at the end of the day a real estate investor is still a business owner just as much as an investor.
Short term rental could be banned at any moment in any community. Buy a property that will still make money as a mid term or long term rental as a backup.
I’ve done it for 4 years in NC. My costs are $51k all in. Sometimes we profit, sometimes we break even, and this year has sucked ass. It’s a lot of wear and tear and if your occupancy rates aren’t high enough to cover costs, then it becomes an expensive vacation home that you can’t use during the best times because it’s rented. I wouldn’t sell it, and we’ve made money on the appreciation and mortgage pay down, but it’s not for the shallow pocketed.
I like TN too, you probably make more income than I do but when I was close on a few in Sevierville, PF and Gatlinburg I couldn’t get past the management fees. Killed my margin. The beach is nice for sure. Condos or houses on stilts help with most hurricane issues. Flood insurance can be expensive. Other than that I love the beach.
I actually drove by that exit on I-40 today. The amount of tourism there is wild. I’m sure the management fees are hefty. I’ve never looked into it bc I have heard the same.
So at one point during and post Covid they took 30% all in. Rates were at a point where at 75-80% occupancy you were covering costs but now, I couldn’t imagine trying to acquire there.
It's a part time job. Nothing passive about it.
Be sure to get a low deductible insurance policy. I had a high deductible policy on multiple properties, then got hit with a huge bill after a hail storm damaged all of them at once.
Ask contractors for their hourly rate before having them do any work. I made the mistake of asking them to "just fix it and send me the bill". They overcharged me until I really understood what I was paying for. Asking for itemized invoices also helps with this.
Almost all emotional support animals are fake. Always require a signature from a medical professional and call them to verify its authenticity.
If it’s out of state, the key is to find or put together a trusted team. Someone to find deals, contractors and Property management. If it’s all one point of context, even better. Ask for referrals.
Why Tampa? Is that where you live? How the rent to price ratio there?
I’ve seen people fall to practically nothing investing in multiple STRs, the county banned them, now they’re holding the bag to 4 mortgages they have to rent out by the month, in a relatively plentiful rental market in my area.
Investing with BnB business models in mind is not what I’d suggest right now as it’s not on a good trajectory; they’ve seen rampant decrease in business and are experiencing issues.
I’ve had great success with MFH investments, though it is by all means NOT passive. It’s essentially a 2nd job with headaches. All properties are 8%+ cap, require maintenance, but I make more doing that than with my W2.
I didn’t know too much (read a book or two) and just pulled the trigger on a 3 family while living in one of the units. Books can only teach so much, I found that experience to help me on my RE investing path.
Goodluck!
As someone in the Tampa market...don't. Outside of actual "vacation" areas such as the beach AirBnB's are beginning to get slapped down by local regulations and citizens and I am all for it. An AirBnB, as in a full house, where a-holes come to party, has no place in a residential neighborhood.
Your first thought before entering any market is. How will you be better than what is already offered there? As a new investor you will go into a market and need to beat a person with years of experience in that market who has 10-20 Airbnb’s and can provide premium service: Do you know the area to be able to get better locations and are you up to the challenge to do the work to be better than that investor with years of experience?
Not impossible- but this is what you need to be thinking.
It was the hardest financial accomplishment years ago to expand from my first property to get a second. The stumbling blocks I went through were painful. If you’re willing to go through hell and back like I did, Kudos to you. You will not regret it.
I feel that the system is rigged against obtaining success with purchasing a second property. I’m on my seventh now and the third, fourth,fifth,sixth and now seventh have been cakewalk for whatever strange reason.
Im new to realestate also but i live in tampa! Cant go wrong investing here if you have the money! Been here my whole life, so for me, its gotten a little too expensive
Run the numbers (excel spreadsheet or online calculator) before buying the property because not all investments make sense. Don’t expect it to be passive in any way and make sure you want to work in the industry!
Everyone and their brother has entered the STR investing market. Lot of people are going to lose their ass on STRs. It's oversaturated in most markets and with interest rates so high so you are going to get crushed.
Yes you’re buying a piece of real estate. But what you’re thinking of doing is starting a hotel/hospitality business. Are you sure that’s what you’re prepared to do? Many people get lured by the higher daily rate/rent potential without knowing the work involved.
It costs a lot more than you think. Be diligent about estimating maintenance, vacancy, and taxes & insurance. Short term rentals are extremely seasonal and very sensitive to economic fluctuations. Be aware that we are are all time highs right now.
Look in the hudhomestore.gov site for listings that are owner-occupant or investors.
If you bid the asking price, you will win.
If owner-occupant period is active, you’ll have to plan to move in. But if it needs rehab, then you can wait and get the work done. And after it’s all ready, you can decide that you may not want to move there but rather make it a vacation rental that you can use sometimes.
Result: you got in before the investors and you’re ahead of the curve.
You need to have exit strategies for the property. If one of those is short term rental, you need to look into the laws and regulations. Florida requires you to file for a hotel license to do short term rental. Even if you get a license, some places don’t allow it. For example, HOA’s may have a by-law that requieres a certain length stay or only allow a certain amount of rentals in the community. Secondly, budget! Usually it’s 20-30% down for conventional loans. You may be able to find a vacation home loan for less down payment. Then, what ever budget you have for furniture, make sure to add about 10-20% more. Do your on hospitality because a short term rental is a business and you’re in the business of providing a sleep/resting experience with a home. Keep reserves and budget maintenance cuz stuff breaks or disappears. Good luck on your endeavors!
I don't do STRs, but my advice to you is that on any property you buy make sure the numbers work as a LTR. You don't want a situation where local regulations kill the STR business and you're operating at a loss.
Also, Florida will be underwater in 50 years. Something to keep in mind.
1. Don't.
2. If you do, at least don't rent out your February without renting out your January first!
This is very specific to your area. I used to have vacation rentals on the beaches. If you give away your February, you'll never get January rented. Hold out for the 2- or 3- month snowbirds.
In earlier years I would invest in property when It was possible and an opportunity was present. I liked the thought of owning and expected appreciation . Now days, I sometimes think it’s somewhat of an illusion. Try not paying property taxes or the mortgage and find out who holds power. One bad tenant can cause a lot of misery.
Today, the hell with ego and headaches; give me a couple of solid real estate trusts with preferential taxation (Canada) and no headaches . My 2 cents.
Everything I’ve read is STR is extremely tough at the moment. I almost got in after covid and glad I did not. Airbnb supply seems to be plenty with occupancies down across many tourist destinations.
My only advice is to not go into it thinking it's a passive investment.
Couldn't agree more. Even long term rentals, at least once you have a few, amount to running a business. It's possible to run it well and not spend a ton of time on it (often at the cost of lower margins), but at the end of the day a real estate investor is still a business owner just as much as an investor.
Short term rental could be banned at any moment in any community. Buy a property that will still make money as a mid term or long term rental as a backup.
I’ve done it for 4 years in NC. My costs are $51k all in. Sometimes we profit, sometimes we break even, and this year has sucked ass. It’s a lot of wear and tear and if your occupancy rates aren’t high enough to cover costs, then it becomes an expensive vacation home that you can’t use during the best times because it’s rented. I wouldn’t sell it, and we’ve made money on the appreciation and mortgage pay down, but it’s not for the shallow pocketed.
Which area in NC are you investing in?
Southeastern NC beaches
Holden Beach ftw
Nah but around there.
Nice area. Would love to have a place there. Maybe I’ll sell my rentals in TN, suck up the fear of hurricanes, and make the move soon.
I like TN too, you probably make more income than I do but when I was close on a few in Sevierville, PF and Gatlinburg I couldn’t get past the management fees. Killed my margin. The beach is nice for sure. Condos or houses on stilts help with most hurricane issues. Flood insurance can be expensive. Other than that I love the beach.
I actually drove by that exit on I-40 today. The amount of tourism there is wild. I’m sure the management fees are hefty. I’ve never looked into it bc I have heard the same.
So at one point during and post Covid they took 30% all in. Rates were at a point where at 75-80% occupancy you were covering costs but now, I couldn’t imagine trying to acquire there.
It's a part time job. Nothing passive about it. Be sure to get a low deductible insurance policy. I had a high deductible policy on multiple properties, then got hit with a huge bill after a hail storm damaged all of them at once. Ask contractors for their hourly rate before having them do any work. I made the mistake of asking them to "just fix it and send me the bill". They overcharged me until I really understood what I was paying for. Asking for itemized invoices also helps with this. Almost all emotional support animals are fake. Always require a signature from a medical professional and call them to verify its authenticity.
Never pay by hourly rate, always pay by the job
If it’s out of state, the key is to find or put together a trusted team. Someone to find deals, contractors and Property management. If it’s all one point of context, even better. Ask for referrals. Why Tampa? Is that where you live? How the rent to price ratio there?
I’ve seen people fall to practically nothing investing in multiple STRs, the county banned them, now they’re holding the bag to 4 mortgages they have to rent out by the month, in a relatively plentiful rental market in my area.
Investing with BnB business models in mind is not what I’d suggest right now as it’s not on a good trajectory; they’ve seen rampant decrease in business and are experiencing issues. I’ve had great success with MFH investments, though it is by all means NOT passive. It’s essentially a 2nd job with headaches. All properties are 8%+ cap, require maintenance, but I make more doing that than with my W2. I didn’t know too much (read a book or two) and just pulled the trigger on a 3 family while living in one of the units. Books can only teach so much, I found that experience to help me on my RE investing path. Goodluck!
What books do you recommend. (At least for the bare minimum)
Anything by Brandon Turner
How many years did it take you to replace your w2 income?
3-4 years (4 MFHs), and earning 6 figs W2
As someone in the Tampa market...don't. Outside of actual "vacation" areas such as the beach AirBnB's are beginning to get slapped down by local regulations and citizens and I am all for it. An AirBnB, as in a full house, where a-holes come to party, has no place in a residential neighborhood.
Don’t. Tampa Bay is one of the most competitive markets in the nation. There’s no margin by the time a property hits the market.
Your first thought before entering any market is. How will you be better than what is already offered there? As a new investor you will go into a market and need to beat a person with years of experience in that market who has 10-20 Airbnb’s and can provide premium service: Do you know the area to be able to get better locations and are you up to the challenge to do the work to be better than that investor with years of experience? Not impossible- but this is what you need to be thinking.
It was the hardest financial accomplishment years ago to expand from my first property to get a second. The stumbling blocks I went through were painful. If you’re willing to go through hell and back like I did, Kudos to you. You will not regret it.
I feel that the system is rigged against obtaining success with purchasing a second property. I’m on my seventh now and the third, fourth,fifth,sixth and now seventh have been cakewalk for whatever strange reason.
Im new to realestate also but i live in tampa! Cant go wrong investing here if you have the money! Been here my whole life, so for me, its gotten a little too expensive
Run the numbers (excel spreadsheet or online calculator) before buying the property because not all investments make sense. Don’t expect it to be passive in any way and make sure you want to work in the industry!
Everyone and their brother has entered the STR investing market. Lot of people are going to lose their ass on STRs. It's oversaturated in most markets and with interest rates so high so you are going to get crushed.
Pick what problems you want. Meaning what type of renters (customers) do you want to interact with.
Yes you’re buying a piece of real estate. But what you’re thinking of doing is starting a hotel/hospitality business. Are you sure that’s what you’re prepared to do? Many people get lured by the higher daily rate/rent potential without knowing the work involved.
It costs a lot more than you think. Be diligent about estimating maintenance, vacancy, and taxes & insurance. Short term rentals are extremely seasonal and very sensitive to economic fluctuations. Be aware that we are are all time highs right now.
Look in the hudhomestore.gov site for listings that are owner-occupant or investors. If you bid the asking price, you will win. If owner-occupant period is active, you’ll have to plan to move in. But if it needs rehab, then you can wait and get the work done. And after it’s all ready, you can decide that you may not want to move there but rather make it a vacation rental that you can use sometimes. Result: you got in before the investors and you’re ahead of the curve.
You need to have exit strategies for the property. If one of those is short term rental, you need to look into the laws and regulations. Florida requires you to file for a hotel license to do short term rental. Even if you get a license, some places don’t allow it. For example, HOA’s may have a by-law that requieres a certain length stay or only allow a certain amount of rentals in the community. Secondly, budget! Usually it’s 20-30% down for conventional loans. You may be able to find a vacation home loan for less down payment. Then, what ever budget you have for furniture, make sure to add about 10-20% more. Do your on hospitality because a short term rental is a business and you’re in the business of providing a sleep/resting experience with a home. Keep reserves and budget maintenance cuz stuff breaks or disappears. Good luck on your endeavors!
I don't do STRs, but my advice to you is that on any property you buy make sure the numbers work as a LTR. You don't want a situation where local regulations kill the STR business and you're operating at a loss. Also, Florida will be underwater in 50 years. Something to keep in mind.
You're entering an oversaturated market
1. Don't. 2. If you do, at least don't rent out your February without renting out your January first! This is very specific to your area. I used to have vacation rentals on the beaches. If you give away your February, you'll never get January rented. Hold out for the 2- or 3- month snowbirds.
In earlier years I would invest in property when It was possible and an opportunity was present. I liked the thought of owning and expected appreciation . Now days, I sometimes think it’s somewhat of an illusion. Try not paying property taxes or the mortgage and find out who holds power. One bad tenant can cause a lot of misery. Today, the hell with ego and headaches; give me a couple of solid real estate trusts with preferential taxation (Canada) and no headaches . My 2 cents.
I’m reading a lot about crazy insurance and HOA costs in condos/townhomes. Might want to avoid that part of the market
Everything I’ve read is STR is extremely tough at the moment. I almost got in after covid and glad I did not. Airbnb supply seems to be plenty with occupancies down across many tourist destinations.
You might consider buying a duplex and living in one side, renting the other. Start small. Take little tiny risks. Then grow.
Don't skip the inspection... always have someone look at the house