Want to buy property either Beach or Mountain for STR. Is now the time?

Question

I would really like to get into short term rentals. I have two rentals that I have held since 2016 with same tenants in it and it has worked out pretty well. I would like to buy a beach or mountain house that I can also use for my family to vacation but everything just seems so overpriced. I have about $55,000 that I could access using HELOC and cash, but I am worried to try to buy anything with this market and in case short term rentals will take a hit in the next year or two because of the economy, then I would be stuck with a payment I cannot afford. I really want to continue to build my portfolio though...any suggestions? I am also open to alternative investments, not necessarily STR.

Leonard Rybak · Answer

@Lauren Huskey, something I would do in your situation would be to buy a STR close to a popular beach near you (where you have researched that STR are allowed by law) and buy there. I would save, and not spend, any of the incoming cash flow until you have a massed enough to cover your payments at least 36 months out. Meanwhile keeping a close eye on bills, and proposals made in the county, municipal, or city in which your STR is located showing any signs of laws being proposed to ban or heavily regulate STRs, then at least you have time to bail. Also, you should be ready to manage this property yourself, and not use a property manager, or else this will heavily eat into your profits.Just my opinion, but what do I know...

Cole Schlack · Answer

Hawaii is one of the best options right now, rate and occupancy is strong. Great weather year-round(same temps), no rainy season, no seaweed, low hurricane risk Outlook is good as people go back to more traveling. Can be a little hard in the $500k range.

Lauren Huskey · Answer

Thanks for all of the advice! I’m under contract for a beach property, inspection is today! I have ran some numbers and with a few repairs it should cash flow well and especially after a few years if I can refinance for a lower rate. Got 5.2% ARM which isn’t too bad.

David Ramirez · Answer

It's difficult to predict where the market will be in two years, but my advice to everyone is to adjust their numbers to a more conservative approach and continue buying. Don't take unnecessary risks.

Lewis Anderson · Answer

A thing that a lot of people forget is while yes, the interest rate is high, but interest rates will not stay that way so if you get a good price in and then when the interest rate goes than you can refinance. I would say that if you can secure a loan and get a beachfront property than you are in a good position to make a lot of money because people are still going to the beach and when the interest rates go down you can make even more money. Hope that helps.

Ricardo Hidalgo · Answer

There are options on the beachside of Panama City beach under 350k! Here is a short summary of the market overview: Location: Panama City Beach is located on the Gulf of Mexico, offering beautiful beaches and crystal clear water. 2 Investment potential: Property in Panama City Beach can be a good investment, as the area is popular for vacation rentals, commercial development, sports complex, new home developments with great cash flowing opportunities. 3 Amenities: Panama City Beach offers a variety of amenities, including shopping, dining, and entertainment options. 4 Entertainment: Panama City Beach is known for its nightlife, with a variety of bars, clubs, and live music venues. 5 Outdoor activities: Panama City Beach offers a variety of outdoor activities, including swimming, fishing, boating, waterfront restaraunts and water sports. 6 Family-friendly: Panama City Beach offers a variety of family-friendly activities and attractions, such as amusement parks, zoos, and aquariums. 8 Accessible: Panama City Beach is easily accessible by car or air travel, with the Northwest Florida Beaches International Airport located nearby. 9 Proximity to other Cities: Panama City Beach is close to other popular destinations such as Destin and 30A, making it easy to explore the surrounding areas. 10 Affordable: Panama City Beach offer a more affordable option compared to other coastal towns in Florida, making it accessible for first time buyers or retirees.

Ben Scarborough · Answer

Hey Lauren, I usually recommend that anyone just starting out in the STR space begins their journey in a mountain market! STRs are not passive income contrary to what some may say, and you are running a business start up. With starting up a business, you will run into speed bumps and slow downs as you learn how to best work your systems that fit your needs. That being said, the seasonality difference between a beach market and a mountain market can be significant depending on the markets you choose! Down here in Gulf Shores, you can count on March-October being pretty steady, but November and December can be very quiet outside of Christmas and Thanksgiving. However, in a mountain market like Gatlinburg, most homes that are operated well will stay relatively busy in November and December. Please feel free to connect or reach out if you have any questions. Happy to help!

Myrtle Mike Thompson · Answer

@Lauren Huskey I can definitely help if you decide to target the Myrtle Beach area. Bookings for the summer look great and my investor clients are still looking to purchase additional units.

Ed Dunbar · Answer

Caveat: I'm 100% rookie in real estate investing. New to the investing world but I have learned a lot about the OBX STR market in the last year. The cash flow might not be astronomical but there are deals to be had on both ends of the islands. I am hoping the "be greedy when others are fearful" will pay off as we recently went under contract on another home out here as a primary residence. As far as NC beach properties, what I am understanding (Correct me if I am wrong) is that you are pretty set no matter what happens in the economy to an extent. Tourism seems to increase consistently and if the economy tanks, regional tourism increases.

Jason Hamilton · Answer

Lauren,I would say it is all about buying right for what you want out of it. We have a place in Boone and in Sunset beach. I have been looking at buying another in Sunset beach, but prices are outrageous because the houses do rent well. Cover all your expenses and have for personal use is achievable in both the places I mentioned. Cash flow really well may be tougher with how prices are in the areas I have been looking (Atlantic Beach all the way to Sunset Beach). I believe you should be able to purchase as a second home with 10% down if you plan to use it for personal use as well, but do not quote me on that. That is more of a long term play, let the loan get paid down by the rentals and moderate appreciation. Enjoy it for years and eventually pull the equity out and buy more!