New to Short Term Rentals - Need some help

[Brian Davis]

Hello,

I wanted to see if this was the best place to get assistance on how to start getting into short term rental property investments.

Basically, my family and I live in CT near New Haven, but every summer we go to Cape Cod as a family vacation for one week.  My in laws usually rent a house for the week and spend between 2-3k for the week.  Every time we go I look at the house online and see the amount we are spending basically can cover the property taxes alone for the year.  I then wonder how much these landlords actually make on a weekly basis through the summer and realize it can be relatively profitable!

This whole idea got me curious and excited about the opportunity to try to do something similar.  I realize I am pretty late to the “game” but knowing it is something we love doing every year (going to cape cod) it would be nice if I could be a landlord and have the ability to stay at my house for 1 or 2 weeks of the year and rent out the remainder of the summer and any other pockets of time that are valuable in the cape.


I know if I did this I would really only be able to get a place that is 300-400k and I really just want to break even at the very minimum to at least get some equity while having a “free” vacation spot.  However I am having trouble finding any decent place for that price and found myself exploring properties on the internet in Florida because we are going down to Jacksonville/st Augustine for the summer and realize I can get so much more bang for my buck down there.

I am wondering if I should give up on cape cod and do more of a long distance approach (as I can also turn Florida into an annual spring break location for the family) or if someone can help me feel comfortable in the cape cod approach in my price range.  Anything somewhat close to a beach and or nice area to walk around a neighborhood is just too pricey.  Are prices expected to stay and climb in cape cod or where does the market look to be going?  Any insight there is helpful!

Lastly, I opened up a small llc in hopes of buying a property under the llc but am realizing many lenders will not deal with lending to an llc w no equity or anything in it.  Can someone advise on this approach and how to get good financing to start knowing I would put around 20% down or less if possible?

sorry know its a lot but just really trying to learn right now.  Thank you in advance!

[Esta Ryder]

Hi! I can relate to so much of what you are saying here! So let's start with Florida. We were in a similar position- we felt like we were priced out of some markets that we liked so we chose a market that was in Florida, in our price range and near the beach. We fell in love with it and now are in a position to buy in a more expensive area of Florida but are emotionally torn because we love our first place (close to beach and family memories). So I think that starting in a market where you can get more bang for your buck is a good idea. But, stay in Jacksonville/St Augustine before you decide to buy. And if there is a certain condo building or neighborhood that you are interested in, rent an STR there first to see if it is everything you think it will be. For example, we stayed in a beautiful gulf front condo building that we were sure was the building where we would buy BUT every night between 10-2, there were HUGE parties on the beach right below us. We would watch the police come multiple times to break up the party because there was no way we could sleep! Had we not checked it out in advance, we would have bought there- and regretted it. We went back for another trip and stayed in the complex that we ended up buying in. Thankfully, we stayed right next to the unit we were going to look at the next morning so we were aware of how loud (traffic) and bright (street lights) it was during the night. So we bought a unit more in the interior of this complex and love it! By staying there before you buy, you can make sure that it is a good fit.

As far as buying on the Cape, don't just buy there to buy.  Make sure that your budget can get you a place that people are renting.  For example, if people are only primarily renting homes on the water and you buy something a mile away because that is all you can afford you probably won't be successful.  

Here are my suggestions:  Get a Realtor in both markets (FL and the Cape).  Most likely I would say to buy in Florida first and then go to the Cape OR wait until you can buy at the Cape (The Realtors in each area will be able to help you with that)

As far as the LLC, talk to the lender and title company. They will have some suggestions for that. I know of one lender in FL who will let you do the loan in an LLC but it will cost you- about 1% point higher than the normal rates.

Feel free to reach out to me and I can give you more details on how we did it- including how we manage from a distance without a management company.  I am excited for you and your family!