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Updated over 1 year ago, 03/22/2023
New to Short Term Rentals - Need some help
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!
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!
Unless you have the ability to save rapidly, I would focus on a market that you can afford to buy in. I'm sure any decent property in Cape Cod that would be suitable for short-term rentals is $1mil+. Florida has gotten fairly expensive as well. A lot of short-term rental investors are looking in the Carolinas (my market is Myrtle Beach), Alabama, and some areas around the Gulf in Texas.
- Myrtle Mike Thompson
Yep, you can still find some decent prices below 1M on Alabama beaches.
- Greg Parker
- [email protected]
Hi @Brian Davis,
Howdy, neighbor! We live in RI and are doing a bit of what you describe. We have long term rentals here in RI/MA and short term rentals in Myrtle Beach and Gatlinburg.
It's awesome to have a place you can use whenever you want, but think about how you will get there. A short drive to the Cape, New Hampshire, lakes region of NY, etc is easy. Think about how far you are realistically willing to drive, flight availability out of your regional airport, etc. We love our MB condo and don't regret anything about it, but flying down there a few times a year (with connecting flights and the unpredictability of air travel) isn't enjoyable.
As far as the Cape goes, they aren't building any more beaches last I checked, so I think those price points are here to stay and will only go up over time.
Being a property owner anywhere is work (but this is a giant forum of people who love doing it, including myself), so you're on the right track in educating yourself and learning. Good luck on your journey!
Hi @Brian Davis! Sounds like you have started doing some good research to make a good investment. In my experience with a new LLC you can't put the property into the LLC unless you either pay cash for it or purchase it under the LLC or get a loan through the LLC. In my case and for most first time investors they typically end up getting a mortgage that is backed by their personal credit and I have not found a way to get that into the LLC once you personally are the primary on the mortgage. My advice for the short term rentals is follow the numbers where they make better sense for you and your family. It sounds like you would likely the rental in either location so see which market is looking better. Also loved the advice from @EstaRyder about making a visit and staying in the area or actual complex you are considering purchasing, this can be invaluable to help anticipate any potential selling or rental points and also help to identify any potential issues.
I am a Broker in Florida and am currently managing a MTR in St. Augustine and have sold short term rentals in that area so please don't hesitate to reach out if you would like more information. I am happy to share some of the numbers I am seeing and give you an idea of what the local market is looking like!
Quote from @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!
You're not late to the game. There are still great properties to be had and income to be earned! In my NW FL market (Emerald Coast), you can get a 2/2 townhome in the mid $330Ks, SFRs that are walkable to the beach from $450K+, and any number of condos starting in the low $200Ks. I like to look at sq ft price to compare similar properties across markets (ex: Panama City Beach vs Destin).
Two things I wanted to point out: 1) "their" property tax will not be what you pay as a new buyer, as the tax will be figured on your purchase price, not theirs; and 2) Insurance in FL is higher than you are probably expecting, but there are ways to minimize that expense to help with your cash flow.
Let me know how I can be helpful re: STRs on the Emerald Coast. I love newbie questions! : )
Good luck to you no matter where you buy!
Quote from @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!
Another great coastal market you may want to look into some is the Gulf Shores/Orange Beach/Fort Morgan area. I could easily argue this area has one of the lower seasonality issues for beach markets because of the high demand from snowbirds (Midwest states) from January-April due to the access from I-65.
I-65 is a straight shot South for many of the midwestern states. It's insane to see the growth in attendees at our church from the first week of January to the first week of February. I would wager it quadruples. Please feel free to reach out if you would like to discuss more, I am happy to help!
-Ben Scarborough
So I live in the Lakes Region of NH and it is so beautiful. There are challenges up here as there are most places, however there are also incredible opportunities and I would love to set up a call with you can see if I can help you find something in the area. Send me a direct message if you would like to discuss further.