Looking to buy a vacation rental. Advice?

Question

Hello! My husband and I live in California but looking to buy an STR in Utah, Colorado or Washington. It will be used by us 15% of the time, but mainly a full time rental! I'm looking for best tips for getting started and some opinions on tech to help!

We are looking to purchase in the next 3 months - I've used the free version of AirDNA to see cap rates on specific addresses I found on Zillow, but wondering if I should pay to get more of the future market insights they have?

Looking for any tips on how to be most profitable. Thanks!

Account Closed · Answer

@Sami Stevens

Hi Sami!  Where in CA are you from?  I’m from CA but reside in Salt Lake.

What kind of STR are you looking for?  Townhouse, single family, or any other specifics you would like?  I can try to think of some areas here in Utah that you may want to look into.  The biggest challenge will be the current market...

Dale Desmond · Answer

Southern Utah is an extremely hot vacation rental market right now! Our occupancy rate is 40% right now in the slowest time of the year! COVID put Southern Utah on the map for guests in LA, PHX, Vegas, SLC (to name a few) to the point that we didn't have any weekend availability from May through Thanksgiving last year!

Candice De · Answer

@Sami Stevens I like your plan! I personally like to recommend buying in a place you want to be - which sounds like a strategy you have thought through. I am in Frisco, centered between Breck, Keystone, Vail, and 2 other ski resorts. Yes, the prices are high for entry, but sounds like you’ve already done your research. Let me know if you want to chat more about Colorado mountain towns!

James Carlson · Answer

Hi @Sami Stevens

Surprise, surprise, the real estate agent from Denver and Colorado Springs is going to say you should buy an STR/Airbnb in Colorado. But seriously ... you should buy a short-term rental in Colorado!

The post a few above mine was half right about Denver area rules. Arvada legalized Airbnb investments in August 2020. Littleton passed a similar law (but even more permissive) in December 2020. And Wheat Ridge just passed a law in early 2021. If you're looking for a vacation rental in the ski areas, know that it gets pretty pricey up there. I like Breckenridge and know an awesome Airbnb-friendly real estate agent up there if you're interested.

AirDNA is a great resource. We have a subscription and you can really dive in to the stats. I'd warn against getting lost in the data, though. It's a lot of information without a lot of contextualization. I'd make crystal clear what your goals are. Is it good cash flow? Then use the Rentalizer tool to see what individual properties will generate and compare against the possible mortgage on said property.

Also, it sounds like you have dual goals here -- this house is both an investment and a place for family visits. So that might mean sacrificing some revenue to get into a place you absolutely love.

I wish you luck!

Pete Slaga · Answer

Hi, location matters.  You want to be near some sort of attraction that potential guests want to experience.  Additionally, you need to factor in the effort to get there.  How far is it to drive from a major metropolitan area or areas?  Typical drive destinations can usually get occupancy year round especially during weekends or holidays. With the real estate market being hot in the non-metro areas you may need to look for a non-traditional property.  Sometimes a mixed-use property like a storefront on the bottom and an apartment on top in the city square might make the best investment sense as an example?  Another possibility might be to purchase raw land and look to put on some tiny pre-fab AFrames or mini cabins?   Not sure if this is what you were looking for, but hopefully it is something to ponder?

Luke Trovinger · Answer

Hey @Sami Stevens! Something to keep in mind if you are looking in the Denver metro area and going the Airbnb route, the majority of surrounding cities (including Denver) will only allow STR if you it is your primary residence. Arvada and Littleton are going to be your outliers that allow STRs, Arvada passing regulation allowing it and Littleton doesn't currently have specifics saying "no" which could change in the future.

Sounds like you will be renting the place out long term, so be sure to lease for a minimum of 30 days out this way if not in the above markets! Best of luck!

Sounds like you will be renting the place out long term, so be sure to lease for a minimum of 30 days out this way if not in the above markets! Best of luck!

Looking to buy a vacation rental. Advice?

Most Popular Reply